What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-03-21 compared with 2023-03-02 · 796 added, 711 removed, 1177 unchanged (56% 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 Internal Control-Integrated

management, with the participation of our Chief Executive Officer and Interim 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

10 unchanged sentences

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, 2022, our Chief Executive Officer and Chief Financial

on the evaluation of our disclosure controls and procedures, as of December 31, 2023, our Chief Executive Officer and Interim Chief Financial

Officer concluded that, as of such date, our disclosure controls and procedures were effective.

Our management, including our Chief Executive

Officer and Chief Financial Officer, has concluded that 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.

Officer and Interim Chief Financial Officer, has concluded that 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.

36 unchanged sentences

in Internal Control over Financial Reporting

the period January 1, 2022 through December 31, 2022, we implemented and tested changes to our internal control over financial reporting

related to our remediation efforts described below.

During the fourth quarter of 2022, there were no changes

in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that have materially affected, or

are reasonably likely to materially affect, our internal control over financial reporting.

of a Material Weakness in Internal Control Over Financial Reporting

the year ended December 31, 2021, we concluded that we had a material weakness in internal control over financial reporting, specifically

related to the completeness and accuracy of key inputs related to non-routine transactions as described in Item 9A of our Annual Report

on Form 10-K for the fiscal year ended December 31, 2021.

To address the material weakness, during the year ended December 31, 2022,

we designed and implemented enhancements to our processes and controls to verify the completeness and accuracy of key inputs related

to non-routine transactions by requiring more detailed reviews by experienced staff and increased communication among our personnel and

third party professionals with whom we consult regarding such transactions.

Based on the cumulative changes implemented, as well as management’s

evaluation of the design and operating effectiveness of the new controls, management has concluded that the material weakness, related

to the completeness and accuracy of key inputs related to non-routine transactions has been remediated as of December 31, 2022.

the fourth quarter of 2023, there were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) of the

Exchange Act) 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

the quarter ended December 31, 2023, no director or Section 16 officer adopted or terminated any Rule 10b5-1 trading agreement or non-Rule

10b5-1 trading agreement.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Directors, Executive Officers and Corporate Governance

11 unchanged sentences

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

(1) Financial

(i) Consolidated

Balance Sheets as of December 31, 2023 and 2022

(ii) Consolidated

Statements of Operations for the years ended December 31, 2023 and 2022

(iii) Consolidated

Statements of Comprehensive Income for the years ended December 31, 2022 and 2021

(iv) Consolidated

Statements of Comprehensive (Loss) Income for the years ended December 31, 2023 and 2022

Statements of Shareholders’ Equity for the years ended December 31, 2023 and 2022

(v) Consolidated

Statements of Cash Flows for the years ended December 31, 2023 and 2022

(vi) Notes to Consolidated Financial Statements

(2) Financial

to Consolidated Financial Statements

Statement Schedules

23 unchanged sentences

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).

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 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).

31 unchanged sentences

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.

Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 (filed as Exhibit 4.9 to the Company’s Form 10-K filed on March 2, 2023, 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.

13 unchanged sentences

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).

Agreement and Bonus Agreement between the Company and Larry Steenvoorden each dated as of July 6, 2023 (filed as Exhibit 10.1 and

10.2 , respectively, to the Company’s Form 8-K filed on July 11, 2023 and incorporated herein by reference).

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

8 unchanged sentences

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).

Sixth Loan Modification Agreement dated January 27, 2022, by and between the Company and SVB (filed as Exhibit 10.19 to the Company’s Form 10-Q filed on May 9, 2022 and incorporated herein by reference).

Seventh Loan Modification Agreement dated February 17, 2023, by and between the Company and SVB (filed as Exhibit 10.1 to the Company’s Form 8-K filed on February 21, 2023 and incorporated herein by reference).

Eighth Loan Modification Agreement dated August 31, 2023, by and between the Company and SVB (filed as Exhibit 10.1 to the Company’s Form 8-K filed on September 1, 2023 and incorporated herein by reference).

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

1 unchanged sentence

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).

At Market Issuance Sales Agreement dated February 14, 2022 by and between CareCloud, Inc.

1 unchanged sentence

(filed as Exhibit 1.1 to the Company’s Form 8-K filed on February 14, 2022 and incorporated herein by reference).

Consulting Agreement dated June 3, 2022 by and between the Company and Hill City Advisors, LLC.

Amendment to Consulting Agreement dated February 16, 2023 by and between the Company and Hill City Advisors, LLC.

Consulting Agreement dated June 3, 2022 by and between the Company and Hill City Advisors, LLC (filed as Exhibit 10.22 to the Company’s Form 10-K filed on March 2, 2023, and incorporated herein by reference).

Amendment to Consulting Agreement dated February 16, 2023 by and between the Company and Hill City Advisors, LLC (filed as Exhibit 10.23 to the Company’s Form 10-K filed on March 2, 2023, and incorporated herein by reference).

Additional Statement of Work dated January 29, 2024 added as Exhibit B to the Consulting Agreement between the Company and Hill City Advisors, LLC.

Consulting Agreement dated January 9, 2024, and as amended February 12, 2024, by and between the Company and Korn Intellect, LLC.

List of subsidiaries.

4 unchanged sentences

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.

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

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

XBRL Instance

XBRL Taxonomy Extension Schema

XBRL Taxonomy Extension Calculation Linkbase

XBRL Taxonomy Extension Label Linkbase

XBRL Taxonomy Extension Presentation Linkbase

XBRL Taxonomy Extension Definition Linkbase

Policy relating to recovery of erroneously awarded compensation, as required by applicable listing standards adopted pursuant to 17 CFR 240.10D-1.

Taxonomy Extension Schema

Taxonomy Extension Calculation Linkbase

Taxonomy Extension Label Linkbase

Taxonomy Extension Presentation Linkbase

Taxonomy Extension Definition Linkbase

Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

Indicates management contract or compensatory plan or arrangement.

The 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.

Such certifications will not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.

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.

Such certifications will not be deemed incorporated

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.

CareCloud, Inc.

Hadi Chaudhry

1 unchanged sentence

Executive Officer

Financial Officer

Chief Financial Officer and Corporate Controller

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

4 unchanged sentences

Executive Officer, President and Director

Financial Officer

Accounting Officer

Financial and Accounting Officer

Cameron Munter

Lawrence Sharnak

Stephen Snyder

to Consolidated Financial Statements

2 unchanged sentences

Consolidated Statements of Operations for the years ended December 31, 2023 and 2022

Consolidated Statements of Comprehensive Income for the years ended December 31, 2022 and 2021

Consolidated Statements of Comprehensive (Loss) Income for the years ended December 31, 2023 and 2022

Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2023 and 2022

1 unchanged sentence

Notes to Consolidated Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders

CareCloud, Inc.

OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

of Directors and Shareholders

on the financial statements

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

(a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income, changes in shareholders’ equity, and cash flows for each of the two years in the period ended December 31, 2022, 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, 2022 and 2021, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

These 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.

We 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 or fraud.

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

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.

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

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

as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive (loss) income, changes in shareholders’

equity, and cash flows for each of the two years in the period ended December 31, 2023, 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, 2023 and 2022, and the results of its operations and its cash flows for each of

the two years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States

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.

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 or fraud.

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

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.

Our 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

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

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.

audit matters

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

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

3 unchanged sentences

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.

Goodwill Impairment Assessment- Healthcare IT Reporting Unit

described further in Notes 2 and 4 of the consolidated financial statements, the Company performed a goodwill impairment assessment as

of October 31, 2022, the date of its annual impairment test, on one of its reporting units, Healthcare IT (HIT).

We identified the Company’s

goodwill impairment assessment over the HIT reporting unit as a critical audit matter.

The principal considerations for our determination that goodwill impairment assessment is a critical audit matter are the significant management estimates and judgements related to forecasts of expected future cash flows required to estimate the HIT reporting unit’s fair value.

Management’s significant estimates and judgements include the determination of the discount rate, revenue growth rates, operating margins, and long-term growth rate.

Auditing these estimates requires a high degree of auditor judgement, including the use of professionals with specialized skills and knowledge.

Our audit procedures related to the goodwill impairment assessment included the following, among others:

assessed the design and implementation of management controls around the determination of inputs used in the quantitative impairment test.

We assessed management’s ability to forecast by

comparing historical projections to actual results and comparing current forecasted projections to historical trends, industry data, and underlying business strategies.

evaluated managements revenue growth rates, operating margins, and cash flows for consistency with relevant historical data, recent

changes in the business, and external industry data and forecasts.

the assistance of our valuation professionals with specialized skills and knowledge, we evaluated the valuation methodologies, inputs,

and assumptions utilized by management, including the long-term growth rate and discount rate.

performed sensitivity analyses on the long-term growth rate and discount rate used to evaluate the impact that changes in these assumptions

have on management’s conclusion.

/s/ GRANT THORNTON LLP

matters below, providing separate opinion on the critical audit matters or on the accounts or disclosures to which it relates.

Impairment Assessment - Healthcare IT Reporting Unit

described further in Note 2, 3, and 19 to the consolidated financial statements, the Company performed its annual goodwill impairment

assessment as of October 31, 2023, on its Healthcare IT (HIT) reporting unit.

In addition, the Company identified triggering events on

August 31, 2023 and December 12, 2023 that resulted in goodwill impairment assessments of HIT for each of the respective dates.

annual impairment test date and at December 12, 2023, the Company concluded that the fair value of the HIT reporting unit was less than

the carrying value at these dates, leading to the Company recording an impairment charge.

We identified the Company’s goodwill

impairment assessment over the HIT reporting unit for each of those assessment dates as a critical audit matter.

principal considerations for our determination that the goodwill impairment assessment as of August 31, 2023, October 31, 2023 and December

12, 2023 is a critical audit matter are the significant management estimates and judgements related to forecasts of expected future cash

flows required to estimate the HIT reporting unit’s fair value.

Management’s significant estimates and judgements include

the determination of the discount rates, revenue growth rates, operating margins, long-term growth rate, and weightings assigned to the

valuation methodologies used.

Auditing these estimates requires a high degree of auditor judgement, including the use of professionals

with specialized skills and knowledge.

audit procedures related to the goodwill impairment assessment included the following, among others:

assessed management’s ability to forecast by comparing historical projections to actual results.

evaluated management’s revenue growth rates, operating margins, and cash flows for consistency with relevant historical data

and trends, recent changes in the business, underlying business strategies, and external industry data and forecasts used at each

impairment testing date.

the assistance of our valuation professionals with specialized skills and knowledge,

we evaluated the valuation methodologies, inputs, and assumptions utilized by management, including the long-term growth rate and

discount rate.

performed sensitivity analyses on discount rates used to evaluate the impact that changes in these assumptions have on management’s

Concern Analysis

described further in Note 2 to the consolidated financial statements, as of and for the year end December 31, 2023, the Company generated

a net loss of $48.7 million, suspended the dividend on its Series A and B Preferred Stock and had negative working capital of $57,000

and cash of $3.3 million.

These factors, among others, raised substantial doubt regarding the Company’s ability to continue as

a going concern for a period of at least once year from the date of the issuance of the financial statements;

however, management believes

its plan to mitigate these conditions alleviates this substantial doubt.

Management’s plan includes an assessment of liquidity,

judgments about the Company’s future activities and compliance with terms of its lending arrangement that are based on estimates

of future cash flows.

Significant assumptions used in the Company’s forecasted model of liquidity include forecasted revenue and

accounts receivable, costs, and cash flows.

Changes in these assumptions could have a material impact on the forecasted liquidity and

going concern assessment.

We identified the going concern analysis as a critical audit matter.

principal consideration for our determination that the going concern analysis is a critical audit matter are the significant judgements

and assumptions involved in determining whether it is probable that management’s plans will be effectively implemented and alleviate

substantial doubt about the Company’s ability to continue as a going concern.

More specifically, there was a high degree of auditor

judgment and subjectivity in performing our procedures to evaluate the reasonableness of the Company’s forecasted financial results.

audit procedures related to the going concern assessment included the following, among others:

evaluated the Company’s forecasted financial results and ability to meet obligations as they come due for at least twelve months

from the issuance date of these financial statements by:

the Company’s forecasted future financial results to (1) historical results and previous forecasts, (2) internal communications

to management and the Board of Directors, (3) forward-looking guidance set forth by the Company within their earnings release, (4)

industry data, and (5) forecasted balances against actual results of the first two months of fiscal year 2024.

sensitivity analyses on the Company’s forecasted cash flows and liquidity covenant calculations by adjusting management’s

projected cash balances using actual results subsequent to year end and adjusted levels of revenue growth.

evaluated management’s plans, including estimated cost savings and probability that the Company will be able to successfully

implement these plans to alleviate substantial doubt about the Company’s ability to continue as a going concern.

assessed the appropriateness of the disclosures included within the consolidated financial statements relating to liquidity and going

GRANT THORNTON LLP

have served as the Company’s auditor since 2015.

BALANCE SHEETS

OF DECEMBER 31, 2022 AND 2021

CARECLOUD, INC.

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2023 AND 2022

($ in thousands, except share and per share amounts)

Current assets:

Restricted cash

Accounts receivable - net

13 unchanged sentences

Deferred revenue (current portion)

Deferred payroll taxes

Notes payable (current portion)

Contingent consideration (current portion)

Dividend payable

Consideration payable

Total current liabilities

8 unchanged sentences

Preferred stock, $ 0.001 par value - authorized 7,000,000 shares.

Series A, issued and outstanding 4,526,231 and 5,299,227 shares at December 31, 2022 and December 31, 2021, respectively.

Series B, issued and outstanding 1,344,128 shares at December 31, 2022

Series A, issued and outstanding 4,526,231 shares at December 31, 2023 and December 31, 2022.

Series B, issued and outstanding 1,468,792 and 1,344,128 shares at December 31, 2023 and December 31, 2022, respectively

Common stock, $ 0.001 par value - authorized 35,000,000 shares.

18 unchanged sentences

Depreciation and amortization

Net loss on lease termination, impairment and unoccupied lease charges

Goodwill impairment charges

Net loss on lease terminations, unoccupied lease charges and restructuring costs

Total operating expenses

OPERATING INCOME

OPERATING INCOME (LOSS)

OPERATING (LOSS) INCOME

Interest income

1 unchanged sentence

Other expense - net

INCOME BEFORE PROVISION FOR INCOME TAXES

Income tax provision

(LOSS) INCOME BEFORE (BENEFIT) PROVISION FOR INCOME TAXES

Income tax (benefit) provision

NET (LOSS) INCOME

Preferred stock dividend

4 unchanged sentences

notes to consolidated financial statements.

STATEMENTS OF COMPREHENSIVE INCOME

THE YEARS ENDED DECEMBER 31, 2022 AND 2021

CARECLOUD, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

($ in thousands)

NET (LOSS) INCOME

OTHER COMPREHENSIVE LOSS, NET OF TAX

Foreign currency translation adjustment (a) (a)

COMPREHENSIVE INCOME

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

Foreign currency translation adjustment (a)

COMPREHENSIVE (LOSS) INCOME

(a) No tax effect has

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

notes to consolidated financial statements.

STATEMENTS OF SHAREHOLDERS’ EQUITY

THE YEARS ENDED DECEMBER 31, 2022 AND 2021

CARECLOUD, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

($ in thousands, except for number of shares)

Preferred Stock Series A

Preferred Stock Series B

Stock Series A

Stock Series B

Additional Paid-in

1 unchanged sentence

Comprehensive

Shareholders’

Balance - January 1, 2022

Treasury (Common)

Total Shareholders’

Balance - January 1, 2023 before adoption of ASC 326

Cumulative effect of adopting ASC 326

Balance - January 1, 2023 after adoption

Foreign currency translation adjustment

Issuance of stock under the equity incentive plan

Redemption of Series A Preferred Stock

Exercise of common stock warrants

Stock issued under the equity incentive plan

Issuance of Series B Preferred Stock (1)

Stock issuance costs

Shares issued for services

Stock-based compensation, net of cash settlements

2 unchanged sentences

Balance - January 1, 2022

Net (loss) income

Foreign currency translation adjustment

Issuance of stock under the equity incentive plan

Cancellation of shares held in escrow

Settlement of contingent liability

Sale of common stock

Stock issued under the equity incentive plan

Redemption of Series A Preferred Stock

Exercise of common stock warrants

Issuance of Series B Preferred Stock (1)

Stock issuance costs

Stock-based compensation, net of cash settlements

1 unchanged sentence

Balance - December 31, 2022

all years presented, the preferred stock dividends were paid monthly at the rate of $2.75 and $2.19 for Series A and Series B, respectively,

per share per annum.

(1) Amounts are net

of issuance cost of approximately $ 71,000 and $ 2.3 million for 2023 and 2022, respectively.

2022, the preferred stock dividends were paid monthly at the rate of $ 2.75 and $ 2.19 for Series A and Series B, respectively, per share

2023, the preferred stock dividends were paid monthly from January through November at the rate of $ 2.75 and $ 2.19 for Series A and Series

B, respectively, per share per annum.

notes to consolidated financial statements.

STATEMENTS OF CASH FLOWS

THE YEARS ENDED DECEMBER 31, 2022 AND 2021

CARECLOUD, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

($ in thousands)

OPERATING ACTIVITIES:

Adjustments to reconcile net income to net cash provided by operating activities:

Net (loss) income

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

Depreciation and amortization

1 unchanged sentence

Deferred revenue

Provision for doubtful accounts

Provision for deferred income taxes

Foreign exchange loss (gain)

Provision for expected credit losses

Deferred income taxes (benefit) provision

Foreign exchange loss

Interest accretion

Loss on sale of assets

Goodwill impairment charges

Stock-based compensation expense

Change in contingent consideration

Adjustment of goodwill

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

Changes in operating assets and liabilities:

Accounts receivable

4 unchanged sentences

Purchases of property and equipment

Capitalized software

Cash paid for acquisition (net)

Capitalized software and other intangible assets

Net cash used in investing activities

4 unchanged sentences

Repayments of notes payable

Financing and stock issuance costs

Proceeds from exercise of warrants

Stock issuance costs

Proceeds from issuance of Series B Preferred Stock, net of expenses

Proceeds from issuance of common stock, net of expenses

Redemption of Series A Preferred Stock

3 unchanged sentences

EFFECT OF EXCHANGE RATE CHANGES ON CASH

NET INCREASE (DECREASE) IN CASH AND RESTRICTED CASH

CASH AND RESTRICTED CASH - Beginning of the year

CASH AND RESTRICTED CASH - End of the year

NET (DECREASE) INCREASE IN CASH

CASH - Beginning of the year

CASH - End of the year

SUPPLEMENTAL NONCASH INVESTING AND FINANCING ACTIVITIES:

Preferred stock cancelled in connection with an acquisition

Contingent consideration at fair value at acquisition date

Dividends declared, not paid

Purchase of prepaid insurance with assumption of note

Purchase of prepaid insurance and motor vehicle with assumption of notes

SUPPLEMENTAL INFORMATION - Cash paid during the year for:

48 unchanged sentences

is equally owned by the founder and Executive Chairman of CareCloud and the same director/employee as noted above.

SIGNIFICANT ACCOUNTING POLICIES

the second quarter of 2023, the Company formed a wholly owned subsidiary, CareCloud ME Health Consultancy LLC, in the United Arab Emirates,

which has not yet begun operations.

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

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

7 unchanged sentences

All intercompany accounts and transactions have been eliminated in consolidation.

and Going Concern — Primarily due to a decline in revenue associated with our Healthcare IT segment and a goodwill impairment

of $ 42 million, the Company generated a net loss of $ 48.7 million and had a net decrease in cash of $ 9.0 million for the year ended December

At December 31, 2023, the Company had negative working capital of $ 57,000 and cash of $ 3.3 million.

Absent any other action,

the Company will require additional liquidity to continue its operations over the next 12 months.

management has considered its plans to continue the Company as a going concern and believes substantial doubt is alleviated by

focusing on cost-control.

As discussed in Note 13, the Company approved a restructuring plan to reduce headcount and operating costs

and generate positive cash flow.

In addition, the Company has suspended the dividend on the Company’s Preferred Stock, which

saves approximately $ 1.3 million

of cash each month.

The dividend will continue to accrue in arrears each month since it is cumulative, but would not be a legal

obligation until the dividend is reinstated.

The dividend will not be recorded as a liability until its declared by the Board of

The Company projects that this restructuring plan, that was implemented in 2023 and will be completed by the end of 2024,

will reduce expenses, thereby reducing ongoing liquidity needs to enable continuation of operations and compliance with debt covenants

for the foreseeable future.

Although there are no guarantees that the Company will be successful, it believes such initiatives will

enable it to continue as a going concern through at least the next twelve months.

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

6 unchanged sentences

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.

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

expected credit losses, (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.

53 unchanged sentences

these assets.

During the years ended December 31, 2022 and 2021, the Company capitalized approximately $ 9.2 million and $ 7.6 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.

During the years ended December 31, 2023 and 2022, the Company capitalized approximately

$ 8.6 million and $ 9.2 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, 2022 and 2021 was as follows:

OF ALLOWANCE FOR DOUBTFUL ACCOUNTS

Year Ended December 31,

($ in thousands)

Beginning balance

Recoveries/adjustments

Ending balance

balance sheet net of an allowance for expected credit losses, which is established based on a lifetime estimated credit loss expected

to occur for trade accounts receivable.

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

20 unchanged sentences

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, 2022

and 2021, other than the impairment recorded on right-of-use (“ROU”) assets of approximately $ 68,000 for the year ended December

In addition, during the year ended December 31, 2021, the Company recorded approximately $ 774,000 of impairment charges on

a vendor contract.

was no impairment of internal-use software costs, intangible assets, operating lease right of use assets or property and equipment during

the years ended December 31, 2023 and 2022.

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

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

impairment test for the Healthcare IT segment is performed using the discounted cash flow approach.

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, 2022 or 2021.

impairment test for the Healthcare IT segment is performed using the discounted cash flow approach, the trading price of publicly

traded stock, and the guideline public company method.

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.

The Company had a triggering event at

August 31, 2023, but it was determined that no

goodwill impairment existed at that time.

The Company had an additional triggering event in December 2023.

It was determined that

the fair value of the Healthcare IT reporting unit was less than the carrying value at October 31 and on December 12, 2023

(triggering event).

Accordingly, impairment charges of approximately $ 2.0

million and $ 40.0

million, respectively, were recorded.

(See Note 3.) No

impairment charges were recorded during the year ended December 31, 2022.

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

5 unchanged sentences

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

For 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.

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 ,

10 unchanged sentences

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.

During the year ended December 31, 2021, the Company incurred approximately $ 316,000 of professional

fees related to the medSR acquisition discussed in Note 3, which are included in general 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

20 unchanged sentences

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 and Series B Preferred Stock through February 2023.

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”).

— Dividends are recorded when declared by

the Company’s Board of Directors.

The Board of Directors had declared monthly dividends on the Series A and Series B Preferred

Stock through February 2024.

However, in December 2023, the dividends on the Preferred Stock were suspended.

The dividend scheduled for

payment on December 15, 2023 together with the remaining dividends that were declared, have been accrued in the consolidated balance

Future monthly dividends will continue to accrue in arrears but will not be recorded as a liability until declared by the Board

of Directors.

Preferred Stock dividends are charged against paid in capital because the Company does not have sufficient retained

The Company is prohibited from paying dividends on its common stock without the prior written consent of its lender, Silicon

Valley Bank, a division of First Citizens Bank (“SVB”).

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

7 unchanged sentences

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:

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

4 unchanged sentences

or other means.

Inputs 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.

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

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

16 unchanged sentences

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

– net in the consolidated statements of operations and amounted to losses of approximately $ 610,000 and gains of $ 16,000 for the

years ended December 31, 2022 and 2021, respectively.

Loss on Lease Termination, Impairment and Unoccupied Lease Charges — Net 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 was able to turn back to the landlord one of the unused facilities

effective January 1, 2022.

– net in the consolidated statements of operations and amounted to losses of approximately $ 790,000 and $ 610,000 for the years

ended December 31, 2023 and 2022, respectively.

Loss on Lease Terminations, Unoccupied Lease Charges and Restructuring Costs — Net loss on lease termination represents the

write-off of leasehold improvements as the result of early lease terminations.

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 was able to turn back

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

Restructuring costs which were incurred in 2023, primarily consist

of severance and separation costs associated with the optimization of the Company’s operations and profitability improvements.

(See Note 13.)

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

13 unchanged sentences

2019, 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 determined that this update will not have a material impact on the consolidated

financial statements upon adoption on January 1, 2023.

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.

Company adopted this guidance effective January 1, 2021.

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

this standard.

2020, the FASB issued ASU 2020-04 to simplify the accounting for contract modifications made to replace LIBOR or other reference rates

that are expected to be discontinued because of reference rate reform.

The guidance provides optional expedients and exceptions for applying

GAAP to these contract modifications if certain criteria are met.

The optional expedients and exceptions can be applied to contract

modifications made until December 31, 2022.

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 Company adopted this guidance effective January 1, 2022.

There was no impact on the consolidated financial statements as

a result of this standard.

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

fiscal years beginning on or after December 15, 2022.

The Company adopted this guidance on January 1, 2023 using a modified retrospective

adoption methodology, whereby the cumulative impact of all prior periods is recorded in accumulated deficit or other impacted balance

sheet items upon adoption.

The impact to the accumulated deficit as of January 1, 2023 for the allowance related to accounts receivable

was a charge of approximately $ 186,000 and a corresponding increase to the allowance for expected credit losses.

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 combination.

The amendments are effective for public business entities for fiscal

years beginning after December 15, 2022.

The Company determined that this update will not 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 provided 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

were achieved, then CAC would 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

were achieved, then CAC would pay MedMatica an additional earn-out, up to a maximum of $ 5 million.

At the end of the Earn-Out period,

it was determined that no amounts were due to the seller.

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:

OF TOTAL CONSIDERATION ON BUSINESS CONSIDERATION

medSR Purchase Price

($ in thousands)

Amounts held in escrow

Contingent consideration

Total purchase price

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

Receivable from seller

Prepaid expenses

Unbilled receivables

Property and equipment

Customer relationships

Acquired backlog

Accounts payable

Accrued expenses & compensation

Deferred revenue

Total purchase price allocation

acquired accounts receivable was 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 was 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 $ 3.1 million, based in part on the actual operating results since the acquisition.

At the end of the 18-month period,

it was determined that no earn-out payment was due to the seller and accordingly, there was no contingent consideration recorded as of

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.

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

October 2023, the FASB issued ASU 2023-06, Disclosure Improvements:

Codification Amendments in Response to the SEC’s Disclosure

Update and Simplification Initiative.

This update amends the disclosure or presentation requirements related to various subtopics

in the FASB Accounting Standards Codification.

The new guidance is intended to align U.S.

GAAP requirements with those of the SEC and

to facilitate the application of U.S.

GAAP for all entities.

The effective date for each amendment will be the date on which the SEC’s

removal of that related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited.

If by June 30, 2027 the SEC has not removed the applicable requirement from Regulation S-X or Regulation S-K, the pending content of

the associated amendment will be removed from the Codification and will not become effective.

November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Disclosures .

The amendments

in this update improve segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after

December 15, 2024.

The difference in the contingent consideration between December 31, 2022 and December 31, 2021 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 of 2021, 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.

Approximately $ 12.3 million

in cash was paid at closing.

The balance of $ 1 .0 million escrow is included in consideration payable and restricted cash in the consolidated

balance sheet at December 31, 2021.

During the quarter ended December 31, 2022, $ 1 .0 million was paid to the seller settling the remaining

portion of the escrow.

weighted-average amortization period of the acquired intangible assets is approximately three years .

earned as a result of the medSR acquisition was approximately $ 29.7 million and $ 15.9 million for the years ended December 31, 2022 and

2021, respectively.

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.

forma financial information (Unaudited)

unaudited pro forma information below represents the consolidated results of operations as if the medSR acquisition occurred on

January 1, 2021.

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 acquisition 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

The difference between the actual revenue and the pro forma revenue is approximately $ 17.8 million of additional

revenue primarily recorded by medSR for the year ended December 31, 2021 and reflected as a pro forma adjustment below.

differences arise from amortizing purchased intangibles using the double declining balance method.

OF BUSINESS ACQUISITION PRO FORMA INFORMATION

Year Ended December 31, 2021

($ in thousands, except per share amounts)

Total revenue

Net loss attributable to common shareholders

Net loss per common share

Early adoption is permitted.

The expected impact would only be to the financial statement disclosures.

December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures.

The amendments in

this update enhance the transparency and decision usefulness of income tax disclosures primarily related to rate reconciliation and income

taxes paid information.

The update also includes certain other amendments to improve the effectiveness of income tax disclosures.

amendments are effective for annual periods beginning after December 15, 2024.

Early adoption is permitted.

The Company does not expect

this update to have a material impact on the consolidated financial statements.

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, 2022 and 2021:

OF INTANGIBLE ASSETS AND GOODWILL

December 31, 2023, and 2022, approximately $ 90,000 of goodwill was allocated to the Medical Practice Management segment and the balance

was allocated to the Healthcare IT segment.

The following is the summary of the changes to the carrying

amount of goodwill for the years ended December 31, 2023 and 2022:

OF CHANGES TO THE CARRYING AMOUNT OF GOODWILL

Year Ended December 31,

1 unchanged sentence

Beginning gross balance

Acquisition, net of adjustments

Impairment charges

Ending gross balance

December 31, 2022, and 2021, approximately $ 90,000 of goodwill was allocated to the Medical Practice Management segment and the balance

was allocated to the Healthcare IT segment.

a result of a triggering event in December 2023 resulting from the suspension of the Preferred Stock dividend, the Company updated its

annual goodwill impairment test that was performed as of October 31, 2023 for the Healthcare IT segment.

It was determined that the fair

value of the Healthcare IT reporting unit was less than the carrying value at both October 31 and as a result of the triggering event.

Accordingly, impairment charges of approximately $ 2.0 million and $ 40.0 million, respectively, were recorded.

is a summary of intangible asset activity for the years ended December 31, 2023 and 2022:

5 unchanged sentences

Translation loss

Allocation from 2021 acquisition

Balance, December 31, 2023

2 unchanged sentences

Amortization expense

Translation loss

Balance, December 31, 2023

2 unchanged sentences

Translation loss

Allocation from 2021 acquisition

Balance, December 31, 2022

2 unchanged sentences

Amortization expense

Translation loss

Balance, December 31, 2022

Net book value

a result of a triggering event in December 2023, we also reviewed our other long term assets for impairment.

We determined that the fair

value of these assets exceeded their carrying value and that there was no impairment.

amount for capitalized software represents payroll and development costs incurred for internally developed software.

3 unchanged sentences

$ 12.4 million and $ 9.8 million for the years ended December 31, 2023 and 2022, respectively.

The weighted-average amortization period

is three years .

The weighted-average amortization period is three years .

of December 31, 2023, future amortization expense scheduled to be expensed is as follows:

14 unchanged sentences

Property and equipment – net

expense was approximately $ 2.0 million and $ 1.9 million for the years ended December 31, 2022 and 2021, respectively.

expense was approximately $ 2.0 million for both the years ended December 31, 2023 and 2022.

a result of a triggering event in December 2023, we also reviewed our property and equipment for impairment.

We determined that the fair

value of these assets exceeded their carrying value and that there was no impairment.

CONCENTRATIONS

Risks — As of December 31, 2022 and 2021, the Company held cash of approximately $ 1.8 million and $ 1.7 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

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, 2023 and 2022, the Company held cash of approximately $ 255,000

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.

The cash held by each U.S.

operating company was below the federal insurance

limit at December 31, 2023.

Concentrations

2 unchanged sentences

require collateral for outstanding trade accounts receivable.

As of December 31, 2022, two customers each individually accounted for

approximately 6 % of accounts receivable.

As of December 31, 2021, two customers each individually accounted for approximately 5 % of accounts

receivable, respectively.

During the years ended December 31, 2022 and 2021, there was one customer with sales of approximately 7 % and

9 % of total revenue, respectively.

As of December 31, 2023, two customers

each individually accounted for approximately 7 % of accounts receivable.

As of December 31, 2022, two customers each individually accounted

for approximately 6 % of accounts receivable.

During the years ended December 31, 2023 and 2022 , there was 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

5 unchanged sentences

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.

The Bagh office now operates as the main operational

center for the Company.

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 $ 7.6

million and $ 7.2

million as of December 31, 2022 and 2021, respectively.

These balances exclude net intercompany receivables of approximately $ 1.0

million and $ 4.1

million as of December 31, 2022 and 2021, respectively.

The following is a summary of the net assets located outside the United

States as of December 31, 2022 and 2021:

million and $ 8.5 million as of December 31, 2023 and 2022, respectively.

These balances exclude net intercompany

receivables of approximately $ 1.0 million as of both December 31, 2023 and 2022, respectively.

The following is a summary of the

net assets located outside the United States as of December 31, 2023 and 2022:

OF CONCENTRATION OF RISK, BY GEOGRAPHICAL RISKS FACTOR

7 unchanged sentences

December 31, 2023 and 2022:

OF LOSSES PER SHARE, BASIC AND DILUTED

OF RECONCILIATION OF WEIGHTED-AVERAGE SHARES OUTSTANDING FOR BASIC AND DILUTED NET LOSS PER COMMON SHARE

Year ended December 31,

4 unchanged sentences

Net loss attributable to common shareholders per share - basic and diluted

December 31, 2022, the 598,245 unvested restricted stock units (“RSUs”) as discussed in Note 15 and 1,128,489 unexercised

warrants expiring between January 2023 and September 2023 with exercise prices between $ 5.00 and $ 10.00 have been excluded from the above

calculations as they were anti-dilutive.

At December 31, 2021, the 331,039 unvested equity RSUs and 3,152,140 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

During the third quarter of 2021, the credit line was further increased to $ 20 million and the term was extended for another year.

During February 2023, the line of credit was increased to $ 25 million and the term was extended for two years.

(See Note 20).

both December 31, 2022 and 2021, there were $ 8 million of 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 65 % of the shares in its offshore subsidiaries.

acquisitions are subject to approval by SVB.

December 31, 2023, the 733,908 unvested restricted stock units (“RSUs”) as discussed in Note 15 have been excluded from the

above calculations as they were anti-dilutive.

All of the warrants previously outstanding expired unexercised in 2023 and are excluded

from the above calculations.

At December 31, 2022, the 598,245 unvested equity RSUs and 1,128,489 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 SVB under a three-year agreement which replaced the

previous credit facility.

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 .

During the third quarter

of 2021, the credit line was further increased to $ 20 million and the term was extended for two years .

During February 2023, the line

of credit was increased to $ 25 million and the term was extended for two years through October 13, 2025 .

Effective August 31, 2023, the

credit facility agreement was amended whereby the interest rate was increased from the prime rate plus 1.5 % to the prime rate plus 2.0 % .

The requirement for the minimum liquidity ratio was slightly reduced.

These amendments expire March 31, 2024 and the credit facility

reverts to its previous terms.

of December 31, 2023 and 2022, there was $ 10 million and $ 8 million, respectively, of borrowings under the credit facility.

on the SVB revolving line of credit is currently charged at the prime rate plus 2.0 % .

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 65 % of the shares in

its offshore subsidiaries.

Future acquisitions are subject to approval by SVB.

At December 31, 2023, the remaining

borrowing base was approximately $ 4.6 million.

connection with the original SVB debt agreement, the Company paid SVB approximately $ 50,000 of fees upfront and issued warrants for SVB

9 unchanged sentences

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 including a current annual fee of $ 100,000 .

These covenants include

a minimum level of adjusted EBITDA and a minimum liquidity ratio.

At December 31, 2022 and 2021, the Company was in compliance with all

September 2021, the agreement with SVB was modified to include CAC and medSR as borrowers.

During January 2022, the agreement with SVB

was modified to allow the Company to issue Series B Preferred Stock and pay monthly dividends on this stock, to use a portion of the

offering proceeds 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.

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 additional warrants were valued at $ 3.58 per warrant and expired unexercised in September

The SVB credit agreement contains various covenants and conditions governing the revolving line of credit including a current annual

fee of $ 100,000 .

These covenants include a minimum level of adjusted EBITDA or a minimum liquidity ratio, one of which must be satisfied

when borrowings are outstanding.

At December 31, 2023 and 2022, the Company was in compliance with all covenants.

January 2022, the agreement with SVB was modified to allow the Company to issue Series B Preferred Stock and pay monthly dividends on

this stock, to use a portion of the offering proceeds 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.

March 2023, SVB became a division of First Citizens Bank & Trust Company.

The agreements that governed the former SVB relationship

remain in place.

As a result, there were no changes to the terms of the credit agreement.

Financing Notes — The Company finances 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.

notes typically have three to six year terms and are issued at current market rates.

Financing — The Company finances certain insurance purchases over the term of the policy life.

2 unchanged sentences

OF MATURITIES OF LONG-TERM DEBT

Years ending December 31,

Line of Credit

Vehicle Financing Notes

Insurance Financing

($ in thousands)

* The line of credit

was repaid after the year-end.

Company accounts for revenue in accordance with ASC 606, Revenue from Contracts with Customers .

6 unchanged sentences

For many services the Company recognizes

revenue as a percent of the amount the customer collects on the medical billing claims.

The Company’s software is utilized at the

time the provider sees the patient, and the Company estimates the value of the consideration it will earn over the remaining contractual

revenue as a percentage of the amount the customer collects on the medical billing claims.

The Company’s software is utilized at

the time the provider sees the patient, and 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;

36 unchanged sentences

management software as well as RCM as part of the bundled fee.

The SaaS component is not a material portion of the contract compared

to the stand-alone value of RCM.

Technology-assisted

31 unchanged sentences

of providers, or may be variable.

digital health services, which began generating revenue in 2022, include chronic care management, where a care manager has remote visits

with patients with one or more chronic conditions under the supervision of a physician who is our client.

The performance obligation

for chronic care management is satisfied at a point in time once the patient receives the remote visit.

The digital health services also

include remote patient monitoring where our system monitors recordings from FDA approved internet connected devices.

These devices record

patient trends and alerts the physician to changes which might trigger the need for additional follow-up visits.

The performance obligations

for remote patient monitoring are satisfied over time as the recordings are received and the patient receives the remote visit.

for chronic care management for the years ended December 31, 2023 and 2022, was approximately $ 1.5 million and $ 208,000 , respectively.

The revenue for remote patient monitoring for the years ended December 31, 2023 and 2022 was approximately $ 400,000 and $ 6,000 , respectively.

medical billing clearinghouse service takes claim information from customers, checks the claims for errors and sends this information

13 unchanged sentences

over time as that individual service is rendered.

health services:

digital health services, which began generating revenue in 2022, include chronic care management, where a care manager has remote visits

with patients with one or more chronic conditions under the supervision of a physician who is our client.

It also includes remote patient

monitoring where our system monitors recordings from FDA approved internet connected devices.

These devices record patient trends and

alerts the physician to changes which might trigger the need for additional follow-up visits.

The performance obligation for chronic

care management is satisfied at a point in time once the patient receives the services.

The performance obligation for remote patient

monitoring is satisfied over time as the patient receives the services.

The revenue for these services for the year ended December 31,

2022 was not material.

professional services include an extensive set of services including EHR vendor-agnostic optimization and activation, project management,

1 unchanged sentence

systems and hospitals.

The performance obligation is satisfied

over time using the input method.

The revenue is recorded on a monthly basis as the professional services are rendered.

The performance obligation is satisfied over time using the input method.

The revenue is recorded on a monthly

basis as the professional services are rendered.

Unbilled revenue at December 31, 2023 and 2022 was approximately $ 100,000 and $ 2.0 million,

respectively.

and mailing services:

21 unchanged sentences

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

all of the above revenue streams other than group purchasing services and chronic care management, 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.

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

were no unsatisfied performance obligations for contracts with an original duration greater than one year.

The Company has

elected to utilize the practical expedient available within the guidance for contracts with an expected duration of one year or less.

practice management services:

Company also provides medical practice management services under long-term management service agreements to three medical practices.

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.

Company also provides medical 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.

Company assumes all financial risk for the performance of the managed medical practices.

4 unchanged sentences

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.

The performance

obligation is satisfied as the management services are provided.

contracts for medical practice management services have approximately an additional 15 years remaining and are only cancellable under

8 unchanged sentences

about contract balances:

of December 31, 2022, the estimated revenue expected to be recognized in the future related to the remaining revenue cycle

management performance obligations outstanding was approximately $ 4

We expect to recognize substantially all of the revenue for the remaining performance obligations over the next three

Approximately $ 371,000

of the contract asset represents revenue earned, not paid, from the group purchasing services.

of December 31, 2023, the estimated revenue expected to be recognized in the future related to the remaining revenue cycle management

performance obligations outstanding was approximately $ 4.7 million.

We expect to recognize substantially

all of the revenue for the remaining performance obligations over the next three months .

Approximately $ 374,000 of the contract asset

represents revenue earned, not paid, from the group purchasing services.

that we are entitled to collect under the applicable contract are recorded as accounts receivable.

16 unchanged sentences

of the Company’s accounts receivable, contract asset and deferred revenue are as follows:

OF ACCOUNTS RECEIVABLE, CONTRACT ASSET AND DEFERRED REVENUE

OF CHANGES IN ACCOUNTS RECEIVABLE, CONTRACT ASSET AND DEFERRED REVENUE

Receivable – Net

Contract Asset

Deferred Revenue

2 unchanged sentences

Balance as of January 1, 2023

medSR acquisition

(Decrease) increase, net

1 unchanged sentence

Balance as of January 1, 2022

Beginning Balance

medSR acquisition

(Decrease) increase, net

Balance as of December 31, 2022

Ending Balance

amount of deferred revenue at the beginning of the year and recognized during the year ended December 31, 2023 and 2022 was approximately

$1.1 million and $1.3 million, respectively.

sales incentive plans include commissions payable to employees and third parties at the time of the initial contract execution that are

4 unchanged sentences

client life, which is three years.

Deferred commissions were approximately $ 643,000 and $ 931,000 at December 31, 2022 and 2021, respectively,

and are included in the other assets amounts in the consolidated balance sheets.

Deferred commissions were approximately $ 517,000 and $ 643,000 at

December 31, 2023 and 2022,

respectively, and are included in the other assets amounts in the consolidated balance sheets.

The amortization of deferred sales commissions

during the years ended December 31, 2023 and 2022 was approximately $ 487,000 and $ 594,000 , respectively.

Accounts Receivable – Estimate of Credit Losses:

2016-13 requires the recognition of lifetime estimated credit losses expected to occur for trade accounts receivable.

The guidance also

requires we pool assets with similar risk characteristics and consider current economic conditions when estimating losses.

of the ASU 2016-13 for trade accounts receivable was recorded as a charge to accumulated deficit of approximately $ 186,000 as of January

adoption, we segmented the accounts receivable population into pools based on their risk assessment.

Risks related to trade accounts

receivable are a customer’s inability to pay or bankruptcy.

Each pool was defined by their internal credit assessment and business

The pools are aligned with management’s review of financial performance.

For the year ended December 31, 2023, no adjustment

to the pools was necessary.

utilize a loss-rate method to measure the expected credit loss for each pool.

The loss rate is calculated using a three-year lookback

period of write-offs and adjustments, divided by the revenue for each pool by aging category, net of customer payments during that period.

We consider current and future economic conditions, internal forecasts, customer collection experience and credit memos issued during

the current period when assessing loss rates.

We reviewed these factors and concluded that no adjustments should be made to the historical

loss rate data for the current quarter.

In addition, the Company uses specific account identification in determining the total allowance

for expected credit losses.

Trade receivables are written off only after the Company has exhausted all collection efforts.

in the allowance for expected credit losses for trade accounts receivable are presented in the table below:

OF TRADE ALLOWANCE FOR DOUBTFUL ACCOUNTS

Year Ended December 31,

($ in thousands)

Beginning balance

Adoption of ASC 326

Recoveries/adjustments

Ending balance

SHAREHOLDERS’ EQUITY

2 unchanged sentences

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”).

Company had 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, 2022, no shares of common stock were issued under

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 million.

During the years ended December 31, 2023 and 2022, no

shares of common stock were issued under this ATM.

This right terminated when the Company suspended the Preferred Stock dividends.

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

7 unchanged sentences

have been designated as Series B shares.

Company has the right to sell up to $ 35 million of its Series B Preferred Stock using an ATM facility.

The underwriter receives 3 % of

the gross proceeds.

During the year ended December 31, 2022, the Company sold 1,324,858 of shares of Series B Preferred Stock and received

net proceeds of approximately $ 30.9 million.

This includes 224,048 shares sold under the Company’s ATM.

On March 18, 2022, the

Company used a portion of the proceeds from selling Series B Preferred Stock to redeem 800,000 shares of Series A Preferred Stock for

$ 25.00 per share, plus all accrued and unpaid dividends to, but not including, the redemption date.

the year ended December 31, 2021, the Company cancelled 215,822 shares of Series A Preferred Stock that were held in escrow from the

CCH acquisition as the matters related to the escrow were settled in cash.

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 date.

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.

Holders of 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

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,

Company also had the right to sell up to $ 35 million of its Series B Preferred Stock using an ATM facility.

This right terminated when

the Company suspended the Preferred Stock dividends.

The underwriter received 3 % of the gross proceeds.

the year ended December 31, 2023, the Company sold 59,773 of shares of Series B Preferred Stock

under the Company’s ATM and received net proceeds of approximately $ 1.4 million .

During the year ended December 31, 2022, the Company sold 1,324,858 shares of Series B Preferred Stock and received net proceeds

of approximately $ 30.9 million .

This includes 224,048 shares sold

under the Company’s ATM.

On March 18, 2022, the Company used a portion of the proceeds from selling Series B Preferred Stock to

redeem 800,000 shares of Series A Preferred Stock for $ 25.00 per share, plus all accrued and unpaid dividends to, but not including,

the redemption date.

November 4, 2020, the Company has the right to 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 date.

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.

Holders of 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, at which time they are entitled to appoint two additional directors

to our Board of Directors.

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.

A Preferred Stock is listed on the Nasdaq Global Market under the trading symbol “CCLDP.”

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.

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.

1 unchanged sentence

part, at a cash redemption price of $ 25.25 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

4 unchanged sentences

and are payable each month when, as and if declared by the Company’s Board of Directors.

As of December 31, 2022, the Board of

Directors has declared monthly dividends on the Series A and Series B Preferred Stock payable through February 2023.

Company has issued 6,603,489 warrants for its common stock, of which 1,128,489 remained outstanding at December 31, 2022.

The outstanding

warrants consist of 1,000,000 warrants at a $ 10.00 exercise price which expired 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 2023 .

During the years

ended December 31, 2022 and 2021, 125,000 and 858,000 warrants, respectively, were exercised at a $ 3.92 and $ 7.50 exercise price for

total proceeds of approximately $ 6,435,000 in 2021.

The warrants exercised in 2022 were a cashless exercise.

In October, 2023, the Board of Directors had declared monthly dividends on the Series A and Series

B Preferred Stock payable through February 2024;

however, on December 11, 2023, the Board of Directors suspended the monthly cash dividends

for Series A Preferred Stock and Series B Preferred Stock beginning with the payment scheduled for December 15, 2023 together with the

remaining dividends that were declared.

The suspension of these dividends will defer approximately $ 1.3 million in cash dividend payments

During this suspension, dividends will continue to accrue in arrears on the Series A and Series B Preferred Stock.

of Directors will regularly review and consider when the suspension should be lifted.

Company has issued 6,603,489 warrants for its common stock, of which 1,128,489 remained

outstanding at December 31, 2022.

All of these warrants expired unexercised during 2023 and there were no warrants outstanding at December

During the year ended December 31, 2022, 125,000 warrants were exercised at a $ 3.92 exercise price.

The warrants were

exercised via a cashless exercise.

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 2023 and 2022 equity offerings, the Company incurred

approximately $ 2.3 million and $ 223,000 , respectively, of such costs, excluding underwriting commissions and placement agent fees which

are recorded in additional paid-in capital in the consolidated balance sheets.

approximately $ 71,000 and $ 2.3 million, respectively, of such costs, including underwriting commissions

and placement agent fees.

For the year ended December 31, 2022, there was $ 32,000 of fees paid for comfort letters in connection with

the equity offerings.

COMMITMENTS AND CONTINGENCIES

2 unchanged sentences

failed to prove any breach of the applicable billing services agreement and failed to prove that any alleged damages were due.

has until April 5, 2023 to file a summary action in Superior Court of New Jersey should it seek to have the decision overturned.

was a client of Millennium Practice Management Associates, Inc.

(“MPMA”), a subsidiary of MediGain, Inc., whose assets were

purchased by MAC on October 3, 2016, after RPRWC terminated its billing services agreement with MPMA.

After MAC’s purchase of MediGain’s

assets, RPRWC demanded an arbitration proceeding against CareCloud and MAC before the American Arbitration Association for damages they

alleged were caused by MPMA prior to the asset purchase.

May 30, 2018, the Superior Court of New Jersey, Chancery Division, Somerset County (the “Chancery Court”) denied CareCloud’s

and MAC’s request to enjoin the arbitration proceeding demanded by RPRWC.

and MAC filed an appeal of the Chancery Court’s decision with the New Jersey Superior Court, Appellate Division.

The Chancery Court

stayed the arbitration pending the appeal.

On appeal, CareCloud and MAC contended they were never party to the billing services agreement

giving rise to the arbitration claim, did not assume the obligations of MPMA under such agreement, and any agreement to arbitrate disputes

arising under such agreement did not apply to CareCloud or MAC as RPRWC terminated the agreement before the applicable asset purchase

agreement took effect.

April 23, 2019, the Appellate Division affirmed in part and reversed in part the Chancery Court’s order.

The Appellate Division

upheld the portion of the Chancery Court’s order requiring MAC to participate in the arbitration based on the Chancery Court’s

finding that MAC had assumed MPMA’s contractual responsibilities.

The Appellate Division, however, reversed the Chancery Court’s

order requiring CareCloud to participate in the arbitration on the grounds that insufficient facts had been provided by RPRWC from which

the court could conclude CareCloud was required to participate in the arbitration and remanded the matter back to the Chancery Court

for further proceedings.

February 6, 2020, the Chancery Court held that CareCloud cannot be compelled to participate in the arbitration.

On March 25, 2020, the

Chancery Court lifted the stay of arbitration relative to RPRWC and MAC.

In its arbitration demand, RPRWC alleged 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.

the discovery phase of the arbitration, RPRWC served expert reports whereby RPRWC’s expert alleged that damages were estimated

to be in the range of $ 9.8 million to $ 10.8 million.

MAC served an expert report refuting the alleged damages.

the event RPRWC files a summary action, MAC will continue to vigorously defend against RPRWC’s claim.

It remains that since MAC

is not a significant subsidiary of CareCloud pursuant to Rule 1-02(w) of Regulation S-X and CareCloud is not a party to this proceeding,

we do not expect any outcome to have a material impact on the Company’s consolidated financial statements.

for RPRWC to file a summary action in Superior Court of New Jersey seeking to overturn the arbitrator’s decision was April 5, 2023

and no summary action was filed by such deadline.

As such, the arbitrator’s decision dismissing RPRWC’s claims is final.

December 22, 2023, an arbitrator rendered a decision in favor of Ramapo Anesthesiologists, PC (“Ramapo”) and granted in part

and denied in part certain claims brought against Origin Healthcare Solutions, LLC;

Meridian Medical Management, Inc.;

and the Company

for alleged breach of contract and other allegations.

Ramapo was awarded mitigation related costs of $ 117,000 .

The payment for such an

award was made during the first quarter of 2024.

The deadline for Ramapo to file a summary action in New Jersey seeking to overturn the

arbitrator’s decision is April 20, 2024.

The Company’s portion of the settlement is approximately $ 32,000 and the insurance

company will pay the balance.

The Company’s portion has been recorded in accrued expenses at December 31, 2023 in the consolidated

balance sheet.

time to time, we may become involved in other legal proceedings arising in the ordinary course of our business.

Including the proceeding

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

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.

determine if an arrangement is a lease at inception.

21 unchanged sentences

borrowing rate.

There were no lease modifications during the years ended December 31, 2022 and 2021.

The anticipated renewal for one

lease was reassessed, resulting in an increase in ROU assets and liabilities of approximately $ 150,000 .

We review our incremental borrowing

rate for our portfolio of leases on a quarterly basis.

the years ended December 31, 2022 and 2021, there were approximately $ 1.0 million and $ 959,000 , respectively, of unoccupied lease charges

There was one lease modification during the year ended December 31, 2023 and none during the year ended December 31,

We review our incremental borrowing rate for our portfolio of leases on a quarterly basis.

the years ended December 31, 2023 and 2022, there were approximately $ 169,000 and $ 1.0 million, respectively, of unoccupied lease charges

for two of the Company’s facilities.

During the year ended December 31, 2021, the Company recorded approximately $ 775,000 of impairment

charges on a vendor contract and recorded a lease impairment of approximately $ 68,000 since the Company is no longer using certain leased

There was no lease impairment recorded for the year ended December 31, 2022.

There were no lease impairments recorded for the years ended December 31, 2023 and 2022.

the year ended December 31, 2022, there was a gain on lease termination of approximately $ 105,000 .

1 unchanged sentence

terminated in conjunction with the Company ceasing its document storage services resulting in additional costs of approximately $ 203,000 .

These amounts are included in net loss on lease terminations, impairment and unoccupied lease charges in the consolidated statements

of operations.

the year ended December 31, 2021, the Company decided to terminate one of its leases in Pakistan which expired as of the end of the year.

The Company did not renew this lease and consolidated its employees into the remaining facilities.

As a result of the termination, the

Company incurred a loss of approximately $ 18,000 which has been included in net loss on lease termination, impairment and unoccupied

lease charges in the consolidated statements of operations.

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, 2022, we had 31 leased properties, five in Medical Practice Management and 26 in Healthcare

IT, with the remaining terms ranging from less than one year to thirteen 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.

These amounts are included in the net loss on lease terminations, unoccupied lease charges and restructuring costs in the consolidated

statements of operations.

expense is included in direct operating costs, general and administrative expense, selling and marketing expense and research and development

expense in the consolidated statements of operations based on the nature of the expense.

As of December 31, 2023, we had 32 leased properties,

five in Medical Practice Management and 27 in Healthcare IT, with the remaining terms ranging from less than one year to twelve 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 basi s.

We also have some related party leases – see Note 12.

components of lease expense were as follows:

16 unchanged sentences

Operating lease ROU assets, net

Current operating lease liabilities

Operating lease liability (current portion)

Non-current operating lease liabilities

Operating lease liability

Operating lease liabilities (current portion)

Operating lease liabilities

Total operating lease liabilities

8 unchanged sentences

Operating leases

average discount rate:

Operating leases

leases, Weighted average discount rate:

cash flow and other information related to leases was as follows:

18 unchanged sentences

Revenues from this customer were approximately

$ 58,000 for the year ended December 31, 2022 and approximately $ 23,000 for the year ended December 31, 2021.

As of December 31, 2022

and 2021, the accounts receivable balance due from this customer was approximately $ 10,000 and $ 3,000 respectively, and is included in

accounts receivable - net in the consolidated balance sheets.

$ 125,000 and $ 58,000 for the years ended December 31,

2023 and 2022, respectively.

As of December 31, 2023 and 2022, the accounts receivable balance due from

this customer was approximately $ 18,000 and $ 10,000 , respectively, an d is included in accounts receivable - net in the consolidated

balance sheets.

Company leases its corporate offices in New Jersey, its temporary housing for its foreign visitors, a storage facility, its backup operations

4 unchanged sentences

During the years ended December

31, 2022 and 2021, the Company spent approximately $ 941,000 and $ 2 .0 million, respectively, to upgrade the related party leased facilities.

Current assets-related party in the consolidated balance sheets includes security deposits related to the leases of the Company’s

corporate offices in the amount of approximately $ 16,000 and $ 13,000 for the years ended December 31, 2022 and 2021, respectively.

October 15, 2021, the Company entered into a one-year lease agreement with the Executive Chairman for an apartment for temporary housing

This agreement was renewed in 2022 for an additional year.

31, 2023 and 2022, the Company spent approximately $ 1.8 million

and $ 941,000 , respectively, to upgrade the related party leased facilities.

During the years ended December

31, 2023 and 2022, the Company temporarily advanced the Executive Chairman approximately $ 330,000 and $ 42,000 , respectively, to purchase

vacant land surrounding the Bagh facility for the sole use and benefit of the Company in order to expedite the purchase on the Company’s

behalf as only individuals with citizenship in Kashmir are allowed to purchase land in this region.

All advanced amounts were repaid

shortly after the advance was made.

Current assets-related party in the consolidated balance sheets includes security deposits related

to the leases of the Company’s corporate offices in the amount of approximately $ 16,000 for both the years ended December

31, 2023 and 2022 .

The Company also leases two facilities used for temporary housing from a management

employee for approximately $ 6,200 per month.

in the ROU asset at December 31, 2023 is approximately $ 331,000 applicable to the related party leases.

4 unchanged sentences

operating lease liability at December 31, 2022 is approximately $ 158,000 and $ 301,000 , respectively, applicable to the related party

June 2022, the Company entered into a one-year consulting agreement with an entity owned and controlled by one of its

non-independent directors whereby the director received 10,000

shares of Series B Preferred Stock in exchange for assisting the Company to identify and acquire additional companies, including

June 2022, the Company entered into a one-year consulting agreement with an entity owned and controlled by one of its former non-independent

directors whereby that director received 10,000 shares of the Company’s 8.75 % Series B Cumulative Redeemable Perpetual Preferred

Stock (“Series B Preferred Stock”) in exchange for assisting the Company to identify and acquire additional companies, including

performing due diligence.

The payment was capitalized and is being amortized over the service period.

The amortization is recorded

as stock compensation in General and Administrative expense in the 2022 consolidated statement of operations.

In addition, the

Company may make additional payments under the agreement for any successful acquisitions by the Company based on the purchase price

of the transaction.

In addition, the Company may make additional payments under the agreement for any successful acquisitions by

the Company based on the purchase price of the transaction.

No such additional payments were made in 2022.

During February 2023, the agreement was amended and extended

through December 2024 whereby the director received 14,000

shares of Series B Preferred Stock in February 2023 and will receive an additional 14,000

shares in January 2024.

All such shares of the Series B Preferred Stock are or will be issued in accordance with the Company’s

Amended and Restated Equity Incentive Plan.

In addition to the extension of the consulting agreement, the amendment provides that any

transaction fees due will be offset against the last two above payments before any amounts are due to the director.

During February 2023, the

agreement was amended and extended through December 2024 whereby the former director received 14,000 shares of Series B Preferred Stock

in February 2023 and received an additional 14,000 shares in January 2024.

All of the payments made were expensed during the year ended

December 31, 2023.

The amortization is recorded as stock compensation in general and administrative expense in the consolidated statement

of operations.

All such shares of the Series B Preferred Stock were issued in accordance with the Company’s Amended and Restated

2014 Equity Incentive Plan.

In addition to the extension of the consulting agreement, the amendment provides that any transaction fees

due will be offset against the last two above payments before any amounts are due to that former director.

There were no transaction

fees through December 31, 2023.

(See Note 20.)

2020, a New Jersey corporation, talkMD Clinicians, PA (“talkMD”), was formed by the wife of the Executive Chairman, who is

3 unchanged sentences

As of December 31, 2023, talkMD had not yet commenced

Cumulatively, the Company has paid approximately $ 4,000 on behalf of talkMD for income taxes.

Company was a party to a nonexclusive aircraft dry lease agreement with Kashmir Air, Inc.

(“KAI”), which was owned by the

Executive Chairman.

The Company recorded an expense of approximately $ 80,000 for the year ended December 31, 2021.

The lease for the

aircraft was renewed as of April 1, 2021 and terminated on August 31, 2021.

As a result of the lease termination, the Company incurred

a loss of approximately $ 185,000 which was included in the net loss on lease termination, impairment and unoccupied lease charges in

the December 31, 2021 consolidated statement of operations.

As of December 31, 2021, the Company had no liability outstanding to KAI.

Cumulatively, the Company has paid approximately

$ 5,000 on behalf of talkMD for income taxes.

RESTRUCTURING COSTS

October 2, 2023, the Company committed to effectively align resources with business priorities and improve profitability through a reduction

in the workforce for the Healthcare IT segment.

The Company identified opportunities for improvements in its workforce realignment, strategy

and staffing, and increased its focus on performance management, to ensure it has the right skillsets and number of employees to execute

its long-term vision.

In addition, the Company instituted certain other expense reductions.

difference between the free cash flow and the expense savings represents amounts which were previously capitalized as part of

software capitalization.

A majority of the impacted employees exited in the fourth quarter of 2023.

The Company estimates that it

will incur expenses of approximately $ 900,000 related to the reduction in workforce of which approximately $ 645,000 was incurred in 2023, with the remaining

expenses to be incurred in 2024.

These restructuring expenses consisted of one-time termination benefits, including but not limited

to, severance payments and healthcare benefits.

Also as previously noted, the dividends on the Preferred Stock have been suspended

in order to increase cash flow.

following table summarizes restructuring costs which are included in net loss on lease termination, unoccupied lease charges and restructuring

costs in the December 31, 2023 consolidated statement of operations:

OF RESTRUCTURING COSTS

Year ended December 31, 2023

($ in thousands)

Severance and separation costs

Equity awards acceleration costs associated with severance

Other exit related costs

Total restructuring and other costs

expense associated with the restructuring is included in net loss on lease terminations, unoccupied lease charges and restructuring cost

in the consolidated statement of operations for the year ended December 31, 2023.

This line also includes $ 291,000 for net loss on lease

terminations and $ 169,000 for unoccupied lease charges.

The liabilities associated with restructuring costs are included in accrued expenses

and other current liabilities in the December 31, 2023 consolidated balance sheet.

The following table summarizes activity related to

liabilities associated with restructuring costs:

OF LIABILITIES ASSOCIATED WITH RESTRUCTURING COSTS

Severance and

separation costs

Equity awards

acceleration costs

related costs

restructuring and

($ in thousands)

Balance as of January 1, 2023

Payments and other adjustments

Balance as of December 31, 2023

EMPLOYEE BENEFIT PLANS

4 unchanged sentences

subsidiaries, although there is no match for CPM employees.

contributions to the plans for the years ended December 31, 2022 and 2021 were approximately $ 549,000 and $ 697,000 , respectively.

contributions to the plans for the years ended December 31, 2023 and 2022 were approximately $ 587,000 and $ 549,000 ,

respectively.

Additionally,

3 unchanged sentences

monthly compensation .

The Company’s contributions for the years ended December 31, 2022 and 2021 were approximately $ 329,000 and

$ 479,000 , respectively.

The Company’s contributions for the years ended December 31, 2023 and 2022 were approximately

$ 394,000 and $ 329,000 , respectively.

Company maintains a defined contribution retirement plan covering all employees in Sri Lanka.

3 unchanged sentences

2022 was approximately $ 24,000 and $ 22,000 , respectively .

The contributions are required to be deposited with the Employees’ Provident

Fund Organization, a government owned entity.

The contributions are required to be

deposited with the Employees’ Provident Fund Organization, a government owned entity.

STOCK-BASED COMPENSATION

11 unchanged sentences

1,000,000 shares of common stock and 200,000 shares of Series B Preferred Stock were added to the A&R Plan for future issuance.

of December 31, 2022, 1,498,492 shares of common stock and 33,769 and 100,000 shares of Series A and Series B Preferred Stock, respectively,

are available for grant.

of December 31, 2023, 493,579 shares of common stock, 33,769 shares of Series A Preferred Stock and 38,000 shares of Series B Preferred

Stock are available for grant.

Permissible awards include incentive stock options, non-statutory stock options, stock appreciation rights,

5 unchanged sentences

2023 through 2025.

Included therein were 44,000 RSUs of common stock granted over two years equally to the four outside members of the

Included therein were 30,000 RSUs of common stock granted over two years equally to the five outside members of the

Board of Directors with 25 % of the shares vesting every six months.

3 unchanged sentences

the Board of Directors with 25 % of the shares vesting every six months.

December 2022, it was agreed that certain bonuses to employees of medSR that were originally going to be paid in cash will be paid in

December 2022, it was agreed that certain bonuses to employees of medSR that were originally going to be paid in cash would be paid in

common stock.

The change of paying the bonuses in common stock resulted in approximately 135,000 shares being issued in February 2023.

This change resulted in approximately $ 404,000

of stock compensation expense, which offset the

amounts previously accrued.

This change resulted in approximately $ 404,000 of stock compensation expense, which offset the amounts previously accrued.

following table summarizes the RSU and restricted stock transactions related to the common and Preferred Stock under the A&R Plan

9 unchanged sentences

cost related to the common stock RSUs classified as equity that will be expensed through 2025.

As of December 31, 2022, there was approximately

$ 557,000 of total unrecognized compensation cost related to the Series B Preferred Stock RSUs classified as equity that will be expensed

through 2023.

There was no unrecognized compensation cost related to the Series A Preferred Stock RSUs for both the years ended December

31, 2022 and 2021.

As of December 31, 2023 and 2022, there

was approximately $ 351,000 and $ 557,000 , respectively, of total unrecognized compensation cost related to the Series B Preferred Stock

RSUs classified as equity that will be, or was, expensed through the following year.

There was no unrecognized compensation cost related

to the Series A Preferred Stock RSUs for both the years ended December 31, 2023 and 2022.

the total outstanding and unvested common stock RSUs at December 31, 2023 and 2022, 733,908 and 598,245 RSUs, respectively, are classified

8 unchanged sentences

Shares available for grant at January 1, 2023

Shares added to the Plan

Shares redesignated as Series B

( 1,098,976 )

RSUs forfeited

1 unchanged sentence

Shares available for grant at January 1, 2022

Shares added to plan

Shares redesignated as Series B

RSUs forfeited

Shares available for grant at December 31, 2022

liability for the cash-settled awards and accrued payroll taxes on equity awards was approximately $ 1.0 million at both December 31,

2022 and 2021, and is included in accrued compensation in the consolidated balance sheets.

During the years ended December 31, 2022 and

2021, approximately $ 105,000 and $ 97,000 , respectively, was paid in connection with the cash-settled awards.

liability for the cash-settled awards and accrued payroll taxes on equity awards was approximately $ 767,000 and $ 1.0 million at December

31, 2023 and 2022, respectively, and is included in accrued compensation in the consolidated balance sheets.

During the years ended December

31, 2023 and 2022, approximately $ 19,000 and $ 105,000 , respectively, was paid in connection with the cash-settled awards.

A Preferred Stock

2021, the Compensation Committee approved executive bonuses to be paid in 34,000 shares of Series A Preferred Stock with the final number

2021, the Compensation Committee granted executive bonuses to be paid in 34,000 shares of Series A Preferred Stock with the final number

of shares and the amount based on specified performance criteria being achieved during 2021.

1 unchanged sentence

Preferred Stock were granted as performance bonuses and in lieu of sales commissions.

Stock-based compensation expense recorded during

2021 for these awards was approximately $ 1.5 million, based on the fair value of the Series A Preferred Shares on the grant date.

January 2022, the Compensation Committee determined that the financial objectives were attained and all of the performance bonus shares

During January 2022, the Compensation Committee

determined that the financial objectives were attained and all of the performance bonus shares were issued.

B Preferred Stock

February 2022, the Compensation Committee approved executive bonuses to be paid in 34,000 shares of Series B Preferred Stock, with the

February 2023, the Compensation Committee granted executive bonuses to be paid in 34,000 shares of Series B Preferred Stock, with the

number of shares and the amount based on specified criteria being achieved during the year 2023.

During February 2023, the Compensation

Committee determined that the financial objectives were attained and all of the performance bonus shares were issued.

During October, the Compensation Committee

approved for issuance 10,000 of the above shares to one of the executives who retired.

The remaining shares will not be issued.

compensation expense

Company recognizes compensation expense on a straight-line basis over the total requisite service period for the entire award.

awards classified as equity the market price of our common stock or our Series A and Series B Preferred Stock on the date of grant is

used in recording the fair value of the award and includes the related taxes.

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 $ 4.27 and $ 9.16 for the years ended December 31, 2022 and 2021, respectively.

The weighted average grant date fair value of the Series A Preferred Stock in connection with the RSUs was $ 26.69 and $ 28.52 for the

years ended December 31, 2022 and 2021, respectively, and for the Series B Preferred Stock it was $ 25.24 for the year ended December

The following table summarizes the components of stock-based compensation expense for the years ended December 31, 2022 and

awards classified as equity, the market price of our common stock or Preferred Stock on the date of grant is used to record the fair

value of the award and includes the related taxes.

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 $ 3.40 and $ 4.27 for the years ended December 31, 2023 and 2022, respectively.

The weighted average

grant date fair value of the Series A Preferred Stock in connection with the RSUs was $ 26.69 for the year ended December 31, 2022.

were no grants of the Series A Preferred Stock in 2023.

For the Series B Preferred Stock, the weighted average grant date fair value

was $ 25.07 and $ 25.24 for the years ended December 31, 2023 and 2022, respectively.

The following table summarizes the components of

stock-based compensation expense for the years ended December 31, 2023 and 2022:

SCHEDULE OF EMPLOYEE SERVICE SHARE-BASED COMPENSATION, ALLOCATION OF RECOGNIZED PERIOD COSTS

Stock-based compensation included in the consolidated statements of operations:

Year Ended December 31,

Stock-based compensation included in the consolidated statements of operations:

($ in thousands)

3 unchanged sentences

Selling and marketing

Net loss on lease terminations, unoccupied lease charges and restructuring costs

Total stock-based compensation expense

18 unchanged sentences

Beginning balance

Current year valuation allowance increase (decrease)

Current year valuation allowance (decrease) increase

Ending balance

income (loss) before tax for financial reporting purposes during the years ended December 31, 2022 and 2021 consisted of the following:

(loss) income before tax for financial reporting purposes during the years ended December 31, 2023 and 2022 consisted of the following:

SCHEDULE OF INCOME BEFORE INCOME TAX, DOMESTIC AND FOREIGN

2 unchanged sentences

United States

provision (benefit) for income taxes for the years ended December 31, 2022 and 2021 consisted of the following:

SCHEDULE OF COMPONENTS OF INCOME TAX EXPENSE (BENEFIT)

(benefit) provision for income taxes for the years ended December 31, 2023 and 2022 consisted of the following:

OF COMPONENTS OF INCOME TAX PROVISION (BENEFIT)

Year Ended December 31,

($ in thousands)

Total income tax provision

Current Income Tax Expense (Benefit)

Deferred Income Tax Expense

Total income tax (benefit) provision

components of the Company’s deferred income taxes as of December 31, 2023 and 2022 are as follows:

2 unchanged sentences

Deferred tax assets:

Allowance for doubtful accounts

Allowance for expected credit losses

Deferred revenue

8 unchanged sentences

Section 267 limitation

Deferred payroll taxes

Credit carryovers

1 unchanged sentence

Accrued compensation

Section 174 Costs

Valuation allowance

9 unchanged sentences

Goodwill is generally not amortized for financial reporting purposes.

However, in 2023 the Company recorded a $ 42 million goodwill impairment charge, which partially reduced the basis of the tax-deductible

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

As a result of the Company having indefinite life net operating losses 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 is sold.

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 having indefinite life net operating losses 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.

to the fact that the aforementioned deferred tax liability could have an indefinite life, it is not netted against the Company’s

2 unchanged sentences

the understatement of the valuation allowance and related deferred income tax expense.

reconciliation of the federal statutory income tax rate ( 21 % ) for 2022 and 2021 to the Company’s effective income tax rate (determined

in dollars) for the years ended December 31, 2022 and 2021 is as follows:

reconciliation of the federal statutory income tax rate ( 21 %) to the Company’s effective income tax rate (determined in dollars)

for the years ended December 31, 2023 and 2022 is as follows:

SCHEDULE OF EFFECTIVE INCOME TAX RATE RECONCILIATION

1 unchanged sentence

($ in thousands)

Federal provision at statutory rate

Federal (benefit) provision at statutory rate

Increase (decrease) in income taxes resulting from:

5 unchanged sentences

Change in contingent consideration

NOL carryback

Goodwill impairment charges

Deferred true-up

Valuation allowance

Total income tax provision

Total income tax (benefit) provision

December 31, 2023 and 2022, the Company did not record any uncertain tax positions based on the technical merits.

21 unchanged sentences

State of New Jersey.

These NOLs expire between 2034 and 2041.

These NOLs expire starting in 2025.

Company has a full valuation allowance on its deferred tax assets in the U.S.

1 unchanged sentence

deferred tax assets

or liabilities recorded on the consolidated balance sheets, other than the deferred tax liability related to the amortization of goodwill.

or liabilities recorded on the consolidated balance sheet at December 31, 2023.

As of December 31, 2022, the Company recorded a deferred

tax liability related to the amortization of goodwill.

OTHER EXPENSE – NET

3 unchanged sentences

($ in thousands)

Foreign exchange (losses) gains

Foreign exchange losses

Other expense

12 unchanged sentences

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.

the 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, 2022 and 2021:

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, 2023 and 2022:

OF REVENUES, OPERATING EXPENSES AND OPERATING INCOME (LOSS) BY REPORTABLE SEGMENT

Ended December 31, 2022

in thousands)

operating costs

and marketing

and administrative

and development

in contingent consideration

and amortization

loss on lease termination and unoccupied lease charges

operating expenses

income (loss)

Healthcare IT

9 unchanged sentences

Research and development

Change in contingent consideration

in contingent consideration

Depreciation and amortization

Net loss on lease termination, impairment and unoccupied lease charges

Goodwill impairment charges

Loss on lease terminations, unoccupied lease charges and restructuring costs

Total operating expenses

Operating income (loss)

Operating (loss) income

Ended December 31, 2022

($ in thousands)

operating costs

and marketing

and administrative

and development

in contingent consideration

and amortization

loss on lease terminations and unoccupied lease charges

Loss on lease terminations, unoccupied lease charges and restructuring costs

operating expenses

income (loss)

FAIR VALUE OF FINANCIAL INSTRUMENTS

16 unchanged sentences

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 was valued using a Monte Carlo simulation model.

There was no contingent

consideration recorded at December 31, 2022.

There was no contingent consideration recorded at December 31, 2023 and 2022.

following table provides a reconciliation of the beginning and ending balances for the contingent consideration measured at fair value

1 unchanged sentence

OF FAIR VALUE, LIABILITIES MEASURED ON RECURRING BASIS, UNOBSERVABLE INPUT RECONCILIATION

Fair Value Measurement at

Reporting Date Using Significant

Unobservable Inputs, Level 3

Year Ended December 31,

Fair Value Measurement at Reporting

Date Using Significant Unobservable

Inputs, Level 3 Year Ended December 31,

($ in thousands)

2 unchanged sentences

Balance - December 31,

following table provides the assets and liabilities carried at fair value measured on a non-recurring basis as of December 31, 2023.

Refer to Note 2 - Basis of Presentation and Significant Accounting Policies, for a description of the valuation techniques used to

determine the fair value of the assets measured on a non-recurring basis in the table below.

VALUE OF THE ASSETS MEASURED ON A NON-RECURRING BASIS

Fair Value Measurement at December 31, 2023

Expense for the year ended

Carrying Value

December 31, 2023

($ in thousands)

Goodwill - Healthcare IT

SUBSEQUENT EVENTS

February 2023, SVB increased the Company’s line of credit to $ 25 million and extended the term of the agreement for two additional

The financial covenants were also slightly modified for 2023 and subsequent years.

to December 31, 2022, the Company sold approximately 60,000 shares of Series B Preferred Stock via an “at-the-market” offering,

raising net proceeds of approximately $ 1.5 million.

January 9, 2024, and as amended February 12, 2024, the Company entered into a Consulting Agreement with an entity owned and controlled

by a member of its Board of Directors to provide investor relations services for $ 8,000 per month and other services as requested by

the Company to be paid on an hourly basis.

The Consulting Agreement is cancelable with ten days’ notice.

February 1, 2024, MAC and its wholly owned subsidiary were merged into CCI.

Also effective February 1, 2024, the Company added an additional

Statement of Work (“SOW”) to the Consulting Agreement with an entity owned and controlled by one of its former non-independent

As compensation for the SOW, the entity will receive $ 25,000 per month.

The SOW is cancelable with ten days’ notice.

(See Note 12.)

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