|
|
x
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
Delaware
|
|
31-1455414
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
Large accelerated filer
¨
|
|
Accelerated filer
x
|
|
Non-accelerated filer
¨
|
|
Smaller reporting company
¨
|
(Do not check if a smaller reporting company)
|
|
•
|
competitive products and pricing;
|
•
|
product demand and market acceptance;
|
•
|
new product development;
|
•
|
key strategic alliances with vendors that resell our products;
|
•
|
our ability to control costs;
|
•
|
availability of products produced by third party vendors;
|
•
|
the healthcare regulatory environment;
|
•
|
potential changes in legislation, regulation and government funding affecting the healthcare industry;
|
•
|
healthcare information systems budgets;
|
•
|
availability of healthcare information systems trained personnel for implementation of new systems, as well as maintenance of legacy systems;
|
•
|
fluctuations in operating results;
|
•
|
critical accounting policies and judgments;
|
•
|
changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or other standard-setting organization;
|
•
|
changes in economic, business and market conditions impacting the healthcare industry, the markets in which we operate and nationally; and
|
•
|
our ability to maintain compliance with the terms of our credit facilities.
|
•
|
the potential failure to achieve the expected benefits of the acquisition, including the inability to generate sufficient revenue to offset acquisition costs, or the inability to achieve expected synergies or cost savings;
|
•
|
unanticipated expenses related to acquired businesses or technologies and its integration into our existing businesses or technology;
|
•
|
the diversion of financial, managerial, and other resources from existing operations;
|
•
|
the risks of entering into new markets in which we have little or no experience or where competitors may have stronger positions;
|
•
|
potential write-offs or amortization of acquired assets or investments;
|
•
|
the potential loss of key employees, clients, or partners of an acquired business;
|
•
|
delays in client purchases due to uncertainty related to any acquisition;
|
•
|
potential unknown liabilities associated with an acquisition; and
|
•
|
the tax effects of any such acquisitions.
|
•
|
General economic and market conditions;
|
•
|
Actual or anticipated variations in annual or quarterly operating results;
|
•
|
Lack of or negative research coverage by securities analysts;
|
•
|
Conditions or trends in the healthcare information technology industry;
|
•
|
Changes in the market valuations of other companies in our industry;
|
•
|
Announcements by us or our competitors of significant acquisitions, strategic partnerships, divestitures, joint ventures or other strategic initiatives;
|
•
|
Announced or anticipated capital commitments;
|
•
|
Ability to maintain listing of our common stock on The Nasdaq Capital Market;
|
•
|
Additions or departures of key personnel; and
|
•
|
Sales and repurchases of our common stock by us, our officers and directors or our significant stockholders, if any.
|
Location
|
Area
(Sq. Feet)
|
|
Principal Business
Function
|
|
End of Term
|
|
Renewal Option
|
|
Atlanta, GA
|
24,335
|
|
|
Corporate Office
|
|
October 31, 2022
|
|
None
|
Cincinnati, OH
|
21,700
|
|
|
Satellite Office
|
|
July 15, 2015
|
|
None
|
New York, NY
|
10,000
|
|
|
Satellite Office
|
|
August 31, 2014
|
|
None
|
Cincinnati, OH
|
1,166
|
|
|
Data Center
|
|
June 1, 2012
|
|
Auto-renewal
|
Fiscal Year 2013
|
High
|
|
Low
|
||||
4
th
Quarter (November 1, 2013 through January 31, 2014)
|
$
|
8.50
|
|
|
$
|
5.53
|
|
3
rd
Quarter (August 1, 2013 through October 31, 2013)
|
8.40
|
|
|
6.52
|
|
||
2
nd
Quarter (May 1, 2013 through July 31, 2013)
|
7.71
|
|
|
5.79
|
|
||
1
st
Quarter (February 1, 2013 through April 30, 2013)
|
7.42
|
|
|
5.12
|
|
Fiscal Year 2012
|
High
|
|
Low
|
||||
4
th
Quarter (November 1, 2012 through January 31, 2013)
|
$
|
6.00
|
|
|
$
|
4.75
|
|
3
rd
Quarter (August 1, 2012 through October 31, 2012)
|
6.60
|
|
|
3.50
|
|
||
2
nd
Quarter (May 1, 2012 through July 31, 2012)
|
4.59
|
|
|
1.70
|
|
||
1
st
Quarter (February 1, 2012 through April 30, 2012)
|
1.88
|
|
|
1.61
|
|
|
Fiscal Year
|
|
|
|
|
|||||||||
|
2013
|
|
2012
|
|
Change
|
|
% Change
|
|||||||
System sales
|
$
|
3,240
|
|
|
$
|
1,463
|
|
|
$
|
1,777
|
|
|
121
|
%
|
Professional services
|
3,642
|
|
|
3,793
|
|
|
(151
|
)
|
|
(4
|
)%
|
|||
Maintenance and support
|
13,986
|
|
|
11,211
|
|
|
2,775
|
|
|
25
|
%
|
|||
Software as a service
|
7,627
|
|
|
7,300
|
|
|
327
|
|
|
4
|
%
|
|||
Total revenues
|
28,495
|
|
|
23,767
|
|
|
4,728
|
|
|
20
|
%
|
|||
Cost of sales
|
13,179
|
|
|
11,593
|
|
|
1,586
|
|
|
14
|
%
|
|||
Selling, general and administrative
|
14,546
|
|
|
10,061
|
|
|
4,485
|
|
|
45
|
%
|
|||
Product research and development
|
7,088
|
|
|
2,948
|
|
|
4,140
|
|
|
140
|
%
|
|||
Total operating expenses
|
34,813
|
|
|
24,602
|
|
|
10,211
|
|
|
42
|
%
|
|||
Operating loss
|
(6,318
|
)
|
|
(835
|
)
|
|
(5,483
|
)
|
|
657
|
%
|
|||
Other income (expense), net
|
(5,499
|
)
|
|
(7,432
|
)
|
|
1,933
|
|
|
(26
|
)%
|
|||
Income tax benefit
|
100
|
|
|
2,888
|
|
|
(2,788
|
)
|
|
(97
|
)%
|
|||
Net loss
|
$
|
(11,717
|
)
|
|
$
|
(5,379
|
)
|
|
$
|
(6,338
|
)
|
|
118
|
%
|
Adjusted EBITDA(1)
|
$
|
1,770
|
|
|
$
|
6,560
|
|
|
$
|
(4,790
|
)
|
|
(73
|
)%
|
(1)
|
Non-GAAP measure meaning earnings before interest, tax, depreciation, amortization, stock-based compensation expense, transactional and one-time costs. See “Use of Non-GAAP Financial Measures” below for additional information and reconciliation.
|
|
Fiscal Year
|
||||
|
2013
|
|
2012
|
||
System sales
|
11.4
|
%
|
|
6.2
|
%
|
Professional services
|
12.8
|
|
|
16.0
|
|
Maintenance and support
|
49.1
|
|
|
47.2
|
|
Software as a service
|
26.9
|
|
|
30.7
|
|
Total revenues
|
100.0
|
%
|
|
100.0
|
%
|
Cost of sales
|
46.2
|
|
|
48.8
|
|
Selling, general and administrative
|
51.0
|
|
|
42.3
|
|
Product research and development
|
24.9
|
|
|
12.4
|
|
Total operating expenses
|
122.2
|
|
|
103.5
|
|
Operating loss
|
(22.2
|
)
|
|
(3.5
|
)
|
Other expense, net
|
(19.3
|
)
|
|
(31.3
|
)
|
Income tax benefit
|
0.5
|
|
|
12.2
|
|
Net loss
|
(41.1
|
)%
|
|
(22.6
|
)%
|
Cost of systems sales
|
97.0
|
%
|
|
187.8
|
%
|
Cost of services, maintenance and support
|
42.6
|
%
|
|
42.2
|
%
|
Cost of software as a service
|
33.1
|
%
|
|
34.4
|
%
|
(1)
|
Because a significant percentage of the operating costs are incurred at levels that are not necessarily correlated with revenue levels, a variation in the timing of systems sales and installations and the resulting revenue recognition can cause significant variations in operating results. As a result, period-to-period comparisons may not be meaningful with respect to the past operations nor are they necessarily indicative of the future operations of the Company in the near or long-term. The data in the table is presented solely for the purpose of reflecting the relationship of various operating elements to revenues for the periods indicated.
|
|
Fiscal Year
|
|
|
|
|
|||||||||
(in thousands):
|
2013
|
|
2012
|
|
Change
|
|
% Change
|
|||||||
System Sales:
|
|
|
|
|
|
|
|
|||||||
Proprietary software
|
$
|
3,154
|
|
|
$
|
1,001
|
|
|
$
|
2,153
|
|
|
215
|
%
|
Hardware and third-party software
|
86
|
|
|
462
|
|
|
(376
|
)
|
|
(81
|
)%
|
|||
Professional services
|
3,642
|
|
|
3,793
|
|
|
(151
|
)
|
|
(4
|
)%
|
|||
Maintenance and support
|
13,986
|
|
|
11,211
|
|
|
2,775
|
|
|
25
|
%
|
|||
Software as a service
|
7,627
|
|
|
7,300
|
|
|
327
|
|
|
4
|
%
|
|||
Total Revenues (1)
|
$
|
28,495
|
|
|
$
|
23,767
|
|
|
$
|
4,728
|
|
|
20
|
%
|
(1)
|
Fiscal
2013
and
2012
includes $
9,957,000
and
$3,395,000
, respectively, of revenues earned from the acquired Meta operations subsequent to the acquisition in August 2012.
|
|
Fiscal Year
|
|
|
|
|
|||||||||
(in thousands):
|
2013
|
|
2012
|
|
Change
|
|
% Change
|
|||||||
Cost of system sales
|
$
|
3,143
|
|
|
$
|
2,747
|
|
|
$
|
396
|
|
|
14
|
%
|
Cost of professional services
|
4,052
|
|
|
3,088
|
|
|
964
|
|
|
31
|
%
|
|||
Cost of maintenance and support
|
3,461
|
|
|
3,246
|
|
|
215
|
|
|
7
|
%
|
|||
Cost of software as a service
|
2,523
|
|
|
2,512
|
|
|
11
|
|
|
—
|
%
|
|||
Total cost of sales
|
$
|
13,179
|
|
|
$
|
11,593
|
|
|
$
|
1,586
|
|
|
14
|
%
|
|
Fiscal Year
|
|
|
|
|
|||||||||
(in thousands):
|
2013
|
|
2012
|
|
Change
|
|
% Change
|
|||||||
General and administrative expenses
|
$
|
11,152
|
|
|
$
|
7,702
|
|
|
$
|
3,450
|
|
|
45
|
%
|
Sales and marketing expenses
|
3,394
|
|
|
2,359
|
|
|
1,035
|
|
|
44
|
%
|
|||
Total selling, general, and administrative
|
$
|
14,546
|
|
|
$
|
10,061
|
|
|
$
|
4,485
|
|
|
45
|
%
|
|
Fiscal Year
|
|
|
|
|
|||||||||
(in thousands):
|
2013
|
|
2012
|
|
Change
|
|
% Change
|
|||||||
Research and development expense
|
$
|
7,088
|
|
|
$
|
2,948
|
|
|
$
|
4,140
|
|
|
140
|
%
|
Capitalized software development cost
|
614
|
|
|
2,000
|
|
|
(1,386
|
)
|
|
(69
|
)%
|
|||
Total R&D Cost
|
$
|
7,702
|
|
|
$
|
4,948
|
|
|
$
|
2,754
|
|
|
56
|
%
|
|
Fiscal Year
|
|
|
|
|
|||||||||
(in thousands):
|
2012
|
|
2011
|
|
Change
|
|
% Change
|
|||||||
Research and development expense
|
$
|
2,948
|
|
|
$
|
1,409
|
|
|
$
|
1,539
|
|
|
109
|
%
|
Capitalized software development cost
|
2,000
|
|
|
2,600
|
|
|
(600
|
)
|
|
(23
|
)%
|
|||
Total R&D Cost
|
$
|
4,948
|
|
|
$
|
4,009
|
|
|
$
|
939
|
|
|
23
|
%
|
|
2013
|
|
2012
|
||||
Company proprietary software
|
$
|
2,230,000
|
|
|
$
|
3,416,000
|
|
Hardware and third-party software
|
79,000
|
|
|
100,000
|
|
||
Professional services
|
7,255,000
|
|
|
4,527,000
|
|
||
Maintenance and support
|
25,936,000
|
|
|
22,504,000
|
|
||
Software as a service
|
21,073,000
|
|
|
20,439,000
|
|
||
Total
|
$
|
56,573,000
|
|
|
$
|
50,986,000
|
|
(in thousands):
|
SaaS Backlog at
January 31, 2014
|
|
Average
Remaining Months
in Term
|
||
7-year term
|
$
|
1,322
|
|
|
57
|
6-year term
|
810
|
|
|
53
|
|
5-year term
|
13,960
|
|
|
33
|
|
4-year term
|
785
|
|
|
45
|
|
3-year term
|
3,527
|
|
|
21
|
|
Less than 3-year term
|
669
|
|
|
13
|
|
Total SaaS backlog
|
$
|
21,073
|
|
|
|
•
|
EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;
|
•
|
EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
|
•
|
EBITDA does not reflect the interest expense, or the cash requirements to service interest or principal payments under our credit agreements;
|
•
|
EBITDA does not reflect income tax payments we are required to make; and
|
•
|
Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized often will have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements.
|
|
Fiscal Year
|
||||||
Adjusted EBITDA Reconciliation
|
2013
|
|
2012
|
||||
Net loss
|
$
|
(11,717
|
)
|
|
$
|
(5,379
|
)
|
Interest expense
|
1,766
|
|
|
1,957
|
|
||
Tax expenses (1)
|
(100
|
)
|
|
(2,888
|
)
|
||
Depreciation
|
718
|
|
|
726
|
|
||
Amortization of capitalized software development costs (2)
|
3,192
|
|
|
2,659
|
|
||
Amortization of intangible assets
|
1,342
|
|
|
584
|
|
||
Amortization of other costs
|
74
|
|
|
35
|
|
||
EBITDA
|
(4,725
|
)
|
|
(2,306
|
)
|
||
Stock-based compensation expense
|
1,661
|
|
|
956
|
|
||
Loss on conversion of convertible notes
|
—
|
|
|
5,970
|
|
||
Loss on early extinguishment of debt
|
161
|
|
|
—
|
|
||
Transaction related professional fees, advisory fees, and other internal direct costs
|
769
|
|
|
796
|
|
||
Associate severances and other costs relating to transactions or corporate restructuring
|
415
|
|
|
866
|
|
||
Other non-recurring operating expenses (3)
|
3,489
|
|
|
278
|
|
||
Adjusted EBITDA
|
$
|
1,770
|
|
|
$
|
6,560
|
|
Adjusted EBITDA Margin (4)
|
6
|
%
|
|
28
|
%
|
||
|
|
|
|
||||
Adjusted EBITDA per diluted share
|
2013
|
|
2012
|
||||
Loss per share — diluted
|
$
|
(0.94
|
)
|
|
$
|
(0.48
|
)
|
Adjusted EBITDA per adjusted diluted share (5)
|
$
|
0.10
|
|
|
$
|
0.46
|
|
Diluted weighted average shares
|
13,747,700
|
|
|
11,634,540
|
|
||
Includable incremental shares — adjusted EBITDA (6)
|
4,863,140
|
|
|
494,109
|
|
||
Adjusted diluted shares
|
18,610,840
|
|
|
12,128,649
|
|
(1)
|
Fiscal 2012 includes a non-cash income tax benefit recorded in 2012 of $3,000,000 to reduce the Company’s tax valuation allowance relating to deferred tax liabilities recorded in conjunction with the Company’s acquisition of Meta Health Technology, Inc.
|
(2)
|
Fiscal 2013 includes $
2,172,000
relating to internally developed legacy software, $
423,000
relating to acquired internally developed software from Interpoint, and $
597,000
relating to internally developed software acquired from Meta Health Technology, Inc.
|
(3)
|
Fiscal 2013 includes valuation adjustment for contingent earn-out of
$3,580,000
.
|
(4)
|
Adjusted EBITDA as a percentage of GAAP revenues.
|
(5)
|
Adjusted EBITDA per adjusted diluted share for the Company's common stock is computed using the more dilutive of the two-class method or the if-converted method.
|
(6)
|
The number of incremental shares that would be dilutive under profit assumption, only applicable under a GAAP net loss. If GAAP profit is earned in the current period, no additional incremental shares are assumed.
|
•
|
Persuasive evidence of an arrangement exists,
|
•
|
Delivery has occurred or services have been rendered,
|
•
|
The arrangement fees are fixed or determinable, and
|
•
|
Collection is considered probable.
|
•
|
significant under performance relative to historical or projected future operating results;
|
•
|
significant changes in the manner of use of the acquired assets or the strategy for the overall business;
|
•
|
identification of other impaired assets within a reporting unit;
|
•
|
disposition of a significant portion of an operating segment;
|
•
|
significant negative industry or economic trends;
|
•
|
significant decline in the Company's stock price for a sustained period; and
|
•
|
a decline in the market capitalization relative to the net book value.
|
|
Payments Due by Period
|
||||||||||||||||||
|
One Year or Less
|
|
Years 2-3
|
|
|
Years 4-5
|
|
|
More than 5 years
|
|
Total
|
||||||||
Long-term debt obligations
|
$
|
1,676
|
|
|
$
|
3,130
|
|
|
$
|
4,655
|
|
|
$
|
—
|
|
|
$
|
9,461
|
|
Interest expense on long-term debt
|
574
|
|
|
816
|
|
|
420
|
|
|
—
|
|
|
1,810
|
|
|||||
Operating lease obligations
|
603
|
|
|
971
|
|
|
936
|
|
|
1,957
|
|
|
4,467
|
|
|||||
Total contractual obligations
|
$
|
2,853
|
|
|
$
|
4,917
|
|
|
$
|
6,011
|
|
|
$
|
1,957
|
|
|
$
|
15,738
|
|
(in thousands)
|
Fiscal Year
|
||||||
2013
|
|
2012
|
|||||
Term loans
|
$
|
8,298
|
|
|
$
|
13,688
|
|
Note payable
|
900
|
|
|
—
|
|
||
Contingent consideration for earn-out
|
—
|
|
|
1,320
|
|
||
Capital lease
|
227
|
|
|
—
|
|
||
Royalty liability
|
2,264
|
|
|
—
|
|
(in thousands)
|
Fiscal Year
|
||||||
2013
|
|
2012
|
|||||
Net loss
|
$
|
(11,717
|
)
|
|
$
|
(5,379
|
)
|
Non-cash adjustments to net loss
|
11,159
|
|
|
7,978
|
|
||
Cash impact of changes in assets and liabilities
|
771
|
|
|
(2,714
|
)
|
||
Annual operating cash flow
|
$
|
213
|
|
|
$
|
(115
|
)
|
(in thousands)
|
Fiscal Year
|
||||||
2013
|
|
2012
|
|||||
Purchases of property and equipment
|
$
|
(152
|
)
|
|
$
|
(577
|
)
|
Capitalized software development costs
|
(614
|
)
|
|
(2,000
|
)
|
||
Payment for acquisitions
|
(3,000
|
)
|
|
(12,162
|
)
|
||
Annual investing cash flow
|
$
|
(3,766
|
)
|
|
$
|
(14,739
|
)
|
(in thousands)
|
Fiscal Year
|
||||||
2013
|
|
2012
|
|||||
Proceeds from term loans
|
$
|
4,958
|
|
|
$
|
9,880
|
|
Principal repayments on term loans
|
(10,348
|
)
|
|
(313
|
)
|
||
Payment of deferred financing costs
|
(116
|
)
|
|
(1,272
|
)
|
||
Proceeds from the sale of common stock
|
20,587
|
|
|
—
|
|
||
Settlement of earn-out consideration
|
(1,300
|
)
|
|
|
|||
Proceeds from private placement
|
—
|
|
|
12,000
|
|
||
Other
|
197
|
|
|
(185
|
)
|
||
Annual financing cash flow
|
$
|
13,978
|
|
|
$
|
20,110
|
|
Chicago, Illinois
|
/s/ BDO USA, LLP
|
April 26, 2013
|
|
January 31
|
||||||
|
2014
|
|
2013
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
17,924,886
|
|
|
$
|
7,500,256
|
|
Accounts receivable, net of allowance for doubtful accounts of $267,264 and $133,765, respectively
|
7,999,571
|
|
|
8,685,017
|
|
||
Contract receivables
|
1,181,606
|
|
|
1,481,819
|
|
||
Prepaid hardware and third party software for future delivery
|
25,640
|
|
|
22,777
|
|
||
Prepaid client maintenance contracts
|
909,464
|
|
|
1,080,330
|
|
||
Other prepaid assets
|
1,407,515
|
|
|
997,024
|
|
||
Deferred income taxes
|
95,498
|
|
|
—
|
|
||
Other current assets
|
144,049
|
|
|
110,555
|
|
||
Total current assets
|
29,688,229
|
|
|
19,877,778
|
|
||
Non-current assets:
|
|
|
|
||||
Property and equipment:
|
|
|
|
||||
Computer equipment
|
3,769,564
|
|
|
3,420,452
|
|
||
Computer software
|
2,239,654
|
|
|
2,196,236
|
|
||
Office furniture, fixtures and equipment
|
889,080
|
|
|
843,274
|
|
||
Leasehold improvements
|
697,570
|
|
|
697,570
|
|
||
|
7,595,868
|
|
|
7,157,532
|
|
||
Accumulated depreciation and amortization
|
(6,676,824
|
)
|
|
(5,958,727
|
)
|
||
Property and equipment, net
|
919,044
|
|
|
1,198,805
|
|
||
Contract receivables, less current portion
|
78,395
|
|
|
126,626
|
|
||
Capitalized software development costs, net of accumulated amortization of $7,949,352 and $17,464,601, respectively
|
10,238,357
|
|
|
12,816,486
|
|
||
Intangible assets, net
|
12,175,634
|
|
|
8,188,131
|
|
||
Deferred financing costs, net of accumulated amortization of $98,102 and $196,947, respectively
|
44,898
|
|
|
541,740
|
|
||
Goodwill
|
11,933,683
|
|
|
12,133,304
|
|
||
Other non-current assets
|
500,634
|
|
|
383,708
|
|
||
Total non-current assets
|
35,890,645
|
|
|
35,388,800
|
|
||
|
$
|
65,578,874
|
|
|
$
|
55,266,578
|
|
|
January 31,
|
||||||
|
2014
|
|
2013
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
1,796,418
|
|
|
$
|
1,495,913
|
|
Accrued compensation
|
1,782,599
|
|
|
2,088,850
|
|
||
Accrued other expenses
|
554,877
|
|
|
1,325,039
|
|
||
Current portion of long-term debt
|
1,214,280
|
|
|
1,250,000
|
|
||
Deferred revenues
|
9,658,232
|
|
|
9,810,442
|
|
||
Contingent consideration for earn-out
|
—
|
|
|
1,319,559
|
|
||
Current portion of note payable
|
300,000
|
|
|
—
|
|
||
Current portion of capital lease obligation
|
105,573
|
|
|
—
|
|
||
Deferred income tax liabilities
|
—
|
|
|
35,619
|
|
||
Total current liabilities
|
15,411,979
|
|
|
17,325,422
|
|
||
Non-current liabilities:
|
|
|
|
||||
Term loans
|
6,971,767
|
|
|
12,437,501
|
|
||
Warrants liability
|
4,117,725
|
|
|
3,649,349
|
|
||
Royalty liability
|
2,264,000
|
|
|
—
|
|
||
Swap contract
|
111,086
|
|
|
—
|
|
||
Note payable
|
600,000
|
|
|
—
|
|
||
Lease incentive liability, less current portion
|
74,434
|
|
|
99,579
|
|
||
Capital lease obligation
|
121,089
|
|
|
—
|
|
||
Deferred income tax liabilities
|
816,079
|
|
|
529,709
|
|
||
Total non-current liabilities
|
15,076,180
|
|
|
16,716,138
|
|
||
Total liabilities
|
30,488,159
|
|
|
34,041,560
|
|
||
Series A 0% Convertible Redeemable Preferred Stock, $.01 par value per share, $8,849,985 and $11,999,985 redemption value, 4,000,000 shares authorized, 2,949,995 and 3,999,995 issued and outstanding, net of unamortized preferred stock discount of $3,250,317 and $4,234,269, respectively
|
5,599,668
|
|
|
7,765,716
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Common stock, $.01 par value per share, 25,000,000 shares authorized; 18,175,787 and 12,643,620 shares issued and outstanding, respectively
|
181,758
|
|
|
126,436
|
|
||
Additional paid in capital
|
76,983,088
|
|
|
49,178,389
|
|
||
Accumulated deficit
|
(47,562,713
|
)
|
|
(35,845,523
|
)
|
||
Accumulated other comprehensive loss
|
(111,086
|
)
|
|
—
|
|
||
Total stockholders’ equity
|
29,491,047
|
|
|
13,459,302
|
|
||
|
$
|
65,578,874
|
|
|
$
|
55,266,578
|
|
|
Fiscal Year
|
||||||
|
2013
|
|
2012
|
||||
Revenues:
|
|
|
|
||||
Systems sales
|
$
|
3,239,569
|
|
|
$
|
1,463,225
|
|
Professional services
|
3,641,731
|
|
|
3,792,569
|
|
||
Maintenance and support
|
13,986,566
|
|
|
11,211,197
|
|
||
Software as a service
|
7,626,837
|
|
|
7,299,812
|
|
||
Total revenues
|
28,494,703
|
|
|
23,766,803
|
|
||
Operating expenses:
|
|
|
|
||||
Cost of systems sales
|
3,142,525
|
|
|
2,747,230
|
|
||
Cost of services
|
4,052,113
|
|
|
3,087,997
|
|
||
Cost of maintenance and support
|
3,460,500
|
|
|
3,245,569
|
|
||
Cost of software as a service
|
2,523,184
|
|
|
2,512,156
|
|
||
Selling, general and administrative
|
14,546,335
|
|
|
10,060,469
|
|
||
Research and development
|
7,088,077
|
|
|
2,948,313
|
|
||
Total operating expenses
|
34,812,734
|
|
|
24,601,734
|
|
||
Operating loss
|
(6,318,031
|
)
|
|
(834,931
|
)
|
||
Other (expense) income:
|
|
|
|
||||
Interest expense
|
(1,765,813
|
)
|
|
(1,957,010
|
)
|
||
Loss on conversion of convertible notes
|
—
|
|
|
(5,970,002
|
)
|
||
Loss on early extinguishment of debt
|
(160,713
|
)
|
|
—
|
|
||
Miscellaneous (expenses) income
|
(3,573,091
|
)
|
|
494,677
|
|
||
Loss before income taxes
|
(11,817,648
|
)
|
|
(8,267,266
|
)
|
||
Income tax benefit
|
100,458
|
|
|
2,888,537
|
|
||
Net loss
|
(11,717,190
|
)
|
|
(5,378,729
|
)
|
||
Less: deemed dividends on Series A Preferred Shares
|
(1,180,904
|
)
|
|
(176,048
|
)
|
||
Net loss attributable to common shareholders
|
$
|
(12,898,094
|
)
|
|
$
|
(5,554,777
|
)
|
Basic net loss per common share
|
$
|
(0.94
|
)
|
|
$
|
(0.48
|
)
|
Number of shares used in basic per common share computation
|
13,747,700
|
|
|
11,634,540
|
|
||
Diluted net loss per common share
|
$
|
(0.94
|
)
|
|
$
|
(0.48
|
)
|
Number of shares used in diluted per common share computation
|
13,747,700
|
|
|
11,634,540
|
|
|
Fiscal Year
|
||||||
|
2013
|
|
2012
|
||||
|
|
|
|
||||
Net loss
|
$
|
(11,717,190
|
)
|
|
$
|
(5,378,729
|
)
|
Other comprehensive loss, net of tax:
|
|
|
|
||||
Fair value of interest rate swap liability
|
(111,086
|
)
|
|
—
|
|
||
Comprehensive loss
|
$
|
(11,828,276
|
)
|
|
$
|
(5,378,729
|
)
|
|
Common stock shares
|
|
Common stock
|
|
Additional paid in capital
|
|
Accumulated
deficit |
|
Accumulated
other comprehensive loss |
|
Total stockholders’ equity
|
|||||||||||
Balance at January 31, 2012
|
10,433,716
|
|
|
$
|
104,338
|
|
|
$
|
38,360,980
|
|
|
$
|
(30,466,794
|
)
|
|
$
|
—
|
|
|
$
|
7,998,524
|
|
Stock issued to Employee Stock Purchase Plan and exercise of stock options
|
149,764
|
|
|
1,497
|
|
|
281,131
|
|
|
—
|
|
|
—
|
|
|
282,628
|
|
|||||
Restricted stock issued
|
137,325
|
|
|
1,373
|
|
|
(1,373
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Conversion of note payable, Interpoint
|
1,529,729
|
|
|
15,297
|
|
|
3,100,885
|
|
|
—
|
|
|
—
|
|
|
3,116,182
|
|
|||||
Stock consideration for acquisition
|
393,086
|
|
|
3,931
|
|
|
1,497,678
|
|
|
—
|
|
|
—
|
|
|
1,501,609
|
|
|||||
Issuance of common stock warrants
|
—
|
|
|
—
|
|
|
2,441,852
|
|
|
—
|
|
|
—
|
|
|
2,441,852
|
|
|||||
Issuance costs
|
—
|
|
|
—
|
|
|
(263,072
|
)
|
|
—
|
|
|
—
|
|
|
(263,072
|
)
|
|||||
Reclassification of common stock warrants to liability
|
—
|
|
|
—
|
|
|
(4,138,783
|
)
|
|
—
|
|
|
—
|
|
|
(4,138,783
|
)
|
|||||
Beneficial conversion feature of Series A Preferred Stock
|
—
|
|
|
—
|
|
|
2,685,973
|
|
|
—
|
|
|
—
|
|
|
2,685,973
|
|
|||||
Share-based compensation expense
|
—
|
|
|
—
|
|
|
956,144
|
|
|
—
|
|
|
—
|
|
|
956,144
|
|
|||||
Deemed dividends on Series A Preferred Stock
|
—
|
|
|
—
|
|
|
(176,048
|
)
|
|
—
|
|
|
—
|
|
|
(176,048
|
)
|
|||||
Issuance of Series A Preferred Stock at fair value
|
—
|
|
|
—
|
|
|
9,182,652
|
|
|
—
|
|
|
—
|
|
|
9,182,652
|
|
|||||
Reclassification of preferred stock to temporary equity at redemption value
|
—
|
|
|
—
|
|
|
(4,749,630
|
)
|
|
—
|
|
|
—
|
|
|
(4,749,630
|
)
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,378,729
|
)
|
|
—
|
|
|
(5,378,729
|
)
|
|||||
Balance at January 31, 2013
|
12,643,620
|
|
|
$
|
126,436
|
|
|
$
|
49,178,389
|
|
|
$
|
(35,845,523
|
)
|
|
$
|
—
|
|
|
$
|
13,459,302
|
|
Stock issued to Employee Stock Purchase Plan and exercise of stock options
|
602,469
|
|
|
6,025
|
|
|
1,350,035
|
|
|
—
|
|
|
—
|
|
|
1,356,060
|
|
|||||
Restricted stock issued
|
29,698
|
|
|
297
|
|
|
(297
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Conversion of Series A Preferred Stock
|
1,050,000
|
|
|
10,500
|
|
|
3,139,500
|
|
|
—
|
|
|
—
|
|
|
3,150,000
|
|
|||||
Stock consideration for earn-out settlement, Interpoint
|
400,000
|
|
|
4,000
|
|
|
2,696,000
|
|
|
—
|
|
|
—
|
|
|
2,700,000
|
|
|||||
Issuance of common stock
|
3,450,000
|
|
|
34,500
|
|
|
22,390,500
|
|
|
—
|
|
|
—
|
|
|
22,425,000
|
|
|||||
Common stock issuance costs
|
—
|
|
|
—
|
|
|
(1,838,381
|
)
|
|
—
|
|
|
—
|
|
|
(1,838,381
|
)
|
|||||
Warrant valuation adjustment
|
—
|
|
|
—
|
|
|
(412,352
|
)
|
|
—
|
|
|
—
|
|
|
(412,352
|
)
|
|||||
Interest rate swap
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(111,086
|
)
|
|
(111,086
|
)
|
|||||
Share-based compensation expense
|
—
|
|
|
—
|
|
|
1,660,598
|
|
|
—
|
|
|
—
|
|
|
1,660,598
|
|
|||||
Deemed dividends on Series A Preferred Stock
|
—
|
|
|
—
|
|
|
(1,180,904
|
)
|
|
—
|
|
|
—
|
|
|
(1,180,904
|
)
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,717,190
|
)
|
|
|
|
(11,717,190
|
)
|
||||||
Balance at January 31, 2014
|
18,175,787
|
|
|
$
|
181,758
|
|
|
$
|
76,983,088
|
|
|
$
|
(47,562,713
|
)
|
|
$
|
(111,086
|
)
|
|
$
|
29,491,047
|
|
|
Fiscal Year
|
||||||
|
2013
|
|
2012
|
||||
Operating activities:
|
|
|
|
||||
Net loss
|
$
|
(11,717,190
|
)
|
|
$
|
(5,378,729
|
)
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities, net of effect of acquisitions:
|
|
|
|
||||
Depreciation
|
718,097
|
|
|
726,406
|
|
||
Amortization of capitalized software development costs
|
3,192,157
|
|
|
2,659,365
|
|
||
Amortization of intangible assets
|
1,341,734
|
|
|
583,535
|
|
||
Amortization of other deferred costs
|
385,461
|
|
|
241,478
|
|
||
Amortization of debt discount
|
4,327
|
|
|
111,583
|
|
||
Valuation adjustment for warrants liability
|
(140,928
|
)
|
|
(489,434
|
)
|
||
Deferred tax expense (benefit)
|
20,885
|
|
|
(2,935,522
|
)
|
||
Valuation adjustment for contingent earn-out
|
3,580,441
|
|
|
86,839
|
|
||
Other valuation adjustments
|
(95,368
|
)
|
|
—
|
|
||
Net loss from conversion of convertible notes
|
—
|
|
|
5,970,002
|
|
||
Loss from early extinguishment of debt
|
160,713
|
|
|
—
|
|
||
Share-based compensation expense
|
1,660,598
|
|
|
956,144
|
|
||
Provision for accounts receivable
|
330,907
|
|
|
67,464
|
|
||
Changes in assets and liabilities, net of assets acquired:
|
|
|
|
||||
Accounts and contract receivables
|
827,435
|
|
|
(2,923,242
|
)
|
||
Other assets
|
(439,477
|
)
|
|
(1,129,255
|
)
|
||
Accounts payable
|
275,360
|
|
|
526,149
|
|
||
Accrued expenses
|
259,771
|
|
|
992,285
|
|
||
Deferred revenues
|
(152,210
|
)
|
|
(180,200
|
)
|
||
Net cash provided by (used in) operating activities
|
212,713
|
|
|
(115,132
|
)
|
||
Investing activities:
|
|
|
|
||||
Purchases of property and equipment
|
(152,283
|
)
|
|
(576,736
|
)
|
||
Capitalization of software development costs
|
(614,028
|
)
|
|
(1,999,676
|
)
|
||
Payment for acquisition
|
(3,000,000
|
)
|
|
(12,161,614
|
)
|
||
Net cash used in investing activities
|
(3,766,311
|
)
|
|
(14,738,026
|
)
|
||
Financing activities:
|
|
|
|
||||
Proceeds from term loan
|
4,958,333
|
|
|
9,880,000
|
|
||
Principal repayments on term loans
|
(10,348,214
|
)
|
|
(312,500
|
)
|
||
Principal payments on capital lease obligation
|
(34,391
|
)
|
|
—
|
|
||
Payment of deferred financing costs
|
(115,900
|
)
|
|
(1,271,862
|
)
|
||
Proceeds from private placement
|
—
|
|
|
12,000,000
|
|
||
Proceeds from exercise of stock options and stock purchase plan
|
1,356,060
|
|
|
282,628
|
|
||
Settlement of earn-out consideration
|
(1,300,000
|
)
|
|
—
|
|
||
Proceeds from the sale of common stock
|
20,586,619
|
|
|
—
|
|
||
Payment of debt success fee
|
(1,124,279
|
)
|
|
(467,906
|
)
|
||
Net cash provided by financing activities
|
13,978,228
|
|
|
20,110,360
|
|
||
Increase in cash and cash equivalents
|
10,424,630
|
|
|
5,257,202
|
|
||
Cash and cash equivalents at beginning of year
|
7,500,256
|
|
|
2,243,054
|
|
||
Cash and cash equivalents at end of year
|
$
|
17,924,886
|
|
|
$
|
7,500,256
|
|
Supplemental cash flow disclosures:
|
|
|
|
||||
Interest paid
|
$
|
2,422,997
|
|
|
$
|
1,626,750
|
|
Income taxes paid
|
$
|
375,688
|
|
|
$
|
84,990
|
|
|
Fiscal Year
|
||||||
|
2013
|
|
2012
|
||||
Supplemental disclosure of non-cash financing activities:
|
|
|
|
||||
Conversion of $3,000,000 note payable to common shares
|
$
|
—
|
|
|
$
|
3,116,182
|
|
Conversion of 1,050,000 shares of Series A Preferred Stock to common shares
|
$
|
3,150,000
|
|
|
$
|
—
|
|
Issuance of 393,086 shares of common stock, as part of Meta purchase price
|
$
|
—
|
|
|
$
|
1,501,609
|
|
Issuance of 400,000 shares of common stock, as part of settlement of earn-out consideration
|
$
|
2,700,000
|
|
|
$
|
—
|
|
Issuance of $900,000 note payable as part of settlement of earn-out consideration
|
$
|
900,000
|
|
|
$
|
—
|
|
Deemed dividends on Series A Preferred Stock
|
$
|
1,180,904
|
|
|
$
|
176,048
|
|
Issuance of warrants to placement agents
|
$
|
—
|
|
|
$
|
753,737
|
|
Reclassification of warrants from equity to warrants liability
|
$
|
—
|
|
|
$
|
4,138,783
|
|
Conversion of notes issued in conjunction with the private placement to Series A Preferred Stock, at fair value
|
$
|
—
|
|
|
$
|
9,182,652
|
|
Interest rate swap contract
|
$
|
111,086
|
|
|
$
|
—
|
|
|
2013
|
|
2012
|
||||
Bad debt expense
|
$
|
330,907
|
|
|
$
|
67,464
|
|
Computer equipment and software
|
3-4 years
|
Office equipment
|
5 years
|
Office furniture and fixtures
|
7 years
|
Leasehold improvements
|
Term of lease
|
•
|
Persuasive evidence of an arrangement exists,
|
•
|
Delivery has occurred or services have been rendered,
|
•
|
The arrangement fees are fixed or determinable, and
|
•
|
Collection is considered probable
|
•
|
Provide updated guidance on how deliverables of an arrangement are separated, and how consideration is allocated;
|
•
|
Eliminate the residual method and require entities to allocate revenue using the relative selling price method and;
|
•
|
Require entities to allocate revenue to an arrangement using the estimated selling price (“ESP”) of deliverables if it does not have vendor specific objective evidence (“VSOE”) or third party evidence (“TPE”) of selling price.
|
•
|
VSOE — the price at which an element is sold as a separate stand-alone transaction
|
•
|
TPE — the price of an element, charged by another company that is largely interchangeable in any particular transaction
|
•
|
ESP — the Company’s best estimate of the selling price of an element of the transaction
|
•
|
significant under performance relative to historical or projected future operating results;
|
•
|
significant changes in the manner of use of the acquired assets or the strategy for the overall business;
|
•
|
identification of other impaired assets within a reporting unit;
|
•
|
disposition of a significant portion of an operating segment;
|
•
|
significant negative industry or economic trends;
|
•
|
significant decline in the Company's stock price for a sustained period; and
|
•
|
a decline in the market capitalization relative to the net book value.
|
|
Fiscal Year
|
||||||
|
2013
|
|
2012
|
||||
Net loss
|
$
|
(11,717,190
|
)
|
|
$
|
(5,378,729
|
)
|
Less: deemed dividends on Series A Preferred Stock
|
(1,180,904
|
)
|
|
(176,048
|
)
|
||
Net loss attributable to common shareholders
|
$
|
(12,898,094
|
)
|
|
$
|
(5,554,777
|
)
|
Weighted average shares outstanding used in basic per common share computations
|
13,747,700
|
|
|
11,634,540
|
|
||
Stock options and restricted stock
|
—
|
|
|
—
|
|
||
Number of average shares used in diluted per common share computation
|
13,747,700
|
|
|
11,634,540
|
|
||
Basic net loss per share of common stock
|
$
|
(0.94
|
)
|
|
$
|
(0.48
|
)
|
Diluted net loss per share of common stock
|
$
|
(0.94
|
)
|
|
$
|
(0.48
|
)
|
|
Balance at August 16, 2012
|
||
Assets purchased:
|
|
||
Cash
|
$
|
1,126,000
|
|
Accounts receivable
|
2,300,000
|
|
|
Property and equipment
|
133,000
|
|
|
Other assets
|
513,000
|
|
|
Client relationships
|
4,464,000
|
|
|
Internally-developed software
|
3,646,000
|
|
|
Trade name (2)
|
1,588,000
|
|
|
Supplier agreements
|
1,582,000
|
|
|
Covenants not to compete
|
720,000
|
|
|
Goodwill (1), (2)
|
8,073,000
|
|
|
Total assets purchased
|
$
|
24,145,000
|
|
Liabilities assumed:
|
|
||
Accounts payable and accrued liabilities
|
1,259,000
|
|
|
Deferred revenue obligation, net
|
3,494,000
|
|
|
Deferred tax liabilities
|
4,602,000
|
|
|
Net assets acquired
|
$
|
14,790,000
|
|
Consideration:
|
|
||
Company common stock
|
$
|
1,502,000
|
|
Cash paid
|
13,288,000
|
|
|
Total consideration
|
$
|
14,790,000
|
|
(1)
|
Goodwill represents the excess of purchase price over the estimated fair value of net tangible and intangible assets acquired, which is not deductible for tax purposes.
|
(2)
|
See Note 7 - Goodwill and Intangible Assets for further changes in fiscal 2013.
|
|
Balance at October 25, 2013
|
||
Assets purchased:
|
|
||
License agreement
|
$
|
4,431,000
|
|
Existing customer relationship
|
408,000
|
|
|
Covenant not to compete
|
129,000
|
|
|
Working capital
|
124,000
|
|
|
Other assets
|
25,000
|
|
|
Goodwill (1)
|
108,000
|
|
|
Total assets purchased
|
$
|
5,225,000
|
|
Consideration:
|
|
||
Cash paid
|
$
|
3,000,000
|
|
Future royalty commitment
|
2,225,000
|
|
|
Total consideration
|
$
|
5,225,000
|
|
(1)
|
Goodwill represents the excess of purchase price over the estimated fair value of net tangible and intangible assets acquired, which is not deductible for tax purposes.
|
|
Facilities
|
|
Equipment
|
|
Fiscal Year Totals
|
||||||
2014
|
$
|
594,000
|
|
|
$
|
9,000
|
|
|
$
|
603,000
|
|
2015
|
519,000
|
|
|
2,000
|
|
|
521,000
|
|
|||
2016
|
448,000
|
|
|
2,000
|
|
|
450,000
|
|
|||
2017
|
461,000
|
|
|
—
|
|
|
461,000
|
|
|||
2018
|
475,000
|
|
|
—
|
|
|
475,000
|
|
|||
Thereafter
|
1,957,000
|
|
|
—
|
|
|
1,957,000
|
|
|||
Total
|
$
|
4,454,000
|
|
|
$
|
13,000
|
|
|
$
|
4,467,000
|
|
|
|
January 31, 2014
|
|
January 31, 2013
|
||||
Senior term loan (1)
|
|
$
|
8,298,000
|
|
|
$
|
4,688,000
|
|
Note payable
|
|
900,000
|
|
|
—
|
|
||
Capital lease
|
|
227,000
|
|
|
—
|
|
||
Subordinated term loan
|
|
—
|
|
|
9,000,000
|
|
||
Total
|
|
9,425,000
|
|
|
13,688,000
|
|
||
Less: Current portion
|
|
1,620,000
|
|
|
1,250,000
|
|
||
Non-current portion of long-term debt
|
|
$
|
7,805,000
|
|
|
$
|
12,438,000
|
|
(1)
|
January 31, 2014 balance represents total principal due, therefore it is not reduced by the debt discount of
$112,000
. In the consolidated balance sheets, the term loan is presented net of this discount.
|
|
|
Senior Term Loan
|
|
Note Payable
|
|
Capital Lease (1)
|
|
Total
|
||||||||
2014
|
|
$
|
1,214,000
|
|
|
$
|
300,000
|
|
|
$
|
161,000
|
|
|
$
|
1,675,000
|
|
2015
|
|
1,214,000
|
|
|
300,000
|
|
|
101,000
|
|
|
1,615,000
|
|
||||
2016
|
|
1,214,000
|
|
|
300,000
|
|
|
—
|
|
|
1,514,000
|
|
||||
2017
|
|
1,214,000
|
|
|
—
|
|
|
—
|
|
|
1,214,000
|
|
||||
2018
|
|
3,442,000
|
|
|
—
|
|
|
—
|
|
|
3,442,000
|
|
||||
Total repayments
|
|
$
|
8,298,000
|
|
|
$
|
900,000
|
|
|
$
|
262,000
|
|
|
$
|
9,460,000
|
|
(1)
|
Future minimum lease payments include principal plus interest.
|
(in thousands)
|
Goodwill
|
||
Balance January 31, 2012
|
$
|
4,061
|
|
Goodwill acquired during the year
|
8,073
|
|
|
Balance January 31, 2013
|
12,133
|
|
|
Goodwill acquired during the year
|
108
|
|
|
Adjustments to goodwill during the year
|
(307
|
)
|
|
Balance January 31, 2014
|
$
|
11,934
|
|
(in thousands)
|
January 31, 2014
|
||||||||||||
Estimated
Useful Life
|
|
Gross Assets
|
|
Accumulated
Amortization
|
|
Net Assets
|
|||||||
Indefinite-lived assets:
|
|
|
|
|
|
|
|
||||||
Trade names
|
N/A
|
|
$
|
1,952
|
|
|
$
|
—
|
|
|
$
|
1,952
|
|
Definite-lived assets:
|
|
|
|
|
|
|
|
||||||
Client relationships
|
10-15 years
|
|
$
|
5,285
|
|
|
$
|
862
|
|
|
$
|
4,423
|
|
Covenants not to compete
|
0.5-15 years
|
|
856
|
|
|
533
|
|
|
323
|
|
|||
Supplier agreements
|
5 years
|
|
1,582
|
|
|
461
|
|
|
1,121
|
|
|||
License agreement
|
15 years
|
|
4,431
|
|
|
74
|
|
|
4,357
|
|
|||
Total
|
|
|
$
|
14,106
|
|
|
$
|
1,930
|
|
|
$
|
12,176
|
|
(in thousands)
|
January 31, 2013
|
||||||||||||
Estimated
Useful Life
|
|
Gross Assets
|
|
Accumulated
Amortization
|
|
Net Assets
|
|||||||
Indefinite-lived assets:
|
|
|
|
|
|
|
|
||||||
Trade names
|
N/A
|
|
$
|
1,588
|
|
|
$
|
—
|
|
|
$
|
1,588
|
|
Definite-lived assets:
|
|
|
|
|
|
|
|
||||||
Client relationships
|
10 years
|
|
$
|
4,879
|
|
|
$
|
271
|
|
|
$
|
4,608
|
|
Covenants not to compete
|
0.5-5 years
|
|
727
|
|
|
172
|
|
|
555
|
|
|||
Supplier agreements
|
5 years
|
|
1,582
|
|
|
145
|
|
|
1,437
|
|
|||
Total
|
|
|
$
|
8,776
|
|
|
$
|
588
|
|
|
$
|
8,188
|
|
(in thousands)
|
Annual Amortization Expense
|
||
2014
|
$
|
1,306
|
|
2015
|
1,280
|
|
|
2016
|
1,234
|
|
|
2017
|
1,023
|
|
|
2018
|
799
|
|
|
Thereafter
|
4,582
|
|
|
Total
|
$
|
10,224
|
|
|
Fiscal Year
|
||||||
|
2013
|
|
2012
|
||||
Current tax benefit (expense):
|
|
|
|
||||
Federal
|
$
|
7,054
|
|
|
$
|
(9,391
|
)
|
State
|
142,576
|
|
|
(37,594
|
)
|
||
|
149,630
|
|
|
(46,985
|
)
|
||
Uncertain tax positions
|
(28,287
|
)
|
|
—
|
|
||
Deferred tax benefit (expense):
|
|
|
|
||||
Federal
|
26,491
|
|
|
2,642,580
|
|
||
State
|
(47,376
|
)
|
|
292,942
|
|
||
|
(20,885
|
)
|
|
2,935,522
|
|
||
Current and deferred income tax benefit
|
$
|
100,458
|
|
|
$
|
2,888,537
|
|
|
Fiscal Year
|
||||||
|
2013
|
|
2012
|
||||
Federal tax benefit at statutory rate
|
4,018,000
|
|
|
$
|
2,810,870
|
|
|
State and local taxes, net of federal benefit
|
488,626
|
|
|
255,348
|
|
||
Change in valuation allowance
|
(3,659,160
|
)
|
|
2,000,295
|
|
||
Permanent items:
|
|
|
|
||||
Loss from conversion of notes payable
|
—
|
|
|
(1,937,411
|
)
|
||
Incentive stock options
|
(78,476
|
)
|
|
—
|
|
||
Transaction costs
|
(343,117
|
)
|
|
(339,320
|
)
|
||
Change in fair value of warrants liability
|
(159,249
|
)
|
|
166,408
|
|
||
Other
|
(351,857
|
)
|
|
(45,540
|
)
|
||
Reserve for uncertain tax position
|
(11,642
|
)
|
|
—
|
|
||
Other
|
197,333
|
|
|
(22,113
|
)
|
||
Income tax benefit
|
$
|
100,458
|
|
|
$
|
2,888,537
|
|
|
January 31,
|
||||||
|
2014
|
|
2013
|
||||
Deferred tax assets:
|
|
|
|
||||
Allowance for doubtful accounts
|
$
|
98,661
|
|
|
$
|
49,130
|
|
Deferred revenue
|
19,561
|
|
|
87,338
|
|
||
Accruals
|
351,827
|
|
|
209,428
|
|
||
Net operating loss carryforwards
|
7,763,718
|
|
|
9,857,529
|
|
||
Stock compensation expense
|
362,145
|
|
|
715,818
|
|
||
Property and equipment
|
147,691
|
|
|
184,605
|
|
||
AMT credit
|
102,144
|
|
|
97,200
|
|
||
Other
|
62,783
|
|
|
106,300
|
|
||
Total deferred tax assets
|
8,908,530
|
|
|
11,307,348
|
|
||
Valuation allowance
|
(7,666,626
|
)
|
|
(7,834,990
|
)
|
||
Net deferred tax assets
|
1,241,904
|
|
|
3,472,358
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Definite-lived intangible assets
|
(1,241,904
|
)
|
|
(3,456,605
|
)
|
||
Indefinite-lived intangibles
|
(720,581
|
)
|
|
(581,081
|
)
|
||
Total deferred tax liabilities
|
(1,962,485
|
)
|
|
(4,037,686
|
)
|
||
Net deferred tax liabilities
|
$
|
(720,581
|
)
|
|
$
|
(565,328
|
)
|
|
2013
|
|
2012
|
||||
Beginning of fiscal year
|
$
|
122,000
|
|
|
$
|
—
|
|
Additions for tax positions of prior years
|
—
|
|
|
122,000
|
|
||
Reductions for tax positions of prior years
|
(1,000
|
)
|
|
—
|
|
||
End of fiscal year
|
$
|
121,000
|
|
|
$
|
122,000
|
|
|
Fiscal Year
|
||||||||||||
|
2013
|
|
2012
|
||||||||||
|
Options
|
|
Weighted Average Exercise Price
|
|
Options
|
|
Weighted Average Exercise Price
|
||||||
Outstanding — beginning of year
|
2,685,237
|
|
|
3.02
|
|
|
1,920,550
|
|
|
2.22
|
|
||
Granted
|
844,800
|
|
|
7.13
|
|
|
1,295,000
|
|
|
3.96
|
|
||
Exercised
|
(557,661
|
)
|
|
2.13
|
|
|
(105,021
|
)
|
|
1.97
|
|
||
Expired
|
(59,835
|
)
|
|
3.09
|
|
|
(425,292
|
)
|
|
2.07
|
|
||
Forfeited
|
(608,134
|
)
|
|
4.16
|
|
|
—
|
|
|
|
|||
Outstanding — end of year
|
2,304,407
|
|
|
4.46
|
|
|
2,685,237
|
|
|
3.02
|
|
||
Exercisable — end of year
|
1,223,365
|
|
|
2.83
|
|
|
976,044
|
|
|
2.29
|
|
||
Aggregate intrinsic value of outstanding options at year end
|
$
|
9,344,529
|
|
|
|
|
$
|
13,950,962
|
|
|
|
||
Aggregate intrinsic value of exercisable options at year end
|
$
|
6,998,539
|
|
|
|
|
$
|
5,137,017
|
|
|
|
||
Weighted average grant date fair value of options granted during year
|
$
|
4.42
|
|
|
|
|
$
|
2.02
|
|
|
|
||
Total intrinsic value of options exercised during the year
|
$
|
2,673,285
|
|
|
|
|
$
|
570,264
|
|
|
|
|
2013
|
|
2012
|
||
Expected life
|
6 years
|
|
|
5 years
|
|
Risk-free interest rate
|
1.81
|
%
|
|
0.35
|
%
|
Weighted average volatility factor
|
0.66
|
|
|
0.57
|
|
Dividend yield
|
—
|
|
|
—
|
|
Forfeiture rate
|
21
|
%
|
|
—
|
|
|
Number of Options
|
|
Average Exercise Price
|
|
Remaining Life in Years
|
|||
January 31, 2013
|
|
|
|
|
|
|||
Outstanding
|
2,685,237
|
|
|
$
|
3.02
|
|
|
8.30
|
Exercisable
|
976,044
|
|
|
$
|
2.29
|
|
|
6.60
|
January 31, 2014
|
|
|
|
|
|
|||
Outstanding
|
2,304,407
|
|
|
$
|
4.46
|
|
(1)
|
7.67
|
Exercisable
|
1,223,365
|
|
|
$
|
2.83
|
|
(2)
|
6.40
|
(1)
|
The exercise prices range from
$1.65
to
$8.17
, of which
718,579
shares are between
$1.65
and
$2.00
per share,
366,000
shares are between
$2.08
and
$4.00
per share, and
1,219,828
shares are between
$4.08
and
$8.17
per share.
|
(2)
|
The exercise prices range from
$1.65
to
$6.94
, of which
806,179
shares are between
$1.65
and
$2.00
per share,
152,826
shares are between
$2.08
and
$4.00
per share, and
264,360
shares are between
$4.08
and
$6.94
per share.
|
|
Non-vested Number of Shares
|
|
Weighted Average Grant Date Fair Value
|
|||
Non-vested balance at January 31, 2012
|
126,457
|
|
|
$
|
1.68
|
|
Granted
|
137,325
|
|
|
2.01
|
|
|
Vested
|
(126,457
|
)
|
|
1.79
|
|
|
Forfeited/expired
|
—
|
|
|
—
|
|
|
Non-vested balance at January 31, 2013
|
137,325
|
|
|
$
|
2.01
|
|
Granted
|
29,698
|
|
|
6.65
|
|
|
Vested
|
(137,325
|
)
|
|
2.01
|
|
|
Forfeited/expired
|
—
|
|
|
—
|
|
|
Non-vested balance at January 31, 2014
|
29,698
|
|
|
$
|
6.65
|
|
Fiscal 2013 (In thousands, except per share data):
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
|
2013
|
||||||||||
Revenues
|
$
|
6,473
|
|
|
$
|
8,773
|
|
|
$
|
6,732
|
|
|
$
|
6,517
|
|
|
$
|
28,495
|
|
Gross profit
|
3,297
|
|
|
5,536
|
|
|
3,597
|
|
|
2,887
|
|
|
15,317
|
|
|||||
Operating profit (loss)
|
(1,373
|
)
|
|
997
|
|
|
(1,140
|
)
|
|
(4,802
|
)
|
|
(6,318
|
)
|
|||||
Net loss (a)
|
(2,710
|
)
|
|
(828
|
)
|
|
(6,232
|
)
|
|
(1,947
|
)
|
|
(11,717
|
)
|
|||||
Less: deemed dividends on Series A Preferred Shares (b)
|
(342
|
)
|
|
(16
|
)
|
|
(374
|
)
|
|
(449
|
)
|
|
(1,181
|
)
|
|||||
Net loss attributable to common shareholders
|
(3,051
|
)
|
|
(844
|
)
|
|
(6,607
|
)
|
|
(2,396
|
)
|
|
(12,898
|
)
|
|||||
Basic net loss per share (c)
|
(0.24
|
)
|
|
(0.07
|
)
|
|
(0.50
|
)
|
|
(0.14
|
)
|
|
(0.94
|
)
|
|||||
Diluted net loss earnings per share (c)
|
(0.24
|
)
|
|
(0.07
|
)
|
|
(0.50
|
)
|
|
(0.14
|
)
|
|
(0.94
|
)
|
|||||
Basic and diluted weighted average shares outstanding
|
12,534
|
|
|
12,862
|
|
|
13,258
|
|
|
16,337
|
|
|
13,748
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Fiscal 2012 (In thousands, except per share data):
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
|
2012
|
||||||||||
Revenues
|
$
|
5,445
|
|
|
$
|
5,049
|
|
|
$
|
6,534
|
|
|
$
|
6,739
|
|
|
$
|
23,767
|
|
Gross profit
|
2,799
|
|
|
2,691
|
|
|
3,491
|
|
|
3,193
|
|
|
12,174
|
|
|||||
Operating profit (loss)
|
673
|
|
|
(24
|
)
|
|
(302
|
)
|
|
(1,181
|
)
|
|
(835
|
)
|
|||||
Net earnings (loss) (d)
|
491
|
|
|
(463
|
)
|
|
2,400
|
|
|
(7,807
|
)
|
|
(5,379
|
)
|
|||||
Less: deemed dividends on Series A Preferred Shares
|
—
|
|
|
—
|
|
|
(139
|
)
|
|
(37
|
)
|
|
(176
|
)
|
|||||
Net earnings (loss) attributable to common shareholders
|
491
|
|
|
(463
|
)
|
|
2,261
|
|
|
(7,844
|
)
|
|
(5,555
|
)
|
|||||
Basic net earnings (loss) per share (c)
|
0.05
|
|
|
(0.04
|
)
|
|
0.18
|
|
|
(0.63
|
)
|
|
(0.48
|
)
|
|||||
Diluted net earnings (loss) per share (c)
|
0.05
|
|
|
(0.04
|
)
|
|
0.15
|
|
|
(0.63
|
)
|
|
(0.48
|
)
|
|||||
Basic weighted average shares outstanding
|
10,307
|
|
|
11,316
|
|
|
12,393
|
|
|
12,493
|
|
|
11,635
|
|
|||||
Diluted weighted average shares outstanding
|
10,307
|
|
|
11,316
|
|
|
15,365
|
|
|
12,493
|
|
|
11,635
|
|
(a)
|
The third quarter of fiscal 2013 includes a loss of $
4,101,000
associated with the settlement of the earn-out consideration to Interpoint (Note 6).
|
(b)
|
During the third quarter of fiscal 2013, the Company recorded an immaterial correction of an error regarding a $
188,145
fiscal second quarter 2013 understatement of deemed dividends on its Series A Preferred Stock, with an offsetting understatement of additional paid-in capital.
|
(c)
|
Quarterly amounts may not be additive.
|
(d)
|
The fourth quarter of 2012 includes a loss of $
5,913,000
incurred upon conversion of the private placement convertible subordinated notes (Note 15), as well as a $
565,000
naked tax credit related to intangible assets recorded as part of the Meta acquisition (Note 8).
|
|
|
Adjusted Fair Value at August 16, 2012
|
|
Proceeds Allocation at August 16, 2012
|
|||||
Instruments:
|
|
|
|
|
|
||||
Series A Preferred Stock
|
|
$
|
9,907,820
|
|
|
$
|
6,546,146
|
|
(1)
|
Convertible subordinated notes payable
|
|
5,699,577
|
|
|
3,765,738
|
|
(2)
|
||
Warrants
|
|
2,856,000
|
|
|
1,688,116
|
|
(3)
|
||
Total investment
|
|
$
|
18,463,397
|
|
|
$
|
12,000,000
|
|
|
(1)
|
The Series A Preferred Stock convert on a
1
:1 basis into common stock, but differ in value from common stock due to the downside protection relative to common stock in the event the Company liquidates, and the downside protection, if, after
four
years, the holder has not converted and the stock is below
$3.00
. The fair value of Series A Preferred Stock was determined using a Monte-Carlo simulation following a Geometric Brownian Motion, using the following assumptions: annual volatility of
75%
, risk-free rate of
0.9%
and dividend yield of
0.0%
. The model also utilized the following assumptions to account for the conditions within the agreement: after
four
years, if the simulated common stock price fell below a price of
$3.00
per share, the convertible preferred stock would automatically convert to common stock on a
1
:1 basis moving forward at a price of exactly
$3.00
per share and a forced conversion if the simulated stock price exceeded
$8.00
per share.
|
(2)
|
The fair value of convertible subordinated notes payable was determined based on its current yield as compared to that of those currently outstanding in the marketplace. Management reviewed the convertible note agreement and determined that the note's interest rate is a reasonable representative of a market rate; therefore the face or principal amount of the loan is a reasonable estimate of its fair value.
|
(3)
|
The fair value of the common stock warrants was determined using a Monte-Carlo simulation following a Geometric Brownian motion, using the following assumptions: annual volatility of
75%
, risk-free rate of
0.9%
, dividend yield of
0.0%
and expected life of
5
years. Because the dilutive down-round financing was subject to approval by shareholder vote which had not happened at the time of the valuation, the model utilized the assumption that the down-round financing would not occur within the simulation.
|
|
Number of Shares
|
|
Series A Preferred Stock
|
|||
Series A Preferred Stock, January 31, 2012
|
—
|
|
|
$
|
—
|
|
Issuance from private placement, at redemption value
|
2,416,785
|
|
|
7,250,355
|
|
|
Discount related to warrants (1)
|
—
|
|
|
(704,209
|
)
|
|
Discount related to beneficial conversion feature
|
—
|
|
|
(2,685,973
|
)
|
|
Discount related to issuance cost
|
—
|
|
|
(1,020,135
|
)
|
|
Issuance of shares at redemption value for conversion of notes payable
|
1,583,210
|
|
|
4,749,630
|
|
|
Accretion of Preferred Stock discount
|
—
|
|
|
176,048
|
|
|
Series A Preferred Stock, January 31, 2013
|
3,999,995
|
|
|
$
|
7,765,716
|
|
Conversion of Preferred Stock to Common Stock
|
(1,050,000
|
)
|
|
(3,150,000
|
)
|
|
Accretion of Preferred Stock discount
|
—
|
|
|
1,180,904
|
|
|
Valuation adjustment (Note 4)
|
—
|
|
|
(196,952
|
)
|
|
Series A Preferred Stock, January 31, 2014
|
2,949,995
|
|
|
$
|
5,599,668
|
|
|
Number of Shares Issuable
|
|
Weighted Average Exercise Price
|
|||
Warrants - private placement
|
1,200,000
|
|
|
$
|
3.99
|
|
Warrants - placement agent
|
200,000
|
|
|
4.06
|
|
|
Total
|
1,400,000
|
|
|
$
|
4.00
|
|
|
|
|
Additions
|
|
|
|
|
||||||||||||
Description
|
Balance at Beginning of Period
|
|
Charged to Costs and Expenses
|
|
Charged to Other Accounts
|
|
Deductions
|
|
Balance at End of Period
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Year ended January 31, 2014:
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowance for doubtful accounts
|
$
|
134
|
|
|
$
|
331
|
|
|
$
|
—
|
|
|
$
|
(198
|
)
|
|
$
|
267
|
|
Year ended January 31, 2013:
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowance for doubtful accounts
|
$
|
100
|
|
|
$
|
67
|
|
|
$
|
34
|
|
|
$
|
(67
|
)
|
|
$
|
134
|
|
•
|
Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of assets of the Company.
|
•
|
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP and that receipts and expenditures of the Company are being made in accordance with authorization of our management and our Board of Directors.
|
•
|
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on our consolidated financial statements.
|
•
|
The Company lacked sufficient, adequately trained personnel with U.S. GAAP knowledge necessary to ensure appropriate accounting for routine and non-routine significant transactions, in particular accounting for multiple-element software revenue arrangements; accounting for capitalized software development costs; accounting for complex equity-based transactions; accounting for debt modifications and interest rate swap transactions; accounting for business acquisitions; evaluating the classification of operating and capital leases; and accounting for income taxes. Where the Company engaged third-party subject matter experts and service providers (collectively, service providers) to assist them with the recognition and measurement of routine and non-routine, complex transactions, the Company did not design and implement appropriate controls over the work of the service providers to ensure that the transactions were properly recorded.
|
•
|
The Company did not perform an effective assessment of risks related to achieving reliable financial reporting, including the identification, assessment of significance, and determination of response to such risks, including appropriately designed internal controls.
|
•
|
The Company did not maintain written policies and procedures that set out the assigned responsibility and accountability for the operation of controls, what is expected of employees and the corrective actions required for matters identified as a result of the operation of controls. Further, the Company did not have an effective monitoring function to ascertain whether the established controls were appropriately designed and operated effectively during the year.
|
•
|
The Company did not design and implement effective internal controls over the completeness, existence, accuracy and presentation of revenues and the related accounts receivable, contracts receivable, and deferred revenues, and the valuation of accounts receivable, including ensuring the completeness and accuracy of system-generated reports used by management to monitor the collectability of outstanding accounts receivable.
|
•
|
The Company did not design, implement and operate effectively controls over the completeness and accuracy of period-end accounts payable and accrued liabilities to ensure that operating expenses were recorded in the appropriate period.
|
•
|
The Company did not maintain appropriate controls over the segregation of duties related to the processing of accounts receivable transactions and cash receipts, and purchase and expense transactions and cash disbursements. As a result, the Company did not maintain effective controls over the safeguarding of cash.
|
•
|
The Company did not design and implement appropriate controls over the capitalization, amortization, assessment for recoverability and accurate reporting of external and internal software development costs.
|
•
|
The Company did not maintain effective internal controls over information technology systems and end-user computing applications to properly restrict access and ensure appropriate segregation of duties affecting transactional data and recording of manual journal entries.
|
•
|
Staffing: In addition to a realignment of our accounting staff structure and operations, we have added a new revenue accounting specialist position to better ensure compliance with our revenue recognition policies.
|
•
|
Policies and procedures: We will be engaging external accounting experts to assist us with enhancing our policies and procedures related to revenue recognition, contracting and other areas reflected in the material weakness discussed above.
|
•
|
Systems: We are currently implementing a series of incremental software solutions to enhance our documentation in critical areas such as revenue recognition and stock-based compensation.
|
•
|
insufficient, inadequately trained personnel with U.S. GAAP knowledge necessary to ensure appropriate accounting for routine and non-routine significant transactions;
|
•
|
ineffective assessment of risks related to achieving reliable financial reporting;
|
•
|
ineffective written policies and procedures and monitoring of internal controls;
|
•
|
ineffective internal controls over accounting for revenues and the related accounts receivable, contracts receivable, and deferred revenues;
|
•
|
ineffective internal controls over accounting for period-end accounts payable and accrued liabilities;
|
•
|
ineffective controls over segregation of duties related to recording accounts receivable transactions and cash receipts and purchase and expense transactions and cash disbursements, and safeguarding of cash;
|
•
|
ineffective internal controls over accounting for capitalized software development costs and the related amortization; and
|
•
|
ineffective internal controls over information technology systems and end-user computing applications to properly restrict access and ensure appropriate segregation of duties affecting transactional data and recording of journal entries.
|
Name
|
Age
|
Position
|
Robert E. Watson
|
57
|
Director, President & Chief Executive Officer
|
Richard D. Nelli
|
45
|
Senior Vice President & Chief Operating Officer
|
Nicholas A. Meeks
|
30
|
Senior Vice President & Chief Financial Officer
|
Lois E. Rickard
|
61
|
Senior Vice President & Chief People Officer
|
Jack W. Kennedy Jr.
|
38
|
Senior Vice President & Chief Legal Counsel
|
Carolyn J. Zelnio
|
50
|
Vice President and Chief Accounting Officer
|
Randolph W. Salisbury
|
60
|
Senior Vice President & Chief Marketing Officer
|
Michael K. Kaplan
|
48
|
Director
|
Allen S. Moseley
|
44
|
Director
|
Jonathan R. Phillips
|
41
|
Chairman of the Board
|
Andrew L. Turner
|
67
|
Director
|
Michael G. Valentine
|
45
|
Director
|
Edward J. VonderBrink
|
69
|
Director
|
Name and Principal Position
|
|
Year
|
|
Salary(1) ($)
|
|
Option Awards(2) ($)
|
|
Stock Awards(2) ($)
|
|
Non-Equity Incentive Plan Compensation ($)
|
|
All Other Compensation (3, 4 & 5)
($)
|
|
Total
($)
|
||
Robert E. Watson
Chief Executive Officer and
President
|
|
2013
|
|
325,000
|
|
307,548
|
|
|
—
|
|
200,000
|
|
15,139
|
|
847,687
|
|
|
2012
|
|
275,000
|
|
32,618
|
|
|
—
|
|
200,000
|
|
15,204
|
|
522,822
|
|
|
|
2011
|
|
250,000
|
|
—
|
|
|
75,000(6)
|
|
75,000(6)
|
|
10,453
|
|
410,453
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Nicholas A. Meeks(7)
Sr. Vice President and
Chief Financial Officer
|
|
2013
|
|
183,147
|
|
300,900
|
|
|
—
|
|
20,139
|
|
11,226
|
|
515,412
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Matthew S. Seefeld(8)
Former Sr. Vice President,
Solutions Strategy
|
|
2013
|
|
200,000
|
|
65,601
|
|
|
—
|
|
25,000
|
|
110,112
|
|
400,713
|
|
|
(1)
|
Includes amounts contributed by the officers to our 401(k) plan.
|
(2)
|
The amounts included in the table above reflect the total grant date fair value and were determined in accordance with Financial Accounting Standards Board ASC Topic 718. The assumptions used in determining the grant date fair values of these awards are set forth in the footnotes to our consolidated financial statements, which are included in our Annual Report on Form 10-K for the year ended January 31, 2014 filed with the SEC.
|
(3)
|
Does not include perquisites and other personal benefits, the aggregate amount of which with respect to each of the Named Executive Officers does not exceed $10,000 reported for the fiscal years presented.
|
(4)
|
Includes our matching contribution to the 401(k) plan equal to a 100% match on the first 4% of the employee’s compensation which is available to all employees who participate in the plan.
|
(5)
|
Excludes group life insurance, health care insurance, employee stock purchase plan discounts, long-term disability insurance and similar benefits provided to all employees that do not discriminate in scope, terms or operations in favor of the Named Executive Officers.
|
(6)
|
Mr. Watson opted to have a portion of his non-equity incentive compensation in 2011 paid in restricted stock, which vested on the grant date, in lieu of cash. Accordingly, Mr. Watson received 45,454 shares of restricted stock. The shares of restricted stock were granted to him at a price of $1.65 per share.
|
(7)
|
Mr. Meeks became our Senior Vice President and Chief Financial Officer effective May 22, 2013. Mr. Meeks was previously Vice President of Financial Planning.
|
(8)
|
Mr. Seefeld resigned as our Senior Vice President, Solutions Strategy effective April 22, 2014.
|
Name
|
Number of Securities Underlying Unexercised Options (#) Exercisable
|
Number of Securities Underlying Unexercised Options (#) Unexercisable
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Equity Incentive Plan Awards: Number of Unearned Shares that Have Not Vested (#)
|
Equity Incentive Plan Awards: Market Value of Unearned Shares that Have Not Vested ($)
|
||
|
|
|
|
|
|
|
||
Robert E. Watson
|
25,000
|
75,000
|
(1)
|
6.90
|
4/21/2023
|
|
—
|
—
|
250,000
|
—
|
(2)
|
2.00
|
1/31/2021
|
|
—
|
—
|
|
|
90,000
|
60,000
|
(3)
|
3.00
|
1/31/2021
|
|
—
|
—
|
|
50,000
|
—
|
(4)
|
2.00
|
4/4/2022
|
|
—
|
—
|
|
|
|
|
|
|
|
||
Nicholas A. Meeks
|
55,000
|
—
|
(5)
|
3.46
|
6/25/2022
|
|
—
|
—
|
100,000
|
—
|
(6)
|
6.65
|
5/22/2023
|
|
—
|
—
|
|
|
|
|
|
|
|
|
||
Matthew S. Seefeld
|
100,000
|
—
|
(7)
|
1.65
|
(9
|
)
|
—
|
—
|
19,444
|
—
|
(8)
|
5.37
|
(10
|
)
|
—
|
—
|
|
|
|
|
|
|
|
|
|
(1)
|
These options vest ratably monthly until they are fully vested on April 22, 2016.
|
(2)
|
These options vested in full on January 31, 2014.
|
(3)
|
These options vest ratably annually until they are fully vested on January 31, 2016.
|
(4)
|
These options vested in full on April 24, 2013.
|
(5)
|
These options vested in full on June 25, 2013.
|
(6)
|
These options vested in full on June 22, 2013.
|
(7)
|
These options vested in full on January 7, 2012.
|
(8)
|
Mr. Seefeld resigned as our Senior Vice President, Solutions Strategy effective April 22, 2014, at which time unvested options to purchase 30,556 shares of our common stock (of a grant of 50,000 options on January 29, 2013) were forfeited.
|
(9)
|
These options must be exercised within 180 days of April 22, 2014, Mr. Seefeld’s date of resignation.
|
(10)
|
These options must be exercised within 180 days of April 22, 2014, Mr. Seefeld’s date of resignation.
|
Name
|
Fees Earned or Paid in Cash
($)
|
Stock Awards(1)(2)(3)
($)
|
Option Awards(1)(3)
($)
|
Total
($)
|
Michael K. Kaplan(4)
|
24,000
|
25,000
|
—
|
49,000
|
Richard C. Levy, M.D.(5)
|
5,000
|
—
|
—
|
5,000
|
Jay D. Miller(5)
|
5,000
|
—
|
—
|
5,000
|
Allen Moseley(6)
|
—
|
—
|
—
|
—
|
Jonathan R. Phillips
|
7,000
|
75,000
|
—
|
82,000
|
Andrew L. Turner
|
11,500
|
37,500
|
—
|
49,000
|
Michael G. Valentine
|
12,000
|
35,000
|
—
|
47,000
|
Edward J. VonderBrink
|
25,220
|
25,000
|
—
|
50,220
|
|
(1)
|
The amounts included in the table above for Option Awards and Restricted Stock Awards reflect the total amount of the grant date fair value for options and restricted stock grants computed in accordance with Financial Accounting Standards Board ASC Topic 718.
|
(2)
|
The amounts shown include the value of shares of restricted stock granted to each of Messrs. Levy, Phillips, and Turner in 2013 in lieu of paying their meeting fees in cash.
|
(3)
|
As of January 31, 2014, the aggregate number of shares of restricted stock outstanding for each director, as applicable, is as follows: Mr. Kaplan, 3,759, Mr. Phillips, 11,278, Mr. Turner, 5,639, Mr. Valentine, 5,263, and Mr. Vonderbrink, 3,759. As of January 31, 2014, the aggregate number of options outstanding for each director, as applicable, is as follows: Mr. Phillips, 45,000, Mr. Turner, 35,000, Mr. Valentine, 0, and Mr. Vonderbrink, 45,000.
|
(4)
|
Meeting and retainers relating to Mr. Kaplan’s service as a director are paid on his behalf to his company, Altos Health Management.
|
(5)
|
The terms of Richard C. Levy, M.D. and Jay D. Miller expired at the 2013 Annual Meeting of Stockholders, and they did not stand for re-election at such meeting.
|
(6)
|
As described above, Mr. Moseley is not permitted to accept personal compensation for service on our board. A total of $50,000 was paid to Noro-Moseley relating to his service as a director in fiscal 2013.
|
Plan category
|
Number of securities to be issued upon exercise of outstanding options, warrants and rights
|
|
Weighted-average exercise price of outstanding options, warrants and rights
|
|
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
|
|
||||
|
(a)
|
|
(b)
|
|
(c)
|
|
||||
Equity compensation plans approved by security holders
|
1,473,425
|
|
(1)
|
$
|
5.38
|
|
|
339,828
|
|
(3)
|
Equity compensation plans not approved by security holders
|
830,982
|
|
(2)
|
$
|
2.84
|
|
|
—
|
|
(4)
|
Total
|
2,304,407
|
|
(1, 2)
|
$
|
4.46
|
|
|
339,828
|
|
|
(1)
|
Includes 1,473,425 options that can be exercised under the 2005 and 2013 Incentive Compensation Plans.
|
(2)
|
Options granted under inducement grants with terms as nearly as practicable identical to the terms and conditions of the Company’s 2005 Incentive Compensation Plan. The share and option awards are inducement grants, pursuant to NASDAQ Marketplace Rule 5635(c)(4).
|
(3)
|
Includes 242,513 shares to be issued from the 2005 and 2013 Incentive Compensation Plans and 97,285 shares to be issued from the Employee Stock Purchase Plan as of January 31, 2014.
|
(4)
|
The Company’s Board of Directors has not established any specific number of shares that can be issued without stockholder approval. Inducement grants to new key employees will be determined on a case-by-case basis. Other than possible inducement grants, the Company expects that all equity awards will be made under stockholder-approved plans.
|
Name of Beneficial Owner
|
Common Stock Beneficially Owned
|
Percent of Common Stock Owned
|
Five Percent Stockholders
|
|
|
Cortina Asset Management, LLC(1)
|
1,022,009
|
5.6%
|
Deerfield Mgmt, L.P.(2)
|
1,140,100
|
6.3%
|
Great Point Partners, LLC(3)
|
2,006,889
|
9.9%
|
IPP Holding Company, LLC(4)
|
989,477
|
5.4%
|
Noro-Moseley Partners VI, L.P.(5)
|
2,123,333
|
10.5%
|
Pembroke Management, LTD(6)
|
1,757,900
|
9.7%
|
Directors and Named Executive Officers
|
|
|
Michael K. Kaplan
|
35,951
|
*
|
Nicholas A. Meeks(7)
|
160,296
|
*
|
Allen S. Moseley
|
0
|
*
|
Jonathan R. Phillips(8)
|
439,192
|
2.4%
|
Matthew S. Seefeld(9)
|
323,443
|
1.8%
|
Andrew L. Turner(10)
|
134,927
|
*
|
Michael G. Valentine
|
40,799
|
*
|
Edward J. VonderBrink(11)
|
154,869
|
*
|
Robert E. Watson(12)
|
620,519
|
3.3%
|
All current directors and executive officers as a group (12 persons)(13)
|
1,770,163
|
9.3%
|
(1)
|
Based on the Schedule 13G filed with the SEC on January 9, 2014. Cortina Asset Management, LLC (“Cortina”) is deemed to have sole voting power over 737,008 shares of common stock and sole dispositive power over 1,022,009 shares of common stock. Cortina’s address is 825 N Jefferson Street, Suite 400, Milwaukee, WI 53202.
|
(2)
|
Based on the Schedule 13G filed with the SEC on April 4, 2014. Includes 629,336 shares of common stock held by Deerfield Special Situations Fund, L.P. (“DSSF”) and 510,764 shares of common stock held by Deerfield Special Situations International Master Fund, L.P. (“DSSIMF”). Deerfield Mgmt, L.P. (“DM”) is the general partner of, and Deerfield Management Company, L.P. (“DMC”) is the investment advisor for, each of DSSF and DSSIMF. DM, DMC and James E. Flynn may be deemed to be the beneficial owner of shares held by DSSF and DSSIMF. The address of DSSF, DSSIMF, DM, DMC and Mr. Flynn is 780 Third Avenue, 37
th
Floor, New York, NY 10017.
|
(3)
|
Based on the Schedule 13G/A filed with the SEC on February 14, 2014. Includes (i) 83,969 shares of common stock, (ii) 1,583,329 shares of common stock issuable upon conversion of preferred stock and (iii) 339,591 shares of common stock issuable upon exercise of warrants, collectively owned by funds and accounts for which Great Point Partners, LLC (“GPP”) is the investment manager. By virtue of such status, GPP may be deemed to be the beneficial owner of such shares. Each of Dr. Jeffrey R. Jay, M.D., as senior managing member of GPP, and David Kroin, as special managing member of GPP, has voting and investment power with respect to such shares and therefore may be deemed to be the beneficial owner thereof. GPP, Dr. Jay, and Mr. Kroin disclaim beneficial ownership of such shares, except to the extent of their respective pecuniary interests therein. Does not include 360,409 shares of common stock issuable upon the exercise of warrants held by GPP for which beneficial ownership is not permitted pursuant to certain applicable beneficial ownership limitation restrictions. GPP’s address is 165 Mason Street, 3
rd
Floor, Greenwich, CT 06830.
|
(4)
|
Based on the Schedule 13G filed with the SEC on April 18, 2013. Includes 989,477 shares remaining from those issued to IPP Holding Company, LLC (“IPP”) on June 15, 2012 upon conversion of the convertible note in the original principal amount of $3,000,000. IPP and W. Ray Cross, a member and manager of IPP, are deemed to share voting and dispositive power over all 989,477 shares. IPP’s address is 2773 Marshall Drive, Tifton, GA 31794.
|
(5)
|
Based on the Schedule 13D filed with the SEC on August 29, 2012, as amended by the Schedule 13D/A filed with the SEC on September 5, 2013. Includes (i) 1,633,333 shares of common stock issuable upon conversion of preferred stock and (ii) 490,000 shares of common stock issuable upon exercise of warrants, collectively beneficially owned by Noro-Moseley Partners VI, L.P. and its general partner, Moseley and Company VI, LLC. Both entities are deemed to share voting and dispositive power of all 2,123,333 shares. Noro-Moseley’s address is 4200 Northside Parkway, N.W. Building 9, Atlanta, GA 30327.
|
(6)
|
Based on the Schedule 13G/A filed with the SEC on May 7, 2014. Clients of Pembroke Management, LTD (“Pembroke”) have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the common stock beneficially owned by Pembroke. Pembroke’s address is 1002 Sherbrooke Street West, Suite 1700, Montreal, Quebec H3A 354.
|
(7)
|
Includes 157,500 shares that are issuable upon exercise of currently exercisable options.
|
(8)
|
Includes 10,000 shares held by Mr. Phillips’ wife and 45,000 shares that are issuable upon exercise of currently exercisable options.
|
(9)
|
Mr. Seefeld resigned as our Senior Vice President, Solutions Strategy effective April 22, 2014. Includes 119,444 shares that are issuable upon exercise of currently exercisable options.
|
(10)
|
Includes 2,000 shares held by Mr. Turner’s wife and 35,000 shares that are issuable upon exercise of currently exercisable options.
|
(11)
|
Includes 45,000 shares that are issuable upon exercise of currently exercisable options.
|
(12)
|
Includes 2,160 shares held by Mr. Watson’s wife and 424,721 shares that are issuable upon currently exercisable options.
|
(13)
|
Includes 14,160 shares held indirectly and 890,831 shares that are issuable upon exercise of currently exercisable options.
|
|
2013
|
|
2012
|
||||
Audit Fees
|
$
|
1,331,000
|
|
|
$
|
275,000
|
|
Audit-Related Fees
|
—
|
|
|
—
|
|
||
Tax Fees
|
—
|
|
|
15,000
|
|
||
All Other Fees
|
—
|
|
|
—
|
|
||
Total Fees
|
$
|
1,331,000
|
|
|
$
|
290,000
|
|
|
|
STREAMLINE HEALTH SOLUTIONS, INC.
|
|
By:
|
/
S
/ R
OBERT
E. W
ATSON
|
|
|
Robert E. Watson
Chief Executive Officer
|
/s/ ROBERT E. WATSON
|
Chief Executive Officer
And Director
(Principal Executive Officer)
|
June 13, 2014
|
Robert E. Watson
|
|
|
/s/ JONATHAN R. PHILLIPS
|
Director
|
June 13, 2014
|
Jonathan R. Phillips
|
|
|
/s/ EDWARD J. VONDERBRINK
|
Director
|
June 13, 2014
|
Edward J. VonderBrink
|
|
|
/s/ ANDREW L. TURNER
|
Director
|
June 13, 2014
|
Andrew L. Turner
|
|
|
/s/ MICHAEL K. KAPLAN
|
Director
|
June 13, 2014
|
Michael K. Kaplan
|
|
|
/s/ ALLEN S. MOSELEY
|
Director
|
June 13, 2014
|
Allen S. Moseley
|
|
|
/s/ MICHAEL G. VALENTINE
|
Director
|
June 13, 2014
|
Michael G. Valentine
|
|
|
/s/ NICHOLAS A. MEEKS
|
Chief Financial Officer (Principal Financial Officer)
|
June 13, 2014
|
Nicholas A. Meeks
|
|
|
/s/ CAROLYN J. ZELNIO
|
Chief Accounting Officer (Principal Accounting Officer)
|
June 13, 2014
|
Carolyn Zelnio
|
|
|
|
3.1(a)
|
Certificate of Incorporation of Streamline Health Solutions, Inc. f/k/a/ LanVision Systems, Inc. (Incorporated herein by reference from the Registration Statement on Form S-1, File Number 333-01494, as filed with the Commission on April 15, 1996.)
|
3.1(b)
|
Certificate of Incorporation of Streamline Health Solutions, Inc., amendment No. 1. (Incorporated herein by reference from Exhibit 3.1(b) of the Form 10-Q, as filed with the Commission on September 8, 2006.)
|
3.2
|
Bylaws of Streamline Health Solutions, Inc., as amended and restated on March 28, 2014, (Incorporated herein by reference from Exhibit 5.03 of Form 8-K, as filed with the Commission on April 3, 2014.)
|
3.3
|
Certificate of the Designations, Powers, Preferences and Rights of the Convertible Preferred Stock (Par Value $.01 Per Share) of Streamline Health Solutions, Inc. (Incorporated herein by reference from the Registration Statement on Form S-1, File Number 333-01494, as filed with the Commission on April 15, 1996.)
|
4.1
|
Specimen Common Stock Certificate of Streamline Health Solutions, Inc. (Incorporated herein by reference from the Registration Statement on Form S-1, File Number 333-01494, as filed with the Commission on April 15, 1996.)
|
10.1#
|
Streamline Health Solutions, Inc. 1996 Employee Stock Option Plan. (Incorporated herein by reference from the Registration Statement on Form S-1, File Number 333-01494, as filed with the Commission on April 15, 1996.)
|
10.2#
|
Streamline Health Solutions, Inc. 1996 Employee Stock Purchase Plan, as amended and restated effective July 1, 2013. (Incorporated herein by reference from the Registration Statement on Form S-8, File Number 333-188763, as filed with the Commission on May 22, 2013.)
|
10.3(a)#
|
2005 Incentive Compensation Plan of Streamline Health Solutions, Inc. (Incorporated herein by reference from Exhibit 10.1 of the Form 8-K, as filed with the Commission on May 26, 2005.)
|
10.3(b)#
|
Amendment No. 1 to 2005 Incentive Compensation Plan of Streamline Health Solutions, Inc.(Incorporated herein by reference to Annex 1 of Definitive Proxy Statement on Schedule 14A, as filed with the Commission on April 13, 2011.)
|
10.3(c)#
|
Amendment No. 2 to 2005 Incentive Compensation Plan of Streamline Health Solutions, Inc. (Incorporated herein by reference to Exhibit 4.3 of Registration Statement on Form S-8, as filed with the Commission on November 15, 2012.)
|
10.4#
|
Employment Agreement dated April 22, 2013 between Streamline Health Solutions, Inc. and Robert E. Watson, (Incorporated herein by reference from Exhibit 10.1 of the Form 8-K, as filed with the Commission on April 26, 2013.)
|
10.5**
|
Reseller Agreement between IDX Information Systems Corporation and Streamline Health Solutions, Inc. entered into on January 30, 2002. (Incorporated herein by reference from Exhibit 10.11 of the Form 10-K for the fiscal year ended January 31, 2002, as filed with the Commission on April 29, 2002.)
|
10.6
|
First Amendment to the Reseller Agreement between IDX Information Systems Corporation and Streamline Health Solutions, Inc. entered into on January 30, 2002 (Incorporated herein by reference from Exhibit 10 of the Form 10-Q for the quarter ended April 30, 2002, as filed with the Commission on June 4, 2002.)
|
10.7#
|
Form of Indemnification Agreement for all directors and officers of Streamline Health Solutions, Inc. (Incorporated herein by reference from Exhibit 10.1 of the Form 8-K, as filed with the Commission on June 7, 2006.)
|
10.8#
|
Employment Agreement among Streamline Health Solutions, Inc., Streamline Health, Inc. and Nicholas A. Meeks effective May 22, 2013 (Incorporated herein by reference from Exhibit 10.2 of the Form 8-K, as filed with the Commission on May 20, 2013.)
|
10.9#***
|
Amended and Restated Employment Agreement among Streamline Health Solutions, Inc. and Richard D. Nelli effective February 20, 2014.
|
10.10#
|
2013 Stock Incentive Plan of Streamline Health Solutions, Inc. (Incorporated herein by reference from Exhibit 99 of the Form S-8, as filed with the Commission on May 22, 2013.)
|
10.11#
|
Form of Stock Option Agreement pursuant to the 2013 Stock Incentive Plan of Streamline Health Solutions, Inc. (Incorporated herein by reference from Exhibit 10.2 of the Form 10-Q, as filed with the Commission on June 14, 2013.)
|
10.12#
|
Form of Restricted Stock Award Agreement (for Directors) pursuant to the 2013 Stock Incentive Plan of Streamline Health Solutions, Inc. (Incorporated herein by reference from Exhibit 10.3 of the Form 10-Q, as filed with the Commission on June 14, 2013.)
|
10.13
|
Purchase Agreement dated as of November 22, 2013 between Streamline Health Solutions and Craig-Hallum Capital Group LLC, as underwriter and representative of the several underwriters. (Incorporated herein by reference from Exhibit 1.1 of the Form 8-K, as filed with the Commission on November 27, 2013.)
|
10.14#
|
Employment Agreement dated September 8, 2013 between Streamline Health Solutions, Inc. and Jack W. Kennedy Jr. (Incorporated by reference from Exhibit 10.1 of the Form 10-Q, as filed with the Commission on December 16, 2013.)
|
10.14(b)#***
|
Amendment No. 1 to Employment Agreement dated March 6, 2014 between Streamline Health Solutions, Inc. and Jack W. Kennedy Jr.
|
10.15
|
Software License and Royalty Agreement dated October 25, 2013 between Streamline Health, Inc. and Montefiore Medical Center. (Incorporated by reference from Exhibit 10.2 of the Form 10-Q, as filed with the Commission on December 16, 2013.)
|
10.14
|
Registration Rights Agreement among Streamline Health Solutions, Inc., Interpoint Partners, LLC dated December 7, 2011. (Incorporated herein by reference from Exhibit 10.3 of the Form 8-K, as filed with the Commission on December 8, 2011.)
|
10.15
|
Settlement Agreement and Mutual Release dated as of November 20, 2013 by and among Streamline Health Solutions, Inc., IPP Acquisition, LLC, IPP Holding Company, LLC, W. Ray Cross, as seller representative, and each of the members of IPP Holding Company, LLC named therein (Incorporated by reference from Exhibit 10.3 of the Form 10-Q, as filed with the Commission on December 16, 2013.)
|
10.16
|
Subordinated Promissory Note dated November 20, 2013 made by IPP Acquisition, LLC and Streamline Health Solutions, Inc. (Incorporated by reference from Exhibit 10.4 of the Form 10-Q, as filed with the Commission on December 16, 2013.)
|
10.17
|
Amended and Restated Senior Credit Agreement dated as of December 13, 2013 by and between Streamline Health, Inc. and Fifth Third Bank. (Incorporated by reference from Exhibit 10.5 of the Form 10-Q, as filed with the Commission on December 16, 2013.)
|
10.18(a)***
|
Amendment No. 1 and Waiver under Amended and Restated Senior Credit Agreement dated as of April 15, 2014 by and between Streamline Health, Inc. and Fifth Third Bank
|
10.18
|
Subordinated Credit Agreement between Streamline Health, Inc. and Fifth Third Bank dated December 7, 2011. (Incorporated herein by reference from Exhibit 10.4 of the Form 8-K, as filed with the Commission on December 8, 2011.)
|
10.19(a)
|
Amendment No. 1 to Subordinated Credit Agreement, dated August 16, 2012, among Streamline Health, Inc., IPP Acquisition, LLC and Fifth Third Bank. (Incorporated herein by reference from Exhibit 10.2 of the Form 8-K, as filed with the Commission on August 21, 2012.)
|
10.19(b)
|
Amendment No. 3 to Subordinated Credit Agreement dated as of December 13, 2013 by and between Streamline Health, Inc. and Fifth Third Bank (Incorporated by reference from Exhibit 10.6 of the Form 10-Q, as filed with the Commission on December 16, 2013.)
|
10.2
|
Securities Purchase Agreement, among Streamline Health Solutions, Inc, and each purchaser identified on the signature pages thereto, dated August 16, 2012. (Incorporated herein by reference from Exhibit 10.4 of the Form 8-K, as filed with the Commission on August 21, 2012.)
|
10.21
|
Registration Rights Agreement, among Streamline Health Solutions, Inc, and each of the purchasers signatory thereto, dated August 16, 2012. (Incorporated herein by reference from Exhibit 10.7 of the Form 8-K, as filed with the Commission on August 21, 2012.)
|
10.22
|
Agreement and Plan of Merger dated January 16, 2014 by and among Streamline Health, Inc., Arch United Acquisition, Inc., Unibased Systems Architecture, Inc. and Barry M. Rundquist, as Representative. (Incorporated herein by reference from Exhibit 2.1 of the Form 8-K, as filed with the Commission on January 23, 2014.)
|
10.23#***
|
Employment Agreement dated March 6, 2014 by and between Streamline Health Solutions, Inc. and Lois E. Rickard.
|
10.24#***
|
Employment Agreement dated February 3, 2014 by and between Streamline Health Solutions, Inc. and Randolph Salisbury.
|
14.1
|
Code of Ethics (Incorporated herein by reference from Exhibit 14.1 of the Form 10-K for the fiscal year ended January 31, 2004, as filed with the Commission on April 8, 2004.)
|
21.1***
|
Subsidiaries of Streamline Health Solutions, Inc.
|
23.1***
|
Consent of Independent Registered Public Accounting Firm - KPMG LLP
|
23.2***
|
Consent of Independent Registered Public Accounting Firm - BDO USA, LLP
|
31.1***
|
Certification by Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
31.2***
|
Certification by Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
32.1***
|
Certification by Chief Executive Officer pursuant to U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
32.2***
|
Certification by Chief Financial Officer pursuant to U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101
|
The following financial information from Streamline Health Solutions, Inc.'s Annual Report on Form 10- K for the fiscal year ended January 31, 2014 filed with the SEC
on June 13, 2014,
formatted in XBRL includes: (i) Consolidated Balance Sheets at January 31, 2014 and 2013, (ii) Consolidated Statements of Operations for the two years ended January 31, 2014, (iii) Consolidated Statements of Changes in Stockholders' Equity for the two years ended January 31, 2014, (iv) Consolidated Statements of Cash Flows for the two years ended January 31, 2014, and (v) the Notes to Consolidated Financial Statements.
|
**
|
The Company has applied for Confidential Treatment of portions of this agreement with the Securities and Exchange Commission.
|
***
|
Filed herewith.
|
#
|
Management Contracts and Compensatory Arrangements.
|
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
|
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
|
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
|
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
|
/s/ RN
|
|
/s/ REW
|
Initialed by Executive
|
|
Initialed by the Company
|
|
STREAMLINE HEALTH SOLUTIONS, INC.
|
|
|
|
|
|
By:
|
/s/ Robert E. Watson
|
|
|
Robert E. Watson
|
|
|
President and Chief Executive Officer
|
|
|
|
|
EXECUTIVE
|
|
|
|
|
|
/s/ Richard Nelli
|
|
|
Richard Nelli
|
1.
|
Start Date
. Executive’s start date was the Original Effective Date.
|
2.
|
Base Salary
. From and after the Effective Date, Base Salary will be paid at an annualized rate of $235,000, which will be subject to annual review and adjustment by the Committee or the Board but will not be reduced below $235,000. Such amounts will be payable to Executive in accordance with the normal payroll practices of the Company.
|
3.
|
Annual Bonus
. Target annual bonus and target goals will be set by the Committee annually. Target annual bonus will be 45% of Executive’s then-current annual base salary. The annual bonus will be paid pursuant to such conditions as are established by the Committee and, to the extent payable under a bonus plan, subject to such terms and conditions as may be set out in such plan. The annual bonus will, if payable, be paid in cash no later than March 14 of the fiscal year following the fiscal year during which Executive’s right to the annual bonus vests. For the portion of the fiscal year from the Effective Date until January 31, 2015, Executive will receive a pro-rated annual bonus for such portion of the fiscal year. For the portion of the fiscal year from February 1, 2014 until the Effective Date, Executive will receive a pro-rated annual bonus at the rate set forth in the Original Agreement for such portion of the fiscal year.
|
4.
|
Benefits
. Executive will be eligible to participate in the Company’s benefit plans on the same terms and conditions as provided for other Company executives, subject to all terms and conditions of such plans as they may be amended from time to time
,
and will accrue paid time off totaling 20 days per annum.
|
5.
|
Grant of Stock Options
. On January 28, 2013, Executive was granted stock options to purchase an aggregate of stock options for 150,000 shares of common stock of the Company, with an option exercise price equal to the closing price on the date of grant of such stock as reported by NASDAQ CM. The options granted shall continue to vest according to the terms set forth in the applicable grant agreement. On the Effective Date, Executive will receive an additional grant of stock options for 50,000 shares of common stock of the Company, with an option exercise price equal to the closing price on the date of grant of such stock as reported by NASDAQ CM. Such options will have a 10-year term, will vest monthly in 36 equal installments commencing on the first month after the grant date (such vesting to be subject to the continued employment of Executive) and will be subject to such other terms and conditions as apply under the
Company
’s 2013 Stock Incentive Plan or other applicable stock plan and the related option agreement.
|
|
1.
|
EMPLOYMENT
|
2.
|
POSITION AND DUTIES
|
3.
|
COMPENSATION AND BENEFITS
|
4.
|
EXPENSES
|
5.
|
BINDING AGREEMENT
|
6.
|
OUTSIDE EMPLOYMENT
|
7.
|
CONFIDENTIAL INFORMATION AND TRADE SECRETS
|
8.
|
PROPERTY OF THE COMPANY
|
9.
|
PROTECTIVE COVENANTS
|
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
|
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
|
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
|
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West
Virginia
Wisconsin
Wyoming
|
10.
|
TERM
|
11.
|
TERMINATION
|
12.
|
ADVICE TO PROSPECTIVE EMPLOYERS
|
13.
|
CHANGE IN CONTROL
|
(b)
|
For purposes of this Agreement, “Change in Control” means any of the following events:
|
(iii)
|
The Company sells all or substantially all of the assets of the Company; or
|
14.
|
ACKNOWLEDGEMENTS
|
15.
|
NOTICES
|
(a)
|
In the case of the Company, if addressed to it as follows: Streamline
|
16.
|
ASSIGNMENT, SUCCESSORS AND ASSIGNS
|
17.
|
MODIFICATION
|
18.
|
SEVERABILITY
|
19.
|
COUNTERPARTS
|
20.
|
ENTIRE AGREEMENT
|
21.
|
DISPUTE RESOLUTION
|
|
|
|
Initialed by Executive
|
|
Initialed by the Company
|
22.
|
CODE SECTION 409A
|
23.
|
WITHHOLDING
.
|
|
STREAMLINE HEALTH SOLUTIONS, INC.
|
|
|
|
|
|
By:
|
/s/ Robert E. Watson
|
|
|
Robert E. Watson
|
|
|
President and Chief Executive Officer
|
|
|
|
|
EXECUTIVE
|
|
|
|
|
|
/s/ Lois Rickard
|
|
|
Lois Rickard
|
1.
|
Start Date
. Executive’s start date will be March 3, 2014.
|
2.
|
Base Salary
. Base Salary will be paid at an annualized rate of $195,000, which will be subject to annual review and adjustment by the Committee or the Board but will not be reduced below $195,000. Such amounts will be payable to Executive in accordance with the normal payroll practices of the Company.
|
3.
|
Annual Bonus
. Target annual bonus and target goals will be set by the Committee annually.
|
4.
|
Benefits
. Executive will be eligible to participate in the Company’s benefit plans on the same terms and conditions as provided for other Company executives, subject to all terms and conditions of such plans as they may be amended from time to time, and will accrue paid time off totaling 20 days per annum.
|
5.
|
Grant of Stock Options
. Executive will receive a grant of stock options for 75,000 shares of common stock of the Company, as of the start date referred to in paragraph 1 above, with an option exercise price equal to the closing price on the date of grant of such stock as reported by NASDAQ CM. Such options will have a 10-year term, will vest monthly in 36 equal installments commencing on the first month after the grant date (such vesting to be subject to the continued employment of Executive) and will be subject to such other terms and conditions as apply under the Company’s 2013 Stock Incentive Plan or other applicable stock plan and the related option agreement.
|
|
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
|
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
|
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
|
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
|
/s/ RN
|
|
/s/ REW
|
Initialed by Executive
|
|
Initialed by the Company
|
|
STREAMLINE HEALTH SOLUTIONS, INC.
|
|
|
|
|
|
By:
|
/s/ Robert E. Watson
|
|
|
Robert E. Watson
|
|
|
President and Chief Executive Officer
|
|
|
|
|
EXECUTIVE
|
|
|
|
|
|
/s/ Randolph Salisbury
|
|
|
Randolph Salisbury
|
1.
|
Start Date
. Executive’s start date will be February 3, 2014.
|
2.
|
Base Salary
. Base Salary will be paid at an annualized rate of $200,000, which will be subject to annual review and adjustment by the Committee or the Board but will not be reduced below $200,000. Such amounts will be payable to Executive in accordance with the normal payroll practices of the Company.
|
3.
|
Annual Bonus
. Target annual bonus and target goals will be set by the Committee annually. Target annual bonus will be 40% of Executive’s then-current annual base salary. The annual bonus will be paid pursuant to such conditions as are established by the Committee and, to the extent payable under a bonus plan, subject to such terms and conditions as may be set out in such plan. The annual bonus will, if payable, be paid in cash no later than March 14 of the fiscal year following the fiscal year during which Executive’s right to the annual bonus vests. For the portion of the fiscal year from Executive’s start date until January 31, 2015, Executive will receive a pro-rated annual bonus for such portion of the fiscal year.
|
4.
|
Benefits
. Executive will be eligible to participate in the Company’s benefit plans on the same terms and conditions as provided for other Company executives, subject to all terms and conditions of such plans as they may be amended from time to time
,
and will accrue paid time off totaling 20 days per annum.
|
5.
|
Grant of Stock Options
. Executive will receive a grant of stock options for 125,000 shares of common stock of the Company, as of the start date referred to in paragraph 1 above, with an option exercise price equal to the closing price on the date of grant of such stock as reported by NASDAQ CM. Such options will have a 10-year term, will vest monthly in 36 equal installments commencing on the first month after the grant date (such vesting to be subject to the continued employment of Executive) and will be subject to such other terms and conditions as apply under the
Company
’s 2013 Stock Incentive Plan or other applicable stock plan and the related option agreement.
|
|
|
“Company”
|
|
|
STREAMLINE HEALTH SOLUTIONS, INC.
|
|
|
|
|
|
By:
|
/s/ Robert E. Watson
|
|
Name:
|
Robert E. Watson
|
|
Title:
|
President and Chief Executive Officer
|
|
|
|
|
“Executive”
|
|
|
|
|
|
/s/ Jack W. Kennedy Jr.
|
|
|
Jack W. Kennedy Jr.
|
Four Quarters Ending
July 31, 2014 and each October 31, January 31, April 30 and July 31 thereafter;
|
Ratio
2.50:1
|
|
STREAMLINE HEALTH, INC.
|
|
|
|
|
|
By:
|
/s/ Nicholas A. Meeks
|
|
Name:
|
Nicholas A. Meeks
|
|
Title:
|
Senior Vice President and Chief Financial Officer
|
|
|
|
|
STREAMLINE HEALTH SOLUTIONS, INC.
|
|
|
UNIBASED SYSTEMS ARCHITECTURE, INC.
|
|
|
META HEALTH TECHNOLOGY, INC.
|
|
|
|
|
|
By:
|
/s/ Nicholas A. Meeks
|
|
Name:
|
Nicholas A. Meeks
|
|
Title:
|
Senior Vice President and Chief Financial Officer
|
|
|
|
|
FIFTH THIRD BANK
|
|
|
|
|
|
By:
|
/s/ Daniel G. Feldman
|
|
Name:
|
Daniel G. Feldmann
|
|
Title:
|
Vice President
|
Name
|
Jurisdiction of Incorporation
|
|
% Owned
|
Streamline Health, Inc.
|
Ohio
|
|
100%
|
•
|
insufficient, inadequately trained personnel with U.S. GAAP knowledge necessary to ensure appropriate accounting for routine and non-routine significant transactions;
|
•
|
ineffective assessment of risks related to achieving reliable financial reporting;
|
•
|
ineffective written policies and procedures and monitoring of internal controls;
|
•
|
ineffective internal controls over accounting for revenues and the related accounts receivable, contracts receivable, and deferred revenues;
|
•
|
ineffective internal controls over accounting for period-end accounts payable and accrued liabilities;
|
•
|
ineffective controls over segregation of duties related to recording accounts receivable transactions and cash receipts and purchase and expense transactions and cash disbursements, and safeguarding of cash;
|
•
|
ineffective internal controls over accounting for capitalized software development costs and the related amortization; and
|
•
|
ineffective internal controls over information technology systems and end-user computing applications to properly restrict access and ensure appropriate segregation of duties affecting transactional data and recording of journal entries.
|
June 13, 2014
|
/s/ Robert E. Watson
|
|
Chief Executive Officer and
President
|
June 13, 2014
|
/s/ Nicholas A. Meeks
|
|
Chief Financial Officer
|