What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2025-03-13 compared with 2024-03-21 · 354 added, 421 removed, 449 unchanged (63% of the section changed)

22 unchanged sentences

in combination with each other, including:

services including end-to-end medical billing, eligibility, analytics, and related services,

all of which can be provided utilizing our technology platform or through a third-party system;

tools are designed to serve as a digital healthcare assistant, helping to enhance clinical

decision-making, streamline workflows, reduce administrative burdens, optimize revenue management,

and promote patient-centered care;

which are easy to use and sometimes integrated with our business services, and enable our

healthcare provider clients to deliver better patient care, streamline their clinical workflows,

decrease documentation errors and potentially qualify for government incentives;

software and related capabilities, which support our clients’ day-to-day business operations

and financial workflows, including automated insurance eligibility software, a robust billing

and claims rules engine and other automated tools designed to maximize reimbursement;

solutions designed to transform interactions between patients and their clinicians, including

smartphone applications that assist patients and healthcare providers in the provision of

healthcare services, including contactless digital check-in solutions, messaging and online

appointment scheduling tools;

Wellness, a digital health solution which includes chronic care management interactions with

certified care managers, remote patient monitoring which feeds patient data directly to the

EHR and highlights exceptions, and telehealth solutions which allow healthcare providers

to conduct remote patient visits;

intelligence and healthcare analytics platforms that allow our clients to derive actionable

insights from their vast amount of data;

claims clearinghouse which enables our clients to electronically scrub and submit claims

and process payments from insurance companies;

services including end-to-end medical billing, eligibility, analytics, and related services, all of which can be provided utilizing

our technology platform or through a third-party system;

tools are designed to serve as a digital healthcare assistant, helping to enhance clinical decision-making, streamline workflows,

reduce administrative burdens, optimize revenue management, and promote patient-centered care;

which are easy to use and sometimes integrated with our business services, and enable our healthcare provider clients to deliver

better patient care, streamline their clinical workflows, decrease documentation errors and potentially qualify for government incentives;

software and related capabilities, which support our clients’ day-to-day business operations and financial workflows, including

automated insurance eligibility software, a robust billing and claims rules engine and other automated tools designed to maximize

reimbursement;

solutions designed to transform interactions between patients and their clinicians, including smartphone applications that assist

patients and healthcare providers in the provision of healthcare services, including contactless digital check-in solutions, messaging

and online appointment scheduling tools;

Wellness, a digital health solution which includes chronic care management interactions with certified care managers, remote patient

monitoring which feeds patient data directly to the EHR and highlights exceptions, and telehealth solutions which allow healthcare

providers to conduct remote patient visits;

intelligence and healthcare analytics platforms that allow our clients to derive actionable insights from their vast amount of data;

claims clearinghouse which enables our clients to electronically scrub and submit claims and process payments from insurance companies;

Interoperability

and data transformation software to support the complex realities of data exchange with healthcare

trading partners, including labs, insurance companies, and other healthcare IT vendors;

applications, interfaces and a variety of other technology solutions that support our healthcare

○ Professional

services consisting of application and advisory services, revenue cycle services, data analytic

services and educational training services;

augmentation and on-demand staffing to support our clients as they expand their businesses,

seek highly trained personnel, or struggle with staffing shortages.

and data transformation software to support the complex realities of data exchange with healthcare trading partners, including labs,

insurance companies, and other healthcare IT vendors;

applications, interfaces and a variety of other technology solutions that support our healthcare clients;

services consisting of application and advisory services, revenue cycle services, data analytic services and educational training

augmentation and on-demand staffing to support our clients as they expand their businesses, seek highly trained personnel, or struggle

with staffing shortages.

practice management services are provided to medical practices.

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advisory services.

offshore operations in Pakistan and Sri Lanka together accounted for approximately 9% and 14% of total expenses for the years ended December

31, 2023 and 2022, respectively.

A significant portion of those expenses were personnel-related costs (approximately 76% and 79% of foreign

costs for the years ended December 31, 2023 and 2022, respectively).

Because personnel-related costs are significantly lower in Pakistan

and Sri Lanka than in the U.S.

and many other offshore locations, we believe our offshore operations give us a competitive advantage

over many industry participants.

All of the medical billing companies that we have acquired used domestic labor or subcontractors from

higher cost locations to provide all or a substantial portion of their services.

We are able to achieve significant cost reductions as

we shift these labor costs to our offshore operations.

We currently provide services to three pediatric practices which comprises

the Medical Practice Management segment.

offshore operations together accounted for approximately 15% and 9% of total expenses for the years ended December 31, 2024 and 2023,

respectively.

A significant portion of those expenses were personnel-related costs (approximately 75% and 76% of foreign costs for the

years ended December 31, 2024 and 2023, respectively).

Because personnel-related costs are significantly lower in Pakistan and Sri Lanka

than in the U.S.

and many other offshore locations, we believe our offshore operations give us a competitive advantage over many industry

participants.

All of the medical billing companies that we have acquired used domestic labor or subcontractors from higher cost locations

to provide all or a substantial portion of their services.

We are able to achieve significant cost reductions as we shift these labor

costs to our offshore operations.

Performance Measures

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these adjusted performance measures.

EBITDA excludes the following elements which are included in GAAP net (loss) income:

tax (benefit) provision or the cash requirements to pay our taxes;

expense or the cash requirements necessary to service interest on principal payments on our

EBITDA excludes the following elements which are included in GAAP net income (loss):

tax provision (benefit) or the cash requirements to pay our taxes;

interest expense or the cash requirements necessary to service interest on principal payments on our debt;

currency gains and losses and other non-operating expenses;

● Stock-based

compensation expense, which includes cash-settled awards and the related taxes, based on

changes in the stock price;

● Depreciation

compensation expense, which includes cash-settled awards and the related taxes, based on changes in the stock price;

and amortization charges;

● Integration

costs, such as severance amounts paid to employees from acquired businesses and transaction

costs, such as brokerage fees, pre-acquisition accounting costs and legal fees and exit costs

related to contractual agreements;

costs, such as severance amounts paid to employees from acquired businesses and transaction costs, such as brokerage fees, pre-acquisition

accounting costs and legal fees and exit costs related to contractual agreements;

impairment charges;

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

terminations, unoccupied lease charges and restructuring costs;

in contingent consideration.

forth below is a presentation of our adjusted EBITDA for the years ended December 31, 2024 and 2023:

Year Ended December 31,

Ended December 31,

($ in thousands)

GAAP net (loss) income

(Benefit) provision for income taxes

GAAP net income (loss)

Provision (benefit) for

Net interest expense

Foreign exchange loss / other expense

Stock-based compensation expense, net of restructuring costs

Foreign exchange loss /

other expense

Stock-based compensation

expense, net of restructuring costs

Depreciation and amortization

Transaction and integration costs

Transaction and integration

Goodwill impairment charges

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

Change in contingent consideration

terminations, unoccupied lease charges and restructuring costs

Adjusted EBITDA

operating income and adjusted operating margin exclude the following elements which are included in GAAP operating (loss) income:

● Stock-based

compensation expense, which includes cash-settled awards and the related taxes, based on

changes in the stock price;

● Amortization

operating income and adjusted operating margin exclude the following elements which are included in GAAP operating income (loss):

compensation expense, which includes cash-settled awards and the related taxes, based on changes in the stock price;

of purchased intangible assets;

● Integration

costs, such as severance amounts paid to employees from acquired businesses and transaction

costs, such as brokerage fees, pre-acquisition accounting costs and legal fees and exit costs

related to contractual agreements;

costs, such as severance amounts paid to employees from acquired businesses and transaction costs, such as brokerage fees, pre-acquisition

accounting costs and legal fees and exit costs related to contractual agreements;

impairment charges;

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

in contingent consideration.

terminations, unoccupied lease charges and restructuring costs.

forth below is a presentation of our adjusted operating income and adjusted operating margin, which represents adjusted operating income

as a percentage of net revenue, for the years ended December 31, 2024 and 2023:

Year Ended December 31,

Ended December 31,

($ in thousands)

GAAP net (loss) income

(Benefit) provision for income taxes

GAAP net income (loss)

Provision (benefit) for

Net interest expense

Other expense - net

GAAP operating (loss) income

expense - net

GAAP operating income (loss)

GAAP operating margin

Stock-based compensation expense, net of restructuring costs

Amortization of purchased intangible assets

Transaction and integration costs

Stock-based compensation

expense, net of restructuring costs

Amortization of purchased

intangible assets

Transaction and integration

Goodwill impairment charges

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

Change in contingent consideration

Non-GAAP adjusted operating income

Non-GAAP adjusted operating margin

net income and adjusted net income per share exclude the following elements which are included in GAAP net (loss) income:

terminations, unoccupied lease charges and restructuring costs

Non-GAAP adjusted operating

net income and adjusted net income per share exclude the following elements which are included in GAAP net income (loss):

currency gains and losses and other non-operating expenses;

● Stock-based

compensation expense, which includes cash-settled awards and the related taxes, based on

changes in the stock price;

● Amortization

compensation expense, which includes cash-settled awards and the related taxes, based on changes in the stock price;

of purchased intangible assets;

● Integration

costs, such as severance amounts paid to employees from acquired businesses and transaction

costs, such as brokerage fees, pre-acquisition accounting costs and legal fees and exit costs

related to contractual agreements;

costs, such as severance amounts paid to employees from acquired businesses and transaction costs, such as brokerage fees, pre-acquisition

accounting costs and legal fees and exit costs related to contractual agreements;

impairment charges;

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

in contingent consideration;

tax (benefit) provision resulting from the amortization of goodwill related to our acquisitions.

terminations, unoccupied lease charges and restructuring costs;

tax provision (benefit) resulting from the amortization of goodwill related to our acquisitions.

tax effect has been provided in computing non-GAAP adjusted net income and non-GAAP adjusted net income per share as the Company has

sufficient carry forward net operating losses to offset the applicable income taxes.

The following table shows our reconciliation of

GAAP net (loss) income to non-GAAP adjusted net income for the years ended December 31, 2023 and 2022:

Year Ended December 31,

following table shows our reconciliation of GAAP net income (loss) to non-GAAP adjusted net income for the years ended December 31, 2024

Ended December 31,

($ in thousands)

GAAP net (loss) income

Foreign exchange loss / other expense

Stock-based compensation expense, net of restructuring costs

Amortization of purchased intangible assets

Transaction and integration costs

GAAP net income

Foreign exchange loss

/ other expense

Stock-based compensation

expense, net of restructuring costs

Amortization of purchased

intangible assets

Transaction and integration

Goodwill impairment charges

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

Change in contingent consideration

Income tax (benefit) provision related to goodwill

Non-GAAP adjusted net income

Year Ended December 31,

GAAP net loss attributable to common shareholders, per share

Impact of preferred stock dividend

Net (loss) income per end-of-period share

Foreign exchange loss / other expense

Stock-based compensation expense

Amortization of purchased intangible assets

Transaction and integration costs

Lease terminations, unoccupied

lease charges and restructuring costs

Income tax benefit related

Non-GAAP adjusted net

Ended December 31,

GAAP net loss attributable to common

shareholders, per share

of preferred stock dividend

Net income (loss) per end-of-period share

Foreign exchange loss /

other expense

Stock-based compensation

expense, net of restructuring costs

Amortization of purchased

intangible assets

Transaction and integration

Goodwill impairment charges

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

Change in contingent consideration

Income tax (benefit) provision related to goodwill

Lease terminations, unoccupied

lease charges and restructuring costs

tax benefit related to goodwill

Non-GAAP adjusted earnings per share

End-of-period common shares

In-the-money warrants and outstanding unvested RSUs

Total fully diluted shares

Non-GAAP adjusted diluted earnings per share

Outstanding unvested RSUs

Total fully diluted

Non-GAAP adjusted diluted

earnings per share

purposes of determining non-GAAP adjusted earnings per share, the Company used the number of common shares outstanding at the end of

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Statements of Operations Data

Years Ended December 31,

($ in thousands, except per share data)

Ended December 31,

($ in thousands, except per

Operating expenses:

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Goodwill impairment charges

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

terminations, unoccupied lease charges and restructuring costs

Total operating expenses

Operating (loss) income

Interest expense - net

Other (expense) income - net

(Loss) income before (benefit) provision for income taxes

Income tax (benefit) provision

Net (loss) income

Preferred stock dividend

Net loss attributable to common shareholders

Weighted average common shares outstanding basic and diluted

Net loss per common share:

Operating income (loss)

Net interest expense

(expense) income - net

Income (loss) before provision

(benefit) for income taxes

tax provision (benefit)

income (loss)

stock dividend

loss attributable to common shareholders

Weighted average common

shares outstanding basic and diluted

loss per common share:

basic and diluted

Balance Sheet Data

As of December 31,

of December 31,

($ in thousands)

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Shareholders’ equity

capital-net is defined as current assets less current liabilities.

Working capital-net is defined as current assets less current liabilities.

Financial Data

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generally accepted accounting principles, or GAAP, with adjusted EBITDA, (previously defined), a non-GAAP financial measure of earnings.

Years Ended December 31,

Ended December 31,

($ in thousands)

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September 30,

($ in thousands, except per share data)

($ in thousands, except per

Operating expenses:

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Research and development

Change in contingent consideration

Depreciation and amortization

Goodwill impairment charges

Net loss on lease terminations, unoccupied lease

charges and restructuring costs

Lease terminations, unoccupied

lease charges and restructuring costs

Total operating expenses

Operating (loss) income

Interest expense - net

Other (expense) income - net

(Loss) income before (benefit) provision for income taxes

Income tax (benefit) provision

Net (loss) income

Operating income (loss)

Net interest expense

Other (expense) income

Income (loss) before provision (benefit) for

Income tax provision (benefit)

Net income (loss)

Preferred stock dividend

Net loss attributable to common shareholders

Net loss per common share:

Net income (loss) attributable

to common shareholders

Net income (loss) per common share:

Basic and diluted

Adjusted EBITDA

(1) The consolidated

statement of operations for the three months ended March 31, 2024 has been restated to record the

earned, but undeclared Preferred Stock dividend.

Reconciliation

of net (loss) income to adjusted EBITDA

following table contains a reconciliation of net (loss) income to adjusted EBITDA by year.

Years Ended December 31,

of net income (loss) to adjusted EBITDA

following table contains a reconciliation of net income (loss) to adjusted EBITDA by year.

Ended December 31,

($ in thousands)

Net (loss) income

Net income (loss)

Foreign exchange loss / other expense

Interest expense - net

Income tax (benefit) provision

Stock-based compensation expense, net of restructuring costs

Net interest expense

Income tax provision (benefit)

Stock-based compensation expense, net of restructuring

Transaction and integration costs

Goodwill impairment charges

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

Lease terminations, unoccupied lease charges

and restructuring costs

Change in contingent consideration

Adjusted EBITDA

following table contains a reconciliation of net (loss) income to adjusted EBITDA by quarter.

following table contains a reconciliation of net income (loss) to adjusted EBITDA by quarter.

September 30,

1 unchanged sentence

($ in thousands)

Net (loss) income

Net income (loss)

Foreign exchange loss (gain) / other expense

Net interest expense

Income tax (benefit) provision

Stock-based compensation expense, net of restructuring costs

Income tax provision (benefit)

Stock-based compensation expense, net of restructuring

Transaction and integration costs

Goodwill impairment charges

Net loss on lease terminations, unoccupied lease charges and restructuring

Change in contingent consideration

Lease terminations, unoccupied

lease charges and restructuring costs

Adjusted EBITDA

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also generate revenue from our printing and mailing, group purchasing services and medical practice management services.

earned approximately 1% of our revenue from group purchasing services during both the years ended December 31, 2023 and 2022.

approximately 11% and 10% of our revenue from medical practice management services during the years ended December 31, 2023 and 2022,

respectively.

This revenue represents fees based on our actual costs plus a percentage of the operating profit and is reported in our

Medical Practice Management segment.

earned approximately 1% of our revenue from group purchasing services during both years ended December 31, 2024 and 2023.

We earned approximately

13% and 11% of our revenue from medical practice management services during the years ended December 31, 2024 and 2023, respectively.

This revenue represents fees based on our actual costs plus a percentage of the operating profit and is reported in our Medical Practice

Management segment.

Operating Costs.

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statements of operations.

Operations in our Offshore Offices together accounted for approximately 11% of direct operating costs for both

the years ended December 31, 2023 and 2022.

As we grow, we expect to achieve further economies of scale and to see our direct operating

costs decrease as a percentage of revenue.

Operations in our Offshore Offices together accounted for approximately 13% and 11% of direct operating costs

for the years ended December 31, 2024 and 2023, respectively.

As we grow, we expect to achieve further economies of scale and to see

our direct operating costs decrease as a percentage of revenue.

and Marketing Expense.

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contractor costs.

in Contingent Consideration.

Contingent consideration represents the portion of consideration payable to the sellers of some of our

acquisitions, the amount of which is based on the achievement of defined performance measures contained in the purchase agreements.

consideration is adjusted to fair value at the end of each reporting period.

and Amortization Expense.

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Impairment Charges.

Goodwill impairment charges, which were related to the Healthcare IT reporting unit, represent the impairment

Goodwill impairment charges in 2023, which were related to the Healthcare IT reporting unit, represent the impairment

recorded as it was determined that the fair value of the goodwill was less than the carrying value.

Loss on Lease Terminations, Unoccupied Lease Charges and Restructuring Costs.

Net loss on lease termination represents the write-off

of leasehold improvements and gains or losses as the result of lease terminations.

Unoccupied lease charges represent the portion of

lease and related costs for vacant space 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.

Terminations, Unoccupied Lease Charges and Restructuring Costs.

Lease terminations represent the write-off of leasehold improvements

and gains or losses as the result of lease terminations.

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

vacant space not being utilized by the Company.

Restructuring costs, primarily consist of severance and separation costs associated with

the optimization of the Company’s operations and profitability improvements.

and Other Income (Expense).

Interest income represents interest earned on temporary cash investments and late fees from customers.

Interest expense consists primarily of interest costs related to our line of credit, motor vehicle loans and amounts due in connection

with acquisitions.

Interest expense consists primarily of interest costs related to our line of credit, motor vehicle loans and amortization of deferred

financing costs.

Other income (expense) results primarily from foreign currency transaction gains (losses).

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These differences result in deferred income tax assets and liabilities.

Company reported GAAP earnings in 2022, it incurred losses historically and in 2023 and there is uncertainty regarding future U.S.

income, which make realization of a deferred tax asset difficult to support in accordance with ASC 740.

Accordingly, a valuation allowance

has been recorded against all deferred tax assets as of December 31, 2023 and December 31, 2022.

For the global intangible low-taxed

income (“GILTI”) tax, companies can either account for the GILTI inclusion in the period in which they are incurred or establish

Company reported GAAP earnings in 2024, it has incurred losses historically and there is uncertainty regarding future U.S.

taxable income,

which make realization of a deferred tax asset difficult to support in accordance with ASC 740.

Accordingly, a valuation allowance has

been recorded against all deferred tax assets as of December 31, 2024 and December 31, 2023.

For the global intangible low-taxed income

(“GILTI”) tax, companies can either account for the GILTI inclusion in the period in which they are incurred or establish

deferred tax liabilities for the expected future taxes associated with GILTI.

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

Consideration:

a business combination provides for contingent consideration, the Company records the contingent consideration at fair value at the acquisition

The Company adjusts the contingent consideration liability at the end of each reporting period based on fair value inputs representing

changes in forecasted revenue of the acquired entities and the probability of an adjustment to the purchase price.

Critical estimates

include determining the forecasted revenue for certain acquisitions, probability and timing of cash collections and an appropriate discount

Changes in the fair value of the contingent consideration after the acquisition date are included in earnings if the contingent

consideration is recorded as a liability.

is evaluated for impairment annually as of October 31 st , referred to as the annual test date.

As a result of the annual

impairment test, an impairment of approximately $2 million was recorded.

The Company will also test for impairment between annual

test dates if an event occurs or circumstances change that would indicate the carrying amount may be impaired.

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 (Healthcare IT and Medical Practice Management).

Application of the goodwill impairment test

requires judgment including the use of a discounted cash flow approach, the trading price of publicly traded stock and the guideline public

company method.

These analyses require significant assumptions and judgments.

These assumptions and judgments include estimation of

future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for our business, estimation

of the useful life over which cash flows will occur, determination of our weighted average cost of capital and the selection of

comparable companies and the interpretation of their data.

Future business and economic conditions, as well as differences in actual

financial results related to any of the assumptions, could materially impact the consolidated financial statements through

impairment of goodwill or intangible assets and acceleration of the amortization period of the purchased intangible assets which are

finite-lived assets.

There was a triggering event at August 31, 2023, but it was determined that there was no impairment.

triggering event in December 2023, an additional impairment test was performed.

As a result, the Company recorded an additional

impairment of approximately $40 million.

No impairment charges were recorded during the year ended December 31, 2022.

As a result of the annual impairment

test, an impairment of approximately $2 million was recorded in October 2023.

The Company also tests for impairment between annual test

dates if an event occurs or circumstances change that would indicate the carrying amount may be impaired.

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 (Healthcare IT and Medical Practice Management).

Application of the goodwill impairment test requires judgment including the use

of a discounted cash flow approach, the trading price of publicly traded stock and the guideline public company method.

These analyses

require significant assumptions and judgments.

These assumptions and judgments include estimation of future cash flows, which is dependent

on internal forecasts, estimation of the long-term rate of growth for our business, estimation of the useful life over which cash flows

will occur, determination of our weighted average cost of capital and the selection of comparable companies and the interpretation of

Future business and economic conditions, as well as differences in actual financial results related to any of the assumptions,

could materially impact the consolidated financial statements through impairment of goodwill or intangible assets and acceleration of

the amortization period of the purchased intangible assets which are finite-lived assets.

There was a triggering event at August 31,

2023, but it was determined that there was no impairment.

Due to a triggering event in December 2023, an additional impairment test was

As a result, the Company recorded an additional impairment of approximately $40 million.

No impairment charges were recorded

during the year ended December 31, 2024.

Combinations:

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following table sets forth our consolidated results of operations as a percentage of total revenue for the years shown.

Year Ended December 31,

Ended December 31,

Operating expenses:

3 unchanged sentences

Research and development

Change in contingent consideration

Depreciation and amortization

Goodwill impairment charges

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

Total operating expenses

Operating (loss) income

Interest expense - net

terminations, unoccupied lease charges and restructuring costs

operating expenses

Operating income (loss)

Net interest expense

Other expense - net

(Loss) income before (benefit) provision for income taxes

Income tax (benefit) provision

Net (loss) income

Income (loss) before provision

(benefit) for income taxes

Income tax provision (benefit)

income (loss)

of 2024 and 2023

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Revenue from these two customers for the year ended

December 31, 2023 was approximately $3.1 million, accounting for approximately $9.0 million of the decline in revenue.

Revenue from these

customers is expected to be approximately $300,000 for the year 2024.

(Refer to Forward-Looking Statements disclosure on page 2 of this

December 31, 2024 was approximately $300,000, accounting for approximately $2.8 million of the decline in revenue.

No further revenue

from these customers is expected for the year 2025.

(Refer to Forward-Looking Statements disclosure on page 3 of this Form 10-K.)

Ended December 31,

($ in thousands)

3 unchanged sentences

Research and development

Change in contingent consideration

Goodwill impairment charges

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

Total operating expenses

Lease terminations, unoccupied

lease charges and restructuring costs

operating expenses

Operating Costs.

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Outsourcing and other customer processing costs

decreased by $3.1 million and other costs such as medical supplies, vaccines, rent and consultancy fees decreased by $957,000.

decreased by $2.4 million and billable expenses decreased by $1.3 million.

and Marketing Expense.

Selling and marketing expense of $9.7 million for the year ended December 31, 2023 decreased by $138,000 or

1% from selling and marketing expense of $9.8 million for the year ended December 31, 2022.

Selling and marketing expense of $6.2 million for the year ended December 31, 2024 decreased by $3.4 million

or 35% from selling and marketing expense of $9.7 million for the year ended December 31, 2023.

The decrease for the year ended December

31, 2023 was due to lower spending on selling and marketing activities.

31, 2024 was due to lower spending on selling and marketing activities and a reduction in headcount.

and Administrative Expense.

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by $3.5 million due to the decrease in headcount and the Pakistan exchange rate.

The Company’s contributions to community based

projects and to a new academic institution in the Bagh area, a community where the Company has a large employee base, decreased by $1.0

Legal, professional and audit fees decreased by $790,000.

Other costs such as computer expenses, utilities and office supplies decreased by $295,000.

This increase was offset by a $635,000

increase in consulting expenses.

and Development Expense.

Research and development expense of $4.7 million for the year ended December 31, 2023 increased by $335,000

Research and development expense of $3.8 million for the year ended December 31, 2024 decreased by $955,000

or 20% from research and development expense of $4.7 million for the year ended December 31, 2023.

The increase was due to the redeployment

of employees performing functions that were previously classified as direct operating costs to functions classified as research and development

expense which was offset by a decrease in the U.S.

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

approximately $8.6 million and $9.2 million of development costs in connection with its internal-use software, respectively.

in Contingent Consideration.

The change of $3.1 million for the year ended December 31, 2022 reflected the estimated decrease in

the fair value of the contingent consideration from the medSR acquisition.

There was no contingent consideration liability recorded at

December 31, 2023 or 2022.

Depreciation.

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

Amortization expense of $12.4 million for the year ended December 31, 2023 increased by $2.6 million or 27% from amortization

The decrease was due to a decrease

headcount which was offset by the redeployment of employees performing functions that were previously classified as direct

operating costs to functions classified as research and development expense.

During the years ended December 31, 2024 and 2023, the Company

capitalized approximately $5.7 million and $8.6 million of development costs, respectively, in connection with its internal-use software.

Depreciation expense was $2.0 million for both the years ended December 31, 2024 and 2023.

Amortization expense of $12.1 million for the year ended December 31, 2024 decreased by $302,000 or 2% from amortization

expense of $12.4 million for the year ended December 31, 2023.

The increase in amortization expense was due to the amortization on certain

internal-use software placed into production.

The decrease in amortization expense was due to certain intangible assets

related to acquisitions becoming fully amortized.

Impairment Charges.

Goodwill impairment charges represent the impairment recorded as it was determined that the fair value of the

Healthcare IT reporting unit was less than the carrying value at both the annual impairment test date of October 31 and as a result of

a triggering event in December 2023.

Loss on Lease Terminations, Unoccupied Lease Charges and Restructuring Costs.

Net loss on lease terminations represents the write-off

of leasehold improvements and gains or losses as the result of lease terminations.

During the year ended December 31, 2023, the Miami

office lease that we assumed in connection with an acquisition ended and we entered into a new lease arrangement with the landlord for

significantly less space.

Charges of $102,000 for the year ended December 31, 2023, were incurred as a result of vacating the former

During the year ended December 31, 2022, a facility lease was terminated in conjunction with the Company ceasing its document

storage services resulting in additional costs for the year ended December 31, 2023 of $162,000.

In addition, during the year ended December

31, 2023, the Company paid $27,000 to settle a claim regarding a lease termination in India.

Unoccupied lease charges represent the portion

of lease and related costs for that portion of the space that is vacant 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.

Unoccupied lease charges for the year ended December

31, 2023 were $169,000.

In addition, there was $645,000 of restructuring costs being recorded in 2023, whereas in 2022, there were no

restructuring costs.

Restructuring costs consists of severance and separation costs associated with the optimization of the Company’s

operations and profitability improvements.

Year Ended December 31,

Goodwill impairment charges in 2023 represent the impairment recorded as it was determined that the fair value

of the Healthcare IT reporting unit was less than the carrying value at both the annual impairment test date of October 31, 2023 and

as a result of a triggering event in December 2023.

There were no impairment charges recorded in 2024.

Terminations, Unoccupied Lease Charges and Restructuring Costs.

Lease terminations represent the write-off of leasehold improvements

and gains or losses as the result of lease terminations.

During the year ended December 31, 2024, there was a gain on a lease termination

During the year ended December 31, 2023, the Miami office lease that we assumed in connection with an acquisition ended and

we entered into a new lease arrangement with the landlord for significantly less space.

Charges of $102,000 for the year ended December

31, 2023, were incurred as a result of vacating the former premises.

During the year ended December 31, 2022, a facility lease was terminated

in conjunction with the Company ceasing its document storage services resulting in additional costs for the year ended December 31, 2023

In addition, during the year ended December 31, 2023, the Company paid $27,000 to settle a claim regarding a lease termination

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

not being utilized by the Company.

Unoccupied lease charges for the year ended December 31, 2023 were $169,000.

There were no unoccupied

lease charges in 2024.

In addition, during the years ended December 31, 2024 and 2023, the Company recorded approximately $606,000 and

$645,000 of restructuring costs, respectively.

Restructuring costs consists of severance and separation costs associated with the optimization

of the Company’s operations and profitability improvements.

Ended December 31,

($ in thousands)

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Other expense - net

Income tax (benefit) provision

Interest income of $154,000 for the year ended December 31, 2023 increased by $113,000 or 276% from interest income of $41,000

Income tax provision (benefit)

Interest income of $88,000 for the year ended December 31, 2024 decreased by $66,000 or 43% from interest income of $154,000

for the year ended December 31, 2023.

The interest income represents interest earned on temporary cash investments, which increased due

to rising interest rates and late fees from customers.

Interest expense of $1.2 million for the year ended December 31, 2023 increased by $789,000 or 195% from interest expense

of $405,000 for the year ended December 31, 2022.

The increase in interest expense was due to the increased use of the line of credit

and increases in interest rates.

Interest expense on the line of credit was $906,000 and $138,000 and the amortization of deferred financing

costs was $169,000 and $124,000 during the years ended December 31, 2023 and 2022, respectively.

The interest income represents late fees from customers and interest earned on temporary cash investments,

which decreased due to lower balances being invested.

Interest expense of $900,000 for the year ended December 31, 2024 decreased by $294,000 or 25% from $1.2 million for the

year ended December 31, 2023.

The decrease in interest expense was due to the decreased use of the line of credit and decreases in the

interest rate charged.

Interest expense on the line of credit was $649,000 and $906,000 and the amortization of deferred financing costs

was $127,000 and $169,000 during the years ended December 31, 2024 and 2023, respectively.

Expense - net.

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for the year ended December 31, 2023.

Other expense primarily represents foreign currency transaction gains and losses.

There were foreign

exchange losses of $790,000 and $610,000 for the years ended December 31, 2023 and 2022, respectively.

Transaction gains and losses result

from revaluing intercompany accounts which are denominated in U.S.

dollars that represent amounts receivable/payable between the entities.

Whenever the exchange rate varies, the gains and losses are recorded in the consolidated statements of operations.

Tax (Benefit) Provision.

There was a $364,000 benefit for

income taxes for the year ended December 31, 2023 compared to the provision for income taxes of $177,000 for the year ended December

current income tax expense for the year ended December 31, 2023 was approximately $161,000 compared to a current income tax expense of

approximately $101,000 for the year ended December 31, 2022.

The current provision for 2023 and 2022 primarily relates to state and foreign

income taxes.

The pre-tax loss and pre-tax income was $49 million

and $5.6 million for the years ended December 31, 2023 and 2022, respectively.

The Company has incurred

losses historically and there is uncertainty regarding future U.S.

taxable income, which make realization of a deferred tax asset difficult

to support in accordance with ASC 740.

Accordingly, a valuation allowance was recorded against all deferred tax assets at December 31,

2023 and 2022.

Other expense primarily represents foreign currency transaction gains and losses and legal settlements

made by the Company.

There was a foreign exchange gain of $130,000 and a loss of $790,000 for the years ended December 31, 2024 and 2023,

respectively.

Transaction gains and losses result from revaluing intercompany accounts which are denominated in U.S.

dollars that represent

amounts receivable/payable between the entities.

Whenever the exchange rate varies, the gains and losses are recorded in the consolidated

statements of operations.

Tax Provision (Benefit).

There was a $160,000 provision for income taxes for the year ended December 31, 2024 compared to the benefit

for income taxes of $364,000 for the year ended December 31, 2023.

current income tax expense for the years ended December 31, 2024 and 2023 was $160,000 and $161,000, respectively.

For the year ended

December 31, 2023, there was a deferred tax benefit of $525,000.

There was no deferred tax recorded for the year ended December 31, 2024.

The current provision for 2024 and 2023 primarily relates to state and foreign income taxes.

The pre-tax income and pre-tax loss was

$8.0 million and $49.0 million for the years ended December 31, 2024 and 2023, respectively.

Although the Company reported GAAP earnings

in 2024, it has incurred losses historically and there is uncertainty regarding future U.S.

taxable income, which make realization of

a deferred tax asset difficult to support in accordance with ASC 740.

Accordingly, a valuation allowance was recorded against all deferred

tax assets at December 31, 2024 and 2023.

Company has recorded goodwill as a result of its acquisitions.

4 unchanged sentences

The resulting deferred

tax liability, which is recorded over the amortization period, will have an indefinite life.

As a result of the Company incurring tax

losses for 2023 and 2022 which have an indefinite life under the recent tax reform legislation, the federal deferred tax liability resulting

from the amortization of goodwill was offset against these indefinite federal operating net loss deferred tax assets to the extent allowable.

The remaining deferred tax liability remains on the Company’s consolidated balance sheet indefinitely unless there is an impairment

of goodwill (for financial reporting purposes) or a portion of the related business is sold.

In 2023, there was a goodwill impairment

charge of $42 million, a portion of which was allocated to the tax deductible portion of the goodwill balance.

The impairment charge

resulted in the reversal of the entire deferred tax liability at December 31, 2023.

tax liability, which is recorded over the amortization period, has an indefinite life.

In 2023, there was a goodwill impairment charge

of $42 million, a portion of which was allocated to the tax deductible portion of the goodwill balance.

The impairment charge resulted

in the reversal of the entire deferred tax liability at December 31, 2023.

There was no deferred tax liability recorded at December 31,

Company will maintain a full valuation allowance on deferred tax assets until there is sufficient evidence to support the reversal of

10 unchanged sentences

the year ended December 31, 2024, there was positive cash flow from operations of $20.6 million and at year-end, the Company had $5.1

million in cash and negative working capital of $57,000.

During the year ended December 31, 2022, there was positive

cash flow from operations of $21.2 million and at year-end, the Company

had $12.3 million in cash and positive working capital of $12.3 million.

The Company has a revolving

line of credit with SVB, and as of December 31, 2023, there was $10 million outstanding.

During the year ended

December 31, 2023, the Company sold 59,773 shares of 8.75% Series B Preferred Stock and raised $1.4

million in net proceeds after fees and expenses.

During the year ended December 31, 2022, the Company sold

1,324,858 shares of 8.75% Series B Preferred Stock and raised $30.9 million in net proceeds after fees and expenses.

million in cash and positive working capital of $5.2 million.

During the year ended December 31, 2023, there was positive cash flow from

operations of $15.5 million and at year-end, the Company had $3.3 million in cash and negative working capital of $57,000.

has a revolving line of credit with SVB and, as of December 31, 2023, $10 million was outstanding.

The line of credit was fully repaid

during the year ended December 31, 2024 and there was nothing outstanding at December 31, 2024.

During the year ended December 31, 2023,

the Company sold 59,773 shares of 8.75% Series B Preferred Stock and raised $1.4 million in net proceeds after fees and expenses.

following table summarizes our cash flows for the years presented.

Year Ended December 31,

Ended December 31,

($ in thousands)

Net cash provided by operating activities

Net cash used in investing activities

Net cash used in financing activities

Effect of exchange rate changes on cash

Net (decrease) increase in cash

loss before income taxes was $49 million for

the year ended December 31, 2023, of which $42 million was a non-cash goodwill impairment charge and $14.4 million was non-cash depreciation.

The income before income taxes for the year ended December 31, 2022 was $5.6 million, which included $11.7 million of non-cash depreciation

Net cash provided

by operating activities

Net cash used in investing

Net cash used in financing

of exchange rate changes on cash

increase (decrease) in cash

income before income taxes was $8.0 million for the year ended December 31, 2024, which included $14.1 million of non-cash depreciation

and amortization.

fiscal year 2023, the Company incurred a net loss of $48.7 million compared to $5.4 million of net income in fiscal year 2022, and at

December 31, 2023, had cash of $3.3 million and a working capital deficit of $57,000.

The decrease in cash for fiscal 2023 was $9 million

compared to an increase in cash of $2 million in fiscal 2022.

The Company also has $10 million drawn on its line of credit.

these factors raise substantial doubt regarding the Company’s ability to continue as a going concern.

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

focusing on cost-control.

Management developed a plan that was substantially implemented during fiscal 2023 to improve liquidity in

its operations through reductions in payroll and operating expenses.

After the reduction is implemented and through employee

attrition, the Company expects an improvement of approximately $10 million in annualized free cash flow, which represents

approximately 14% of total payroll cost.

This reduction will result in approximately $5 million in annualized payroll expense

In addition, the Company instituted certain other expense reductions.

The Company also suspended its Preferred Stock

dividends in December 2023 resulting in cash savings of $1.3 million per month.

Additional headcount reductions occurred in early

Additional cost reductions will continue throughout the year.

The Company is focused on reducing costs, returning to

profitability, generating positive cash flow and maintaining compliance with its debt covenants.

Although there are no guarantees

that the Company will be successful, it believes that such initiatives will enable it to continue as a going concern through at

least the next twelve months.

continues to focus on the Company’s overall profitability, including managing expenses, and to the extent possible growing revenue,

and expects that these efforts will continue to enhance our liquidity and financial position.

Based on management’s forecasts,

the Company will have sufficient liquidity to meet its obligations as they become due for the next twelve months from the date of the

financial statements issuance.

The loss before income taxes for the year ended December 31, 2023 was $49.0 million, of which $42.0 million was a non-cash

goodwill impairment charge and $14.4 million was non-cash depreciation and amortization.

have not been adversely affected by inflation as typically we receive a percentage of the fees our clients collect from our revenue cycle

7 unchanged sentences

The interest rate on

our line of credit is based on prime rate which had been increasing through 2023 but now appears to be remaining steady.

provided by operating activities was $15.5 million and $ 21.2

million during the years ended December 31, 2023 and 2022, respectively.

The decrease in the net income of $54.1

million included the following changes in non-cash items:

a goodwill impairment charge of $42

million, an increase in depreciation and amortization of $2.6 million and

a decrease in the change in contingent consideration of $3.1 million .

Revenue decreased by $21.8 million for the year ended December 31, 2023 compared to the year ended

December 31, 2022, offset by a decrease in cash operating expenses of $15.8 million for the same period.

receivable decreased by $2.2 million and $1.5 million

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

Accounts payable, accrued compensation and accrued expenses increased by

$3.3 million and $6.6 million for the years ended December

our line of credit is based on the prime rate which had been increasing through 2023 but decreased during 2024.

provided by operating activities was $20.6 million and $15.5 million during the years ended December 31, 2024 and 2023, respectively.

The increase in the net income of $56.5 million included the following changes in non-cash items:

a decrease in stock-based compensation

expense of $4.8 million and a decrease in depreciation and amortization of $420,000.

No goodwill impairment charges were recorded during

2024 as compared to the $42 million charge recognized in 2023.

Revenue decreased by $6.2 million for the year ended December 31, 2024

compared to the year ended December 31, 2023, offset by a decrease in cash operating expenses of $20.2 million for the same period.

receivable increased by $1.2 million and decreased by $2.2 million for the years ended December 31, 2024 and 2023, respectively.

payable, accrued compensation and accrued expenses decreased by $4.7 million and $3.3 million for the years ended December 31, 2024 and

2023, respectively.

used in investing activities during the year ended December 31, 2024 was $7.4 million, a decrease of $4.2 million compared to $11.6 million

during the year ended December 31, 2023.

Capitalized software was $5.7 million and $8.6 million during the years ended December 31, 2024

and 2023, respectively.

used in investing activities during the year ended December 31, 2023 was $11.6 million , a decrease

of $154,000 compared to $11.8 million during the year ended December 31, 2022.

software was $8.6 million and $9.2 million during the years ended December 31, 2023 and 2022, respectively.

Purchases of property and

equipment were $3.1 million and $2.6 million during the years ended December 31, 2023 and 2022, respectively.

used by financing activities during the year ended December 31, 2023 was $13.3 million, compared to $7.7 million of cash used for the

year ended December 31, 2022.

Cash provided by financing activities during 2023 includes $1.4 million of net proceeds from issuing 59,773

shares, offset by $888,000 of repayments for debt obligations, and $14.3 million of preferred stock dividends.

Cash provided by financing

activities during 2022 includes $30.9 million of net proceeds from issuing 1,324,858 shares of Series B Preferred Stock of which $20.0

million was used to redeem 800,000 shares of Series A Preferred Stock, offset by $1.0 million of repayments for debt obligations, and

$15.3 million of preferred stock dividends.

There was also $1.5 million of payments to settle the tax withholding obligations in 2023

Purchases of property and equipment were $1.7 million and $3.1 million during the years ended December 31, 2024

and 2023, respectively.

used by financing activities during the year ended December 31, 2024 was $11.3 million, compared to $13.3 million of cash used for

the year ended December 31, 2023.

Cash used by financing activities during 2024 includes the full repayment of the credit line of

$10 million and $677,000 of repayments for debt obligations.

Cash provided by financing activities during 2023 includes $1.4 million

of net proceeds from issuing 59,773 shares of Series B Preferred Stock, offset by $888,000 of repayments for debt obligations, and

$14.3 million of preferred stock dividends paid.

There was also $579,000 of payments to settle the tax withholding obligations in 2024

compared to $1.5 million in 2023.

The net proceeds from the line of credit were $2.0 million during the year ended December 31, 2023.

There were no net proceeds from the line of credit during the year ended December 31, 2022.

Net proceeds on the line of credit were $2.0 million during the year ended December 31,

Obligations and Commitments

12 unchanged sentences

As of December 31, 2024, talkMD had not yet commenced operations.

The Company has made

arrangements to have the income tax returns prepared for talkMD and will advance the funds for the required taxes.

Cumulatively, the

Company has paid approximately $5,000 on behalf of talkMD for income taxes.

The Company made arrangements

to have the income tax returns prepared for talkMD and advances the funds for the required taxes.

Cumulatively, the Company has paid

approximately $6,000 on behalf of talkMD for income taxes.

We do not engage in off-balance sheet financing arrangements.

7 unchanged sentences

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 7. Management’s Discussion and Analysis