|
|
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;
|
•
|
the success of our relationships with channel partners;
|
•
|
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 Stock 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
|
|
November 30, 2022
|
|
None
|
Cincinnati, OH
|
21,700
|
|
|
Vacated Office
|
|
July 15, 2015
|
|
None
|
New York, NY
|
10,350
|
|
|
Satellite Office
|
|
November 29, 2019
|
|
None
|
Cincinnati, OH
|
1,166
|
|
|
Vacated Data Center
|
|
February, 2015
|
|
None
|
Fiscal Year 2014
|
High
|
|
Low
|
||||
4
th
Quarter (November 1, 2014 through January 31, 2015)
|
$
|
4.38
|
|
|
$
|
3.25
|
|
3
rd
Quarter (August 1, 2014 through October 31, 2014)
|
5.01
|
|
|
3.22
|
|
||
2
nd
Quarter (May 1, 2014 through July 31, 2014)
|
5.77
|
|
|
4.17
|
|
||
1
st
Quarter (February 1, 2014 through April 30, 2014)
|
6.75
|
|
|
4.70
|
|
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
|
|
Total Return To Shareholders
|
||||||||||||||||
(Includes reinvestment of dividends)
|
||||||||||||||||
|
|
|
||||||||||||||
ANNUAL RETURN PERCENTAGE
|
|
|
||||||||||||||
|
|
Years ended January 31,
|
||||||||||||||
Company / Index
|
|
2011
|
2012
|
2013
|
2014
|
2015
|
||||||||||
Streamline Health Solutions, Inc.
|
|
(15.84
|
)%
|
(11.29
|
)%
|
229.09
|
%
|
11.23
|
%
|
(33.44
|
)%
|
|||||
S&P SmallCap 600 Index
|
|
30.93
|
|
7.50
|
|
15.45
|
|
28.44
|
|
6.15
|
|
|||||
S&P 1500 Health Care Technology Index
|
|
32.71
|
|
10.42
|
|
7.83
|
|
38.55
|
|
0.79
|
|
|||||
|
|
|
|
|
|
|
||||||||||
INDEXED RETURNS
|
|
|
|
|
|
|
||||||||||
|
Base Period
|
Years ended January 31,
|
||||||||||||||
Company / Index
|
1/31/2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
||||||||||
Streamline Health Solutions, Inc.
|
100
|
$
|
84.16
|
|
$
|
74.66
|
|
$
|
245.70
|
|
$
|
273.30
|
|
$
|
181.90
|
|
S&P SmallCap 600 Index
|
100
|
130.93
|
|
140.75
|
|
162.50
|
|
208.71
|
|
221.55
|
|
|||||
S&P 1500 Health Care Technology Index
|
100
|
132.71
|
|
146.55
|
|
158.03
|
|
218.95
|
|
220.69
|
|
Consolidated Statements of Operations Data (a):
|
Fiscal Year
|
||||||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|
2011
|
|
2010
|
||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
||||||||||
Systems sales
|
$
|
1,214,879
|
|
|
$
|
3,239,569
|
|
|
$
|
1,463,225
|
|
|
$
|
722,195
|
|
|
$
|
2,557,797
|
|
Professional services
|
2,580,167
|
|
|
3,641,731
|
|
|
3,792,569
|
|
|
3,369,875
|
|
|
3,641,265
|
|
|||||
Maintenance and support
|
16,157,371
|
|
|
13,986,566
|
|
|
11,211,197
|
|
|
8,867,697
|
|
|
7,856,704
|
|
|||||
Software as a service
|
7,672,990
|
|
|
7,626,837
|
|
|
7,299,812
|
|
|
4,156,441
|
|
|
3,550,225
|
|
|||||
Total revenues
|
27,625,407
|
|
|
28,494,703
|
|
|
23,766,803
|
|
|
17,116,208
|
|
|
17,605,991
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of systems sales
|
3,536,495
|
|
|
3,142,525
|
|
|
2,747,230
|
|
|
2,237,899
|
|
|
3,827,313
|
|
|||||
Cost of services
|
3,458,984
|
|
|
4,052,113
|
|
|
3,087,997
|
|
|
2,630,314
|
|
|
3,120,740
|
|
|||||
Cost of maintenance and support
|
3,087,842
|
|
|
3,460,500
|
|
|
3,245,569
|
|
|
2,199,803
|
|
|
2,440,838
|
|
|||||
Cost of software as a service
|
2,920,403
|
|
|
2,523,184
|
|
|
2,512,156
|
|
|
1,815,986
|
|
|
1,902,521
|
|
|||||
Selling, general and administrative
|
16,225,574
|
|
|
14,546,335
|
|
|
10,060,469
|
|
|
6,577,101
|
|
|
6,406,190
|
|
|||||
Research and development
|
9,756,206
|
|
|
7,088,077
|
|
|
2,948,313
|
|
|
1,408,749
|
|
|
1,759,694
|
|
|||||
Impairment of intangible assets (b)
|
1,952,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total operating expenses
|
40,937,504
|
|
|
34,812,734
|
|
|
24,601,734
|
|
|
16,869,852
|
|
|
19,457,296
|
|
|||||
Operating loss
|
(13,312,097
|
)
|
|
(6,318,031
|
)
|
|
(834,931
|
)
|
|
246,356
|
|
|
(1,851,305
|
)
|
|||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense (c)
|
(748,969
|
)
|
|
(1,765,813
|
)
|
|
(1,957,010
|
)
|
|
(178,524
|
)
|
|
(116,392
|
)
|
|||||
Loss on conversion of convertible notes (d)
|
—
|
|
|
—
|
|
|
(5,970,002
|
)
|
|
—
|
|
|
—
|
|
|||||
Loss on early extinguishment of debt
|
(429,849
|
)
|
|
(160,713
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Miscellaneous (expenses) income (e)
|
1,592,449
|
|
|
(3,573,091
|
)
|
|
494,677
|
|
|
(30,943
|
)
|
|
34,080
|
|
|||||
Loss before income taxes
|
(12,898,466
|
)
|
|
(11,817,648
|
)
|
|
(8,267,266
|
)
|
|
36,889
|
|
|
(1,933,617
|
)
|
|||||
Income tax benefit
|
887,009
|
|
|
100,458
|
|
|
2,888,537
|
|
|
(24,315
|
)
|
|
(1,017,000
|
)
|
|||||
Net loss
|
(12,011,457
|
)
|
|
(11,717,190
|
)
|
|
(5,378,729
|
)
|
|
12,574
|
|
|
(2,950,617
|
)
|
|||||
Less: deemed dividends on Series A Preferred Shares (d)
|
(1,038,310
|
)
|
|
(1,180,904
|
)
|
|
(176,048
|
)
|
|
—
|
|
|
—
|
|
|||||
Net loss attributable to common shareholders
|
$
|
(13,049,767
|
)
|
|
$
|
(12,898,094
|
)
|
|
$
|
(5,554,777
|
)
|
|
$
|
12,574
|
|
|
$
|
(2,950,617
|
)
|
Basic net loss per common share
|
$
|
(0.71
|
)
|
|
$
|
(0.94
|
)
|
|
$
|
(0.48
|
)
|
|
$
|
—
|
|
|
$
|
(0.31
|
)
|
Number of shares used in basic per common share computation
|
18,261,800
|
|
|
13,747,700
|
|
|
11,634,540
|
|
|
9,887,841
|
|
|
9,504,986
|
|
|||||
Diluted net loss per common share
|
$
|
(0.71
|
)
|
|
$
|
(0.94
|
)
|
|
$
|
(0.48
|
)
|
|
$
|
—
|
|
|
$
|
(0.31
|
)
|
Number of shares used in diluted per common share computation
|
18,261,800
|
|
|
13,747,700
|
|
|
11,634,540
|
|
|
9,899,073
|
|
|
9,504,986
|
|
(a)
|
Fiscal years 2011, 2012, 2013, and 2014 amounts include the results of operations of the following acquisitions: Interpoint Partners, LLC (“Interpoint”), from December 11, 2011; Meta Health Technology, Inc. (“Meta”), from August 16, 2012; Clinical Looking Glass (“CLG”), from October 25, 2013; and Unibased Systems Architecture, Inc., from February 3, 2014.
|
(b)
|
In fiscal 2014, Meta trade name was deemed impaired and written off in full, resulting in a
$1,952,000
loss.
|
(c)
|
Interest expense increased during 2012 primarily as a result of increases in the term loans interest and success fees associated with the Fifth Third Bank credit agreements, entered into to fund the Interpoint and Meta acquisitions - Please refer to Note 6 - Debt to our consolidated financial statements included herein for additional details on these credit agreements.
|
(d)
|
Please refer to Note 15 - Private Placement Investment to our consolidated financial statements included herein for details on convertible notes and Series A Preferred Shares.
|
(e)
|
Fiscal 2013 includes expense related to cumulative change in value of the earn-out totaling
$3,580,000
. Fiscal 2014 includes
$2,283,000
in income related to valuation adjustment for warrants liability.
|
Consolidated Balance Sheets Data (a):
|
January 31
|
||||||||||||||||||
|
2015
|
|
2014
|
|
2013
|
|
2012
|
|
2011
|
||||||||||
Cash and cash equivalents (b)
|
$
|
6,522,600
|
|
|
$
|
17,924,886
|
|
|
$
|
7,500,256
|
|
|
$
|
2,243,054
|
|
|
$
|
1,403,949
|
|
Current assets
|
16,505,723
|
|
|
29,688,229
|
|
|
19,877,778
|
|
|
8,408,243
|
|
|
5,938,415
|
|
|||||
Total assets
|
55,779,115
|
|
|
65,578,874
|
|
|
55,266,578
|
|
|
25,141,058
|
|
|
16,015,422
|
|
|||||
Current liabilities
|
14,299,591
|
|
|
15,411,979
|
|
|
17,325,422
|
|
|
8,742,621
|
|
|
8,159,949
|
|
|||||
Non-current liabilities
|
15,839,758
|
|
|
15,076,180
|
|
|
16,716,138
|
|
|
8,399,913
|
|
|
1,261,034
|
|
|||||
Total liabilities
|
30,139,349
|
|
|
30,488,159
|
|
|
34,041,560
|
|
|
17,142,534
|
|
|
9,420,983
|
|
|||||
Series A 0% Convertible Redeemable Preferred Stock (c)
|
6,637,978
|
|
|
5,599,668
|
|
|
7,765,716
|
|
|
—
|
|
|
—
|
|
|||||
Total stockholders’ equity
|
$
|
19,001,788
|
|
|
$
|
29,491,047
|
|
|
$
|
13,459,302
|
|
|
$
|
7,998,524
|
|
|
$
|
6,594,439
|
|
(a)
|
Overall increase in January 31, 2012, 2013, 2014 and 2015 amounts resulting from the following acquisitions: Interpoint in December 2011, Meta in August 2012, CLG in October 2013, and Unibased in February 2014.
|
(b)
|
Increased January 31, 2014 balance is attributed to cash raised through the public offering of
3,450,000
shares of the Company’s common stock in November 2013, as described in Note 16 - Stockholders’ Equity to our consolidated financial statements included herein.
|
(c)
|
Please refer to Note 15 - Private Placement Investment to our consolidated financial statements included herein for details on the Series A Preferred Shares.
|
|
|
|
Fiscal Year ended January 31,
|
||||||||||||||||||||||
|
|
|
|
|
|
|
2014 to 2013 Change
|
|
2013 to 2012 Change
|
||||||||||||||||
|
2014
|
|
2013
|
|
2012
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
System sales
|
$
|
1,215
|
|
|
$
|
3,240
|
|
|
$
|
1,463
|
|
|
$
|
(2,025
|
)
|
|
(63
|
)%
|
|
$
|
1,777
|
|
|
121
|
%
|
Professional services
|
2,580
|
|
|
3,642
|
|
|
3,793
|
|
|
(1,062
|
)
|
|
(29
|
)%
|
|
(151
|
)
|
|
(4
|
)%
|
|||||
Maintenance and support
|
16,157
|
|
|
13,986
|
|
|
11,211
|
|
|
2,171
|
|
|
16
|
%
|
|
2,775
|
|
|
25
|
%
|
|||||
Software as a service
|
7,673
|
|
|
7,627
|
|
|
7,300
|
|
|
46
|
|
|
1
|
%
|
|
327
|
|
|
4
|
%
|
|||||
Total revenues
|
27,625
|
|
|
28,495
|
|
|
23,767
|
|
|
(870
|
)
|
|
(3
|
)%
|
|
4,728
|
|
|
20
|
%
|
|||||
Cost of sales
|
13,004
|
|
|
13,179
|
|
|
11,593
|
|
|
(175
|
)
|
|
(1
|
)%
|
|
1,586
|
|
|
14
|
%
|
|||||
Selling, general and administrative
|
16,226
|
|
|
14,546
|
|
|
10,061
|
|
|
1,680
|
|
|
12
|
%
|
|
4,485
|
|
|
45
|
%
|
|||||
Product research and development
|
9,756
|
|
|
7,088
|
|
|
2,948
|
|
|
2,668
|
|
|
38
|
%
|
|
4,140
|
|
|
140
|
%
|
|||||
Impairment of intangible assets
|
1,952
|
|
|
—
|
|
|
—
|
|
|
1,952
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|||||
Total operating expenses
|
40,938
|
|
|
34,813
|
|
|
24,602
|
|
|
6,125
|
|
|
18
|
%
|
|
10,211
|
|
|
42
|
%
|
|||||
Operating loss
|
(13,313
|
)
|
|
(6,318
|
)
|
|
(835
|
)
|
|
(6,995
|
)
|
|
111
|
%
|
|
(5,483
|
)
|
|
657
|
%
|
|||||
Other income (expense), net
|
415
|
|
|
(5,499
|
)
|
|
(7,432
|
)
|
|
5,914
|
|
|
(108
|
)%
|
|
1,933
|
|
|
(26
|
)%
|
|||||
Income tax benefit
|
887
|
|
|
100
|
|
|
2,888
|
|
|
787
|
|
|
787
|
%
|
|
(2,788
|
)
|
|
(97
|
)%
|
|||||
Net loss
|
$
|
(12,011
|
)
|
|
$
|
(11,717
|
)
|
|
$
|
(5,379
|
)
|
|
$
|
(294
|
)
|
|
3
|
%
|
|
$
|
(6,338
|
)
|
|
118
|
%
|
Adjusted EBITDA(1)
|
$
|
(987
|
)
|
|
$
|
1,770
|
|
|
$
|
6,560
|
|
|
$
|
(2,757
|
)
|
|
(156
|
)%
|
|
$
|
(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
|
|||||||
|
2014
|
|
2013
|
|
2012
|
|||
System sales
|
4.4
|
%
|
|
11.4
|
%
|
|
6.2
|
%
|
Professional services
|
9.3
|
|
|
12.8
|
|
|
16.0
|
|
Maintenance and support
|
58.5
|
|
|
49.1
|
|
|
47.2
|
|
Software as a service
|
27.8
|
|
|
26.9
|
|
|
30.7
|
|
Total revenues
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of sales
|
47.1
|
|
|
46.2
|
|
|
48.8
|
|
Selling, general and administrative
|
58.7
|
|
|
51.0
|
|
|
42.3
|
|
Product research and development
|
35.3
|
|
|
24.9
|
|
|
12.4
|
|
Impairment of intangible assets
|
7.1
|
|
|
—
|
|
|
—
|
|
Total operating expenses
|
148.2
|
|
|
122.2
|
|
|
103.5
|
|
Operating loss
|
(48.2
|
)
|
|
(22.2
|
)
|
|
(3.5
|
)
|
Other income (expense), net
|
1.5
|
|
|
(19.3
|
)
|
|
(31.3
|
)
|
Income tax benefit
|
3.2
|
|
|
0.5
|
|
|
12.2
|
|
Net loss
|
(43.5
|
)%
|
|
(41.1
|
)%
|
|
(22.6
|
)%
|
Cost of Sales to Revenues ratio, by revenue stream:
|
|
|
|
|
|
|||
Systems sales
|
291.1
|
%
|
|
97.0
|
%
|
|
187.8
|
%
|
Services, maintenance and support
|
34.9
|
%
|
|
42.6
|
%
|
|
42.2
|
%
|
Software as a service
|
38.1
|
%
|
|
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
|
|
2014 to 2013 Change
|
|
2013 to 2012 Change
|
||||||||||||||||||||
(in thousands):
|
2014
|
|
2013
|
|
2012
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
System Sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Proprietary software
|
$
|
1,164
|
|
|
$
|
3,154
|
|
|
$
|
1,001
|
|
|
$
|
(1,990
|
)
|
|
(63
|
)%
|
|
$
|
2,153
|
|
|
215
|
%
|
Hardware and third-party software
|
51
|
|
|
86
|
|
|
462
|
|
|
(35
|
)
|
|
(41
|
)%
|
|
(376
|
)
|
|
(81
|
)%
|
|||||
Professional services
|
2,580
|
|
|
3,642
|
|
|
3,793
|
|
|
(1,062
|
)
|
|
(29
|
)%
|
|
(151
|
)
|
|
(4
|
)%
|
|||||
Maintenance and support
|
16,157
|
|
|
13,986
|
|
|
11,211
|
|
|
2,171
|
|
|
16
|
%
|
|
2,775
|
|
|
25
|
%
|
|||||
Software as a service
|
7,673
|
|
|
7,627
|
|
|
7,300
|
|
|
46
|
|
|
1
|
%
|
|
327
|
|
|
4
|
%
|
|||||
Total Revenues (1)
|
$
|
27,625
|
|
|
$
|
28,495
|
|
|
$
|
23,767
|
|
|
$
|
(870
|
)
|
|
(3
|
)%
|
|
$
|
4,728
|
|
|
20
|
%
|
(1)
|
Fluctuation is largely attributed to incremental revenue from acquired operations, as summarized below:
|
(in thousands):
|
|
|
|
Fiscal Year
|
|
2014 to 2013 $ Change
|
|
2013 to 2012 $ Change
|
||||||||||||||
Acquisition
|
|
Acquisition date
|
|
2014
|
|
2013
|
|
2012
|
|
|
||||||||||||
Meta
|
|
August 2012
|
|
$
|
7,237
|
|
|
$
|
9,957
|
|
|
$
|
3,395
|
|
|
$
|
(2,720
|
)
|
|
$
|
6,562
|
|
CLG
|
|
October 2013
|
|
1,233
|
|
|
309
|
|
|
—
|
|
|
924
|
|
|
309
|
|
|||||
Unibased
|
|
February 2014
|
|
1,849
|
|
|
—
|
|
|
—
|
|
|
1,849
|
|
|
—
|
|
|||||
Total Revenues
|
|
|
|
$
|
10,319
|
|
|
$
|
10,266
|
|
|
$
|
3,395
|
|
|
$
|
53
|
|
|
$
|
6,871
|
|
|
Fiscal Year
|
|
2014 to 2013 Change
|
|
2013 to 2012 Change
|
||||||||||||||||||||
(in thousands):
|
2014
|
|
2013
|
|
2012
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
Cost of system sales
|
$
|
3,536
|
|
|
$
|
3,143
|
|
|
$
|
2,747
|
|
|
$
|
393
|
|
|
13
|
%
|
|
$
|
396
|
|
|
14
|
%
|
Cost of professional services
|
3,459
|
|
|
4,052
|
|
|
3,088
|
|
|
(593
|
)
|
|
(15
|
)%
|
|
964
|
|
|
31
|
%
|
|||||
Cost of maintenance and support
|
3,088
|
|
|
3,461
|
|
|
3,246
|
|
|
(373
|
)
|
|
(11
|
)%
|
|
215
|
|
|
7
|
%
|
|||||
Cost of software as a service
|
2,920
|
|
|
2,523
|
|
|
2,512
|
|
|
397
|
|
|
16
|
%
|
|
11
|
|
|
—
|
%
|
|||||
Total cost of sales
|
$
|
13,003
|
|
|
$
|
13,179
|
|
|
$
|
11,593
|
|
|
$
|
(176
|
)
|
|
(1
|
)%
|
|
$
|
1,586
|
|
|
14
|
%
|
|
Fiscal Year
|
|
2014 to 2013 Change
|
|
2013 to 2012 Change
|
||||||||||||||||||||
(in thousands):
|
2014
|
|
2013
|
|
2012
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
General and administrative expenses
|
$
|
11,799
|
|
|
$
|
11,152
|
|
|
$
|
7,702
|
|
|
$
|
647
|
|
|
6
|
%
|
|
$
|
3,450
|
|
|
45
|
%
|
Sales and marketing expenses
|
4,283
|
|
|
3,394
|
|
|
2,359
|
|
|
889
|
|
|
26
|
%
|
|
1,035
|
|
|
44
|
%
|
|||||
Total selling, general, and administrative
|
$
|
16,082
|
|
|
$
|
14,546
|
|
|
$
|
10,061
|
|
|
$
|
1,536
|
|
|
11
|
%
|
|
$
|
4,485
|
|
|
45
|
%
|
|
Fiscal Year
|
|
2014 to 2013 Change
|
|
2013 to 2012 Change
|
||||||||||||||||||||
(in thousands):
|
2014
|
|
2013
|
|
2012
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
Research and development expense
|
$
|
9,756
|
|
|
$
|
7,088
|
|
|
$
|
2,948
|
|
|
$
|
2,668
|
|
|
38
|
%
|
|
$
|
4,140
|
|
|
140
|
%
|
Capitalized software development cost
|
620
|
|
|
614
|
|
|
2,000
|
|
|
6
|
|
|
1
|
%
|
|
(1,386
|
)
|
|
(69
|
)%
|
|||||
Total R&D Cost
|
$
|
10,376
|
|
|
$
|
7,702
|
|
|
$
|
4,948
|
|
|
$
|
2,674
|
|
|
35
|
%
|
|
$
|
2,754
|
|
|
56
|
%
|
|
Fiscal Year
|
|
2014 to 2013 Change
|
|
2013 to 2012 Change
|
||||||||||||||||||||
(in thousands):
|
2014
|
|
2013
|
|
2012
|
|
$
|
|
%
|
|
$
|
|
%
|
||||||||||||
Interest expense
|
$
|
(749
|
)
|
|
$
|
(1,766
|
)
|
|
$
|
(1,957
|
)
|
|
$
|
1,017
|
|
|
(58
|
)%
|
|
$
|
191
|
|
|
(10
|
)%
|
Loss on conversion of convertible notes
|
—
|
|
|
—
|
|
|
(5,970
|
)
|
|
—
|
|
|
—
|
%
|
|
5,970
|
|
|
(100
|
)%
|
|||||
Loss on early extinguishment of debt
|
(430
|
)
|
|
(161
|
)
|
|
—
|
|
|
(269
|
)
|
|
167
|
%
|
|
(161
|
)
|
|
100
|
%
|
|||||
Miscellaneous income (expenses)
|
1,592
|
|
|
(3,573
|
)
|
|
495
|
|
|
5,165
|
|
|
(145
|
)%
|
|
(4,068
|
)
|
|
(822
|
)%
|
|||||
Total other (expense) income
|
$
|
413
|
|
|
$
|
(5,500
|
)
|
|
$
|
(7,432
|
)
|
|
$
|
5,913
|
|
|
(108
|
)%
|
|
$
|
1,932
|
|
|
(26
|
)%
|
|
2014
|
|
2013
|
||||
Company proprietary software
|
$
|
20,888,000
|
|
|
$
|
2,230,000
|
|
Hardware and third-party software
|
244,000
|
|
|
79,000
|
|
||
Professional services
|
7,485,000
|
|
|
7,255,000
|
|
||
Maintenance and support
|
21,304,000
|
|
|
25,936,000
|
|
||
Software as a service
|
22,574,000
|
|
|
21,073,000
|
|
||
Total
|
$
|
72,495,000
|
|
|
$
|
56,573,000
|
|
(in thousands):
|
SaaS Backlog at
January 31, 2015
|
|
Average
Remaining Months
in Term
|
||
7-year term
|
$
|
1,355
|
|
|
37
|
6-year term
|
627
|
|
|
41
|
|
5-year term
|
15,480
|
|
|
30
|
|
4-year term
|
575
|
|
|
33
|
|
3-year term
|
4,134
|
|
|
26
|
|
Less than 3-year term
|
403
|
|
|
10
|
|
Total SaaS backlog
|
$
|
22,574
|
|
|
|
•
|
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
|
2014
|
|
2013
|
|
2012
|
||||||
Net loss
|
$
|
(12,011
|
)
|
|
$
|
(11,717
|
)
|
|
$
|
(5,379
|
)
|
Interest expense
|
749
|
|
|
1,766
|
|
|
1,957
|
|
|||
Tax benefit (1)
|
(887
|
)
|
|
(100
|
)
|
|
(2,888
|
)
|
|||
Depreciation
|
1,005
|
|
|
718
|
|
|
726
|
|
|||
Amortization of capitalized software development costs (2)
|
3,678
|
|
|
3,192
|
|
|
2,659
|
|
|||
Amortization of intangible assets
|
1,396
|
|
|
1,342
|
|
|
584
|
|
|||
Amortization of other costs
|
166
|
|
|
74
|
|
|
35
|
|
|||
EBITDA
|
(5,904
|
)
|
|
(4,725
|
)
|
|
(2,306
|
)
|
|||
Stock-based compensation expense
|
1,934
|
|
|
1,661
|
|
|
956
|
|
|||
Loss on impairment of intangible assets
|
1,952
|
|
|
—
|
|
|
—
|
|
|||
Loss on conversion of convertible notes
|
—
|
|
|
—
|
|
|
5,970
|
|
|||
Loss on early extinguishment of debt
|
430
|
|
|
161
|
|
|
—
|
|
|||
Loss on disposal of fixed assets
|
181
|
|
|
—
|
|
|
—
|
|
|||
Non-cash valuation adjustments to assets and liabilities (3)
|
(2,154
|
)
|
|
3,427
|
|
|
87
|
|
|||
Transaction related professional fees, advisory fees, and other internal direct costs
|
182
|
|
|
769
|
|
|
796
|
|
|||
Associate severances and other costs relating to transactions or corporate restructuring
|
901
|
|
|
415
|
|
|
866
|
|
|||
Other non-recurring operating expenses (4)
|
1,491
|
|
|
62
|
|
|
191
|
|
|||
Adjusted EBITDA
|
$
|
(987
|
)
|
|
$
|
1,770
|
|
|
$
|
6,560
|
|
Adjusted EBITDA Margin (5)
|
(4
|
)%
|
|
6
|
%
|
|
28
|
%
|
|||
|
|
|
|
|
|
||||||
Adjusted EBITDA per diluted share
|
2014
|
|
2013
|
|
2012
|
||||||
Loss per share — diluted
|
$
|
(0.71
|
)
|
|
$
|
(0.94
|
)
|
|
$
|
(0.48
|
)
|
Adjusted EBITDA per adjusted diluted share (6)
|
$
|
(0.05
|
)
|
|
$
|
0.10
|
|
|
$
|
0.46
|
|
Diluted weighted average shares
|
18,261,800
|
|
|
13,747,700
|
|
|
11,634,540
|
|
|||
Includable incremental shares — adjusted EBITDA (7)
|
—
|
|
|
4,863,140
|
|
|
494,109
|
|
|||
Adjusted diluted shares
|
18,261,800
|
|
|
18,610,840
|
|
|
12,128,649
|
|
(1)
|
Fiscal 2012 includes a non-cash income tax benefit 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.
|
(2)
|
Fiscal 2014 includes
$2,220,000
relating to internally developed legacy software,
$326,000
relating to acquired internally developed software from Interpoint,
$729,000
relating to internally developed software acquired from Meta, and
$403,000
relating to internally developed software acquired from Unibased. 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. Fiscal 2012 includes
$1,969,000
relating to internally developed legacy software,
$224,000
relating to acquired internally developed software from Interpoint, and
$466,000
relating to internally developed software acquired from Meta.
|
(3)
|
Fiscal 2014 includes valuation adjustment for warrants liability of
$(2,283,000)
. Fiscal 2013 and 2012 include valuation adjustment for contingent earn-out of
$3,580,000
and
$87,000
, respectively.
|
(4)
|
Increase in fiscal 2014 is primarily due to professional services fees that are deemed non-recurring.
|
(5)
|
Adjusted EBITDA as a percentage of GAAP revenues.
|
(6)
|
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.
|
(7)
|
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
|
||||||||||||||||||
(in thousands)
|
Less than 1 year
|
|
1-3 Years
|
|
3-5 Years
|
|
More than 5 years
|
|
Total
|
||||||||||
Long-term debt obligations
|
$
|
500
|
|
|
$
|
1,750
|
|
|
$
|
7,750
|
|
|
$
|
—
|
|
|
$
|
10,000
|
|
Interest expense on long-term debt
|
831
|
|
|
1,340
|
|
|
995
|
|
|
—
|
|
|
3,166
|
|
|||||
Capital lease obligations (1)
|
858
|
|
|
550
|
|
|
—
|
|
|
—
|
|
|
1,408
|
|
|||||
Operating lease obligations
|
1,040
|
|
|
1,978
|
|
|
2,006
|
|
|
1,468
|
|
|
6,492
|
|
|||||
Total contractual obligations
|
$
|
3,229
|
|
|
$
|
5,618
|
|
|
$
|
10,751
|
|
|
$
|
1,468
|
|
|
$
|
21,066
|
|
(1)
|
Future minimum lease payments include principal plus interest.
|
(in thousands)
|
Fiscal Year
|
||||||
2014
|
|
2013
|
|||||
Term loans
|
$
|
10,000
|
|
|
$
|
8,298
|
|
Note payable
|
—
|
|
|
900
|
|
||
Capital lease
|
1,365
|
|
|
227
|
|
||
Royalty liability
|
2,386
|
|
|
2,264
|
|
(in thousands)
|
Fiscal Year
|
||||||||||
2014
|
|
2013
|
|
2012
|
|||||||
Net loss
|
$
|
(12,011
|
)
|
|
$
|
(11,717
|
)
|
|
$
|
(5,379
|
)
|
Non-cash adjustments to net loss
|
8,499
|
|
|
11,159
|
|
|
7,978
|
|
|||
Cash impact of changes in assets and liabilities
|
500
|
|
|
771
|
|
|
(2,714
|
)
|
|||
Annual operating cash flow
|
$
|
(3,012
|
)
|
|
$
|
213
|
|
|
$
|
(115
|
)
|
(in thousands)
|
Fiscal Year
|
||||||||||
2014
|
|
2013
|
|
2012
|
|||||||
Purchases of property and equipment
|
$
|
(2,125
|
)
|
|
$
|
(152
|
)
|
|
$
|
(577
|
)
|
Capitalized software development costs
|
(620
|
)
|
|
(614
|
)
|
|
(2,000
|
)
|
|||
Payment for acquisitions, net of cash acquired
|
(6,058
|
)
|
|
(3,000
|
)
|
|
(12,162
|
)
|
|||
Annual investing cash flow
|
$
|
(8,803
|
)
|
|
$
|
(3,766
|
)
|
|
$
|
(14,739
|
)
|
(in thousands)
|
Fiscal Year
|
||||||||||
2014
|
|
2013
|
|
2012
|
|||||||
Proceeds from term loans
|
$
|
10,000
|
|
|
$
|
4,958
|
|
|
$
|
9,880
|
|
Principal repayments on term loans
|
(8,298
|
)
|
|
(10,348
|
)
|
|
(313
|
)
|
|||
Principal repayments on note payable
|
(900
|
)
|
|
—
|
|
|
—
|
|
|||
Payment of deferred financing costs
|
(573
|
)
|
|
(116
|
)
|
|
(1,272
|
)
|
|||
Proceeds from private placement
|
—
|
|
|
—
|
|
|
12,000
|
|
|||
Proceeds from the sale of common stock
|
—
|
|
|
20,587
|
|
|
—
|
|
|||
Settlement of earn-out consideration
|
—
|
|
|
(1,300
|
)
|
|
—
|
|
|||
Other
|
184
|
|
|
197
|
|
|
(185
|
)
|
|||
Annual financing cash flow
|
$
|
413
|
|
|
$
|
13,978
|
|
|
$
|
20,110
|
|
Chicago, Illinois
|
/s/ BDO USA, LLP
|
April 26, 2013
|
|
January 31
|
||||||
|
2015
|
|
2014
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
6,522,600
|
|
|
$
|
17,924,886
|
|
Accounts receivable, net of allowance for doubtful accounts of $665,962 and $267,264, respectively
|
6,935,270
|
|
|
7,999,571
|
|
||
Contract receivables
|
191,465
|
|
|
1,181,606
|
|
||
Prepaid hardware and third party software for future delivery
|
55,173
|
|
|
25,640
|
|
||
Prepaid client maintenance contracts
|
935,858
|
|
|
909,464
|
|
||
Other prepaid assets
|
1,437,680
|
|
|
1,407,515
|
|
||
Deferred income taxes
|
220,004
|
|
|
95,498
|
|
||
Other current assets
|
207,673
|
|
|
144,049
|
|
||
Total current assets
|
16,505,723
|
|
|
29,688,229
|
|
||
Non-current assets:
|
|
|
|
||||
Property and equipment:
|
|
|
|
||||
Computer equipment
|
2,381,923
|
|
|
3,769,564
|
|
||
Computer software
|
964,857
|
|
|
2,239,654
|
|
||
Office furniture, fixtures and equipment
|
683,443
|
|
|
889,080
|
|
||
Leasehold improvements
|
724,015
|
|
|
697,570
|
|
||
|
4,754,238
|
|
|
7,595,868
|
|
||
Accumulated depreciation and amortization
|
(1,617,423
|
)
|
|
(6,676,824
|
)
|
||
Property and equipment, net
|
3,136,815
|
|
|
919,044
|
|
||
Contract receivables, less current portion
|
43,553
|
|
|
78,395
|
|
||
Capitalized software development costs, net of accumulated amortization of $11,846,468 and $7,949,352, respectively
|
9,197,118
|
|
|
10,238,357
|
|
||
Intangible assets, net
|
9,500,317
|
|
|
12,175,634
|
|
||
Deferred financing costs, net of accumulated amortization of $13,677 and $98,102, respectively
|
387,199
|
|
|
44,898
|
|
||
Goodwill
|
16,184,667
|
|
|
11,933,683
|
|
||
Other non-current assets
|
823,723
|
|
|
500,634
|
|
||
Total non-current assets
|
39,273,392
|
|
|
35,890,645
|
|
||
|
$
|
55,779,115
|
|
|
$
|
65,578,874
|
|
|
January 31,
|
||||||
|
2015
|
|
2014
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
2,298,851
|
|
|
$
|
1,796,418
|
|
Accrued compensation
|
865,865
|
|
|
1,782,599
|
|
||
Accrued other expenses
|
563,838
|
|
|
554,877
|
|
||
Current portion of long-term debt
|
500,000
|
|
|
1,214,280
|
|
||
Deferred revenues
|
9,289,076
|
|
|
9,658,232
|
|
||
Current portion of note payable
|
—
|
|
|
300,000
|
|
||
Current portion of capital lease obligation
|
781,961
|
|
|
105,573
|
|
||
Total current liabilities
|
14,299,591
|
|
|
15,411,979
|
|
||
Non-current liabilities:
|
|
|
|
||||
Term loans
|
9,500,000
|
|
|
6,971,767
|
|
||
Warrants liability
|
1,834,380
|
|
|
4,117,725
|
|
||
Royalty liability
|
2,385,826
|
|
|
2,264,000
|
|
||
Swap contract
|
—
|
|
|
111,086
|
|
||
Note payable
|
—
|
|
|
600,000
|
|
||
Lease incentive liability, less current portion
|
342,129
|
|
|
74,434
|
|
||
Capital lease obligation
|
582,911
|
|
|
121,089
|
|
||
Deferred revenues, less current portion
|
964,933
|
|
|
—
|
|
||
Deferred income tax liabilities
|
229,579
|
|
|
816,079
|
|
||
Total non-current liabilities
|
15,839,758
|
|
|
15,076,180
|
|
||
Total liabilities
|
30,139,349
|
|
|
30,488,159
|
|
||
Series A 0% Convertible Redeemable Preferred Stock, $.01 par value per share, $8,849,985 redemption value, 4,000,000 shares authorized, 2,949,995 issued and outstanding, net of unamortized preferred stock discount of $2,212,007 and $3,250,317, respectively
|
6,637,978
|
|
|
5,599,668
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Common stock, $.01 par value per share, 45,000,000 shares authorized; 18,553,389 and 18,175,787 shares issued and outstanding, respectively
|
185,534
|
|
|
181,758
|
|
||
Additional paid in capital
|
78,390,424
|
|
|
76,983,088
|
|
||
Accumulated deficit
|
(59,574,170
|
)
|
|
(47,562,713
|
)
|
||
Accumulated other comprehensive loss
|
—
|
|
|
(111,086
|
)
|
||
Total stockholders’ equity
|
19,001,788
|
|
|
29,491,047
|
|
||
|
$
|
55,779,115
|
|
|
$
|
65,578,874
|
|
|
Fiscal Year
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Revenues:
|
|
|
|
|
|
||||||
Systems sales
|
$
|
1,214,879
|
|
|
$
|
3,239,569
|
|
|
$
|
1,463,225
|
|
Professional services
|
2,580,167
|
|
|
3,641,731
|
|
|
3,792,569
|
|
|||
Maintenance and support
|
16,157,371
|
|
|
13,986,566
|
|
|
11,211,197
|
|
|||
Software as a service
|
7,672,990
|
|
|
7,626,837
|
|
|
7,299,812
|
|
|||
Total revenues
|
27,625,407
|
|
|
28,494,703
|
|
|
23,766,803
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Cost of systems sales
|
3,536,495
|
|
|
3,142,525
|
|
|
2,747,230
|
|
|||
Cost of services
|
3,458,984
|
|
|
4,052,113
|
|
|
3,087,997
|
|
|||
Cost of maintenance and support
|
3,087,842
|
|
|
3,460,500
|
|
|
3,245,569
|
|
|||
Cost of software as a service
|
2,920,403
|
|
|
2,523,184
|
|
|
2,512,156
|
|
|||
Selling, general and administrative
|
16,225,574
|
|
|
14,546,335
|
|
|
10,060,469
|
|
|||
Research and development
|
9,756,206
|
|
|
7,088,077
|
|
|
2,948,313
|
|
|||
Impairment of intangible assets
|
1,952,000
|
|
|
—
|
|
|
—
|
|
|||
Total operating expenses
|
40,937,504
|
|
|
34,812,734
|
|
|
24,601,734
|
|
|||
Operating loss
|
(13,312,097
|
)
|
|
(6,318,031
|
)
|
|
(834,931
|
)
|
|||
Other income (expense):
|
|
|
|
|
|
||||||
Interest expense
|
(748,969
|
)
|
|
(1,765,813
|
)
|
|
(1,957,010
|
)
|
|||
Loss on conversion of convertible notes
|
—
|
|
|
—
|
|
|
(5,970,002
|
)
|
|||
Loss on early extinguishment of debt
|
(429,849
|
)
|
|
(160,713
|
)
|
|
—
|
|
|||
Miscellaneous income (expenses)
|
1,592,449
|
|
|
(3,573,091
|
)
|
|
494,677
|
|
|||
Loss before income taxes
|
(12,898,466
|
)
|
|
(11,817,648
|
)
|
|
(8,267,266
|
)
|
|||
Income tax benefit
|
887,009
|
|
|
100,458
|
|
|
2,888,537
|
|
|||
Net loss
|
(12,011,457
|
)
|
|
(11,717,190
|
)
|
|
(5,378,729
|
)
|
|||
Less: deemed dividends on Series A Preferred Shares
|
(1,038,310
|
)
|
|
(1,180,904
|
)
|
|
(176,048
|
)
|
|||
Net loss attributable to common shareholders
|
$
|
(13,049,767
|
)
|
|
$
|
(12,898,094
|
)
|
|
$
|
(5,554,777
|
)
|
Basic net loss per common share
|
$
|
(0.71
|
)
|
|
$
|
(0.94
|
)
|
|
$
|
(0.48
|
)
|
Number of shares used in basic per common share computation
|
18,261,800
|
|
|
13,747,700
|
|
|
11,634,540
|
|
|||
Diluted net loss per common share
|
$
|
(0.71
|
)
|
|
$
|
(0.94
|
)
|
|
$
|
(0.48
|
)
|
Number of shares used in diluted per common share computation
|
18,261,800
|
|
|
13,747,700
|
|
|
11,634,540
|
|
|
Fiscal Year
|
||||||||||
|
2014
|
|
2013
|
|
2012
|
||||||
|
|
|
|
|
|
||||||
Net loss
|
$
|
(12,011,457
|
)
|
|
$
|
(11,717,190
|
)
|
|
$
|
(5,378,729
|
)
|
Other comprehensive gain (loss), net of tax:
|
|
|
|
|
|
||||||
Fair value of interest rate swap liability
|
(3,436
|
)
|
|
(111,086
|
)
|
|
—
|
|
|||
Reclassification adjustment for loss on settlement of interest rate swap liability realized in net loss
|
114,522
|
|
|
—
|
|
|
—
|
|
|||
Other comprehensive income (loss)
|
$
|
111,086
|
|
|
$
|
(111,086
|
)
|
|
$
|
—
|
|
Comprehensive loss
|
$
|
(11,900,371
|
)
|
|
$
|
(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
|
|
Stock issued to Employee Stock Purchase Plan and exercise of stock options
|
257,296
|
|
|
2,573
|
|
|
512,551
|
|
|
—
|
|
|
—
|
|
|
515,124
|
|
|||||
Restricted stock issued
|
120,306
|
|
|
1,203
|
|
|
(1,203
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Interest rate swap
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
111,086
|
|
|
111,086
|
|
|||||
Share-based compensation expense
|
—
|
|
|
—
|
|
|
1,934,298
|
|
|
—
|
|
|
—
|
|
|
1,934,298
|
|
|||||
Deemed dividends on Series A Preferred Stock
|
—
|
|
|
—
|
|
|
(1,038,310
|
)
|
|
—
|
|
|
—
|
|
|
(1,038,310
|
)
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(12,011,457
|
)
|
|
|
|
(12,011,457
|
)
|
||||||
Balance at January 31, 2015
|
18,553,389
|
|
|
$
|
185,534
|
|
|
$
|
78,390,424
|
|
|
$
|
(59,574,170
|
)
|
|
$
|
—
|
|
|
$
|
19,001,788
|
|
|
|
|
Fiscal Year
|
|
|
||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Operating activities:
|
|
|
|
|
|
||||||
Net loss
|
$
|
(12,011,457
|
)
|
|
$
|
(11,717,190
|
)
|
|
$
|
(5,378,729
|
)
|
Adjustments to reconcile net loss to net cash (used in) provided by operating activities, net of effect of acquisitions:
|
|
|
|
|
|
||||||
Depreciation
|
1,005,283
|
|
|
718,097
|
|
|
726,406
|
|
|||
Amortization of capitalized software development costs
|
3,677,991
|
|
|
3,192,157
|
|
|
2,659,365
|
|
|||
Amortization of intangible assets
|
1,396,317
|
|
|
1,341,734
|
|
|
583,535
|
|
|||
Amortization of other deferred costs
|
189,107
|
|
|
385,461
|
|
|
241,478
|
|
|||
Amortization of debt discount
|
47,552
|
|
|
4,327
|
|
|
111,583
|
|
|||
Valuation adjustment for warrants liability
|
(2,283,345
|
)
|
|
(140,928
|
)
|
|
(489,434
|
)
|
|||
Deferred tax expense (benefit)
|
(720,582
|
)
|
|
20,885
|
|
|
(2,935,522
|
)
|
|||
Valuation adjustment for contingent earn-out
|
—
|
|
|
3,580,441
|
|
|
86,839
|
|
|||
Other valuation adjustments
|
128,855
|
|
|
(95,368
|
)
|
|
—
|
|
|||
Net loss from conversion of convertible notes
|
—
|
|
|
—
|
|
|
5,970,002
|
|
|||
Loss on impairment of intangible assets
|
1,952,000
|
|
|
—
|
|
|
—
|
|
|||
Loss from early extinguishment of debt
|
315,327
|
|
|
160,713
|
|
|
—
|
|
|||
Loss on disposal of fixed assets
|
180,793
|
|
|
—
|
|
|
—
|
|
|||
Loss on exit of operating lease
|
234,823
|
|
|
—
|
|
|
—
|
|
|||
Share-based compensation expense
|
1,934,298
|
|
|
1,660,598
|
|
|
956,144
|
|
|||
Provision for accounts receivable
|
440,771
|
|
|
330,907
|
|
|
67,464
|
|
|||
Changes in assets and liabilities, net of assets acquired:
|
|
|
|
|
|
||||||
Accounts and contract receivables
|
2,157,977
|
|
|
827,435
|
|
|
(2,923,242
|
)
|
|||
Other assets
|
(637,348
|
)
|
|
(439,477
|
)
|
|
(1,129,255
|
)
|
|||
Accounts payable
|
600,263
|
|
|
275,360
|
|
|
526,149
|
|
|||
Accrued expenses
|
(1,422,571
|
)
|
|
259,771
|
|
|
992,285
|
|
|||
Deferred revenues
|
(197,698
|
)
|
|
(152,210
|
)
|
|
(180,200
|
)
|
|||
Net cash (used in) provided by operating activities
|
(3,011,644
|
)
|
|
212,713
|
|
|
(115,132
|
)
|
|||
Investing activities:
|
|
|
|
|
|
||||||
Purchases of property and equipment
|
(2,125,240
|
)
|
|
(152,283
|
)
|
|
(576,736
|
)
|
|||
Capitalization of software development costs
|
(619,752
|
)
|
|
(614,028
|
)
|
|
(1,999,676
|
)
|
|||
Payment for acquisition, net of cash acquired
|
(6,058,225
|
)
|
|
(3,000,000
|
)
|
|
(12,161,614
|
)
|
|||
Net cash used in investing activities
|
(8,803,217
|
)
|
|
(3,766,311
|
)
|
|
(14,738,026
|
)
|
|||
Financing activities:
|
|
|
|
|
|
||||||
Proceeds from term loan
|
10,000,000
|
|
|
4,958,333
|
|
|
9,880,000
|
|
|||
Principal repayments on term loans
|
(8,297,620
|
)
|
|
(10,348,214
|
)
|
|
(312,500
|
)
|
|||
Principal repayments on note payable
|
(900,000
|
)
|
|
—
|
|
|
—
|
|
|||
Principal payments on capital lease obligation
|
(368,386
|
)
|
|
(34,391
|
)
|
|
—
|
|
|||
Payment of deferred financing costs
|
(573,002
|
)
|
|
(115,900
|
)
|
|
(1,271,862
|
)
|
|||
Proceeds from private placement
|
—
|
|
|
—
|
|
|
12,000,000
|
|
|||
Proceeds from exercise of stock options and stock purchase plan
|
551,583
|
|
|
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
|
412,575
|
|
|
13,978,228
|
|
|
20,110,360
|
|
|||
(Decrease) increase in cash and cash equivalents
|
(11,402,286
|
)
|
|
10,424,630
|
|
|
5,257,202
|
|
|||
Cash and cash equivalents at beginning of year
|
17,924,886
|
|
|
7,500,256
|
|
|
2,243,054
|
|
|||
Cash and cash equivalents at end of year
|
$
|
6,522,600
|
|
|
$
|
17,924,886
|
|
|
$
|
7,500,256
|
|
|
|
|
Fiscal Year
|
|
|
||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Supplemental cash flow disclosures:
|
|
|
|
|
|
||||||
Interest paid
|
$
|
518,919
|
|
|
$
|
2,422,997
|
|
|
$
|
1,626,750
|
|
Income taxes (received) paid
|
$
|
(80,467
|
)
|
|
$
|
375,688
|
|
|
$
|
84,990
|
|
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
|
$
|
1,038,310
|
|
|
$
|
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
|
|
|
$
|
—
|
|
|
2014
|
|
2013
|
|
2012
|
||||||
Bad debt expense
|
$
|
440,771
|
|
|
$
|
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
|
|
Fiscal Year
|
||||||||||
Amortization expense on internally developed software included in:
|
2014
|
|
2013
|
|
2012
|
||||||
Cost of systems sales
|
$
|
3,352,000
|
|
|
$
|
2,769,000
|
|
|
$
|
2,435,000
|
|
Cost of software as a service
|
326,000
|
|
|
423,000
|
|
|
224,000
|
|
|||
Total amortization expense on internally developed software
|
$
|
3,678,000
|
|
|
$
|
3,192,000
|
|
|
$
|
2,659,000
|
|
•
|
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
|
|
|
||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Net loss
|
$
|
(12,011,457
|
)
|
|
$
|
(11,717,190
|
)
|
|
$
|
(5,378,729
|
)
|
Less: deemed dividends on Series A Preferred Stock
|
(1,038,310
|
)
|
|
(1,180,904
|
)
|
|
(176,048
|
)
|
|||
Net loss attributable to common shareholders
|
$
|
(13,049,767
|
)
|
|
$
|
(12,898,094
|
)
|
|
$
|
(5,554,777
|
)
|
Weighted average shares outstanding used in basic per common share computations
|
18,261,800
|
|
|
13,747,700
|
|
|
11,634,540
|
|
|||
Stock options and restricted stock
|
—
|
|
|
—
|
|
|
—
|
|
|||
Number of average shares used in diluted per common share computation
|
18,261,800
|
|
|
13,747,700
|
|
|
11,634,540
|
|
|||
Basic net loss per share of common stock
|
$
|
(0.71
|
)
|
|
$
|
(0.94
|
)
|
|
$
|
(0.48
|
)
|
Diluted net loss per share of common stock
|
$
|
(0.71
|
)
|
|
$
|
(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. In fiscal 2014, Meta trade name was deemed impaired and its corresponding balance was fully written off.
|
|
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.
|
|
Balance at February 3, 2014
|
||
Assets purchased:
|
|
||
Cash
|
$
|
59,000
|
|
Accounts receivable (2)
|
221,000
|
|
|
Other assets
|
61,000
|
|
|
Internally-developed software
|
2,017,000
|
|
|
Client relationships
|
647,000
|
|
|
Trade name
|
26,000
|
|
|
Goodwill (1)
|
4,251,000
|
|
|
Total assets purchased
|
7,282,000
|
|
|
Liabilities assumed:
|
|
||
Accounts payable and accrued liabilities
|
362,000
|
|
|
Deferred revenue obligation, net
|
793,000
|
|
|
Deferred income taxes
|
9,000
|
|
|
Net assets acquired
|
$
|
6,118,000
|
|
Cash paid
|
$
|
6,118,000
|
|
(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)
|
During the fourth quarter of fiscal 2014, the Company recorded an immaterial correction of an error to reduce the accounts receivable acquired from Unibased by
$266,000
, with the offset to goodwill.
|
|
Facilities
|
|
Equipment
|
|
Fiscal Year Totals
|
||||||
2015
|
$
|
1,035,000
|
|
|
$
|
5,000
|
|
|
$
|
1,040,000
|
|
2016
|
969,000
|
|
|
2,000
|
|
|
971,000
|
|
|||
2017
|
1,007,000
|
|
|
—
|
|
|
1,007,000
|
|
|||
2018
|
1,039,000
|
|
|
—
|
|
|
1,039,000
|
|
|||
2019
|
967,000
|
|
|
—
|
|
|
967,000
|
|
|||
Thereafter
|
1,468,000
|
|
|
—
|
|
|
1,468,000
|
|
|||
Total
|
$
|
6,485,000
|
|
|
$
|
7,000
|
|
|
$
|
6,492,000
|
|
For the four-quarter period ending
|
|
Minimum EBITDA
|
||
April 30, 2015
|
|
$
|
(2,500,000
|
)
|
July 31, 2015
|
|
(1,750,000
|
)
|
|
October 31, 2015
|
|
(750,000
|
)
|
|
January 31, 2016
|
|
500,000
|
|
|
|
January 31, 2015
|
|
January 31, 2014
|
||||
Senior term loan (1)
|
|
$
|
10,000,000
|
|
|
$
|
8,298,000
|
|
Note payable
|
|
—
|
|
|
900,000
|
|
||
Capital lease
|
|
1,365,000
|
|
|
227,000
|
|
||
Total
|
|
11,365,000
|
|
|
9,425,000
|
|
||
Less: Current portion
|
|
1,282,000
|
|
|
1,620,000
|
|
||
Non-current portion of long-term debt
|
|
$
|
10,083,000
|
|
|
$
|
7,805,000
|
|
(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
|
|
Capital Lease (1)
|
|
Total
|
||||||
2015
|
|
$
|
500,000
|
|
|
$
|
858,000
|
|
|
$
|
1,358,000
|
|
2016
|
|
750,000
|
|
|
457,000
|
|
|
1,207,000
|
|
|||
2017
|
|
1,000,000
|
|
|
93,000
|
|
|
1,093,000
|
|
|||
2018
|
|
1,000,000
|
|
|
—
|
|
|
1,000,000
|
|
|||
2019
|
|
6,750,000
|
|
|
—
|
|
|
6,750,000
|
|
|||
Total repayments
|
|
$
|
10,000,000
|
|
|
$
|
1,408,000
|
|
|
$
|
11,408,000
|
|
(1)
|
Future minimum lease payments include principal plus interest.
|
|
Goodwill
|
||
Balance January 31, 2013
|
$
|
12,133,000
|
|
Goodwill acquired during the year
|
108,000
|
|
|
Adjustments to goodwill during the year
|
(307,000
|
)
|
|
Balance January 31, 2014
|
11,934,000
|
|
|
Goodwill acquired during the year
|
4,251,000
|
|
|
Balance January 31, 2015
|
$
|
16,185,000
|
|
|
January 31, 2015
|
||||||||||||
Estimated
Useful Life
|
|
Gross Assets
|
|
Accumulated
Amortization
|
|
Net Assets
|
|||||||
Definite-lived assets:
|
|
|
|
|
|
|
|
||||||
Trade name
|
1 year
|
|
$
|
26,000
|
|
|
$
|
26,000
|
|
|
$
|
—
|
|
Client relationships
|
10-15 years
|
|
5,932,000
|
|
|
1,548,000
|
|
|
4,384,000
|
|
|||
Covenants not to compete
|
0.5-15 years
|
|
856,000
|
|
|
606,000
|
|
|
250,000
|
|
|||
Supplier agreements
|
5 years
|
|
1,582,000
|
|
|
778,000
|
|
|
804,000
|
|
|||
License agreement
|
15 years
|
|
4,431,000
|
|
|
369,000
|
|
|
4,062,000
|
|
|||
Total
|
|
|
$
|
12,827,000
|
|
|
$
|
3,327,000
|
|
|
$
|
9,500,000
|
|
|
January 31, 2014
|
||||||||||||
Estimated
Useful Life
|
|
Gross Assets
|
|
Accumulated
Amortization
|
|
Net Assets
|
|||||||
Indefinite-lived assets:
|
|
|
|
|
|
|
|
||||||
Trade name
|
N/A
|
|
$
|
1,952,000
|
|
|
$
|
—
|
|
|
$
|
1,952,000
|
|
Definite-lived assets:
|
|
|
|
|
|
|
|
||||||
Client relationships
|
10-15 years
|
|
$
|
5,285,000
|
|
|
$
|
862,000
|
|
|
$
|
4,423,000
|
|
Covenants not to compete
|
0.5-15 years
|
|
856,000
|
|
|
533,000
|
|
|
323,000
|
|
|||
Supplier agreements
|
5 years
|
|
1,582,000
|
|
|
461,000
|
|
|
1,121,000
|
|
|||
License agreement
|
15 years
|
|
4,431,000
|
|
|
74,000
|
|
|
4,357,000
|
|
|||
Total
|
|
|
$
|
14,106,000
|
|
|
$
|
1,930,000
|
|
|
$
|
12,176,000
|
|
|
Annual Amortization Expense
|
||
2015
|
$
|
1,345,000
|
|
2016
|
1,298,000
|
|
|
2017
|
1,088,000
|
|
|
2018
|
863,000
|
|
|
2019
|
826,000
|
|
|
Thereafter
|
4,080,000
|
|
|
Total
|
$
|
9,500,000
|
|
|
|
|
Fiscal Year
|
|
|
||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Current tax benefit (expense):
|
|
|
|
|
|
||||||
Federal
|
$
|
131,816
|
|
|
$
|
(8,705
|
)
|
|
$
|
(9,391
|
)
|
State
|
34,611
|
|
|
130,048
|
|
|
(37,594
|
)
|
|||
|
166,427
|
|
|
121,343
|
|
|
(46,985
|
)
|
|||
Deferred tax benefit (expense):
|
|
|
|
|
|
||||||
Federal
|
663,681
|
|
|
26,491
|
|
|
2,642,580
|
|
|||
State
|
56,901
|
|
|
(47,376
|
)
|
|
292,942
|
|
|||
|
720,582
|
|
|
(20,885
|
)
|
|
2,935,522
|
|
|||
Current and deferred income tax benefit
|
$
|
887,009
|
|
|
$
|
100,458
|
|
|
$
|
2,888,537
|
|
|
|
|
Fiscal Year
|
|
|
||||||
|
2014
|
|
2013
|
|
2012
|
||||||
Federal tax benefit at statutory rate
|
$
|
4,385,479
|
|
|
$
|
4,018,000
|
|
|
$
|
2,810,870
|
|
State and local taxes, net of federal benefit
|
325,966
|
|
|
488,626
|
|
|
255,348
|
|
|||
Change in valuation allowance
|
(4,030,864
|
)
|
|
(3,659,160
|
)
|
|
2,000,295
|
|
|||
Permanent items:
|
|
|
|
|
|
||||||
Loss from conversion of notes payable
|
—
|
|
|
—
|
|
|
(1,937,411
|
)
|
|||
Incentive stock options
|
(421,366
|
)
|
|
(343,117
|
)
|
|
—
|
|
|||
Transaction costs
|
(5,291
|
)
|
|
(78,476
|
)
|
|
(339,320
|
)
|
|||
Change in fair value of warrants liability
|
776,337
|
|
|
(159,249
|
)
|
|
166,408
|
|
|||
Other
|
(44,719
|
)
|
|
(351,857
|
)
|
|
(45,540
|
)
|
|||
Reserve for uncertain tax position
|
164,127
|
|
|
(11,642
|
)
|
|
—
|
|
|||
Other
|
(262,660
|
)
|
|
197,333
|
|
|
(22,113
|
)
|
|||
Income tax benefit
|
$
|
887,009
|
|
|
$
|
100,458
|
|
|
$
|
2,888,537
|
|
|
January 31,
|
||||||
|
2015
|
|
2014
|
||||
Deferred tax assets:
|
|
|
|
||||
Allowance for doubtful accounts
|
$
|
245,252
|
|
|
$
|
98,661
|
|
Deferred revenue
|
372,275
|
|
|
19,561
|
|
||
Accruals
|
174,658
|
|
|
351,827
|
|
||
Net operating loss carryforwards
|
14,905,174
|
|
|
7,763,718
|
|
||
Stock compensation expense
|
438,659
|
|
|
362,145
|
|
||
Property and equipment
|
—
|
|
|
147,691
|
|
||
AMT credit
|
102,144
|
|
|
102,144
|
|
||
Other
|
8,912
|
|
|
62,783
|
|
||
Total deferred tax assets
|
16,247,074
|
|
|
8,908,530
|
|
||
Valuation allowance
|
(12,554,242
|
)
|
|
(7,666,626
|
)
|
||
Net deferred tax assets
|
3,692,832
|
|
|
1,241,904
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Property and Equipment
|
(21,755
|
)
|
|
—
|
|
||
Definite-lived intangible assets
|
(3,671,077
|
)
|
|
(1,241,904
|
)
|
||
Indefinite-lived intangibles
|
(9,575
|
)
|
|
(720,581
|
)
|
||
Total deferred tax liabilities
|
(3,702,407
|
)
|
|
(1,962,485
|
)
|
||
Net deferred tax liabilities
|
$
|
(9,575
|
)
|
|
$
|
(720,581
|
)
|
|
2014
|
|
2013
|
|
2012
|
||||||
Beginning of fiscal year
|
$
|
121,000
|
|
|
$
|
122,000
|
|
|
$
|
—
|
|
Additions for tax positions of prior years
|
—
|
|
|
—
|
|
|
122,000
|
|
|||
Reductions for tax positions of prior years
|
—
|
|
|
(1,000
|
)
|
|
—
|
|
|||
Reductions attributable to lapse of statute of limitations
|
(121,000
|
)
|
|
—
|
|
|
—
|
|
|||
End of fiscal year
|
$
|
—
|
|
|
$
|
121,000
|
|
|
$
|
122,000
|
|
|
Fiscal Year
|
|||||
|
2014
|
|||||
|
Options
|
|
Weighted Average Exercise Price
|
|||
Outstanding — beginning of year
|
2,304,407
|
|
|
4.46
|
|
|
Granted
|
1,318,078
|
|
|
4.95
|
|
|
Exercised
|
(246,155
|
)
|
|
1.91
|
|
|
Expired
|
(168,060
|
)
|
|
5.31
|
|
|
Forfeited
|
(770,947
|
)
|
|
5.75
|
|
|
Outstanding — end of year
|
2,437,323
|
|
|
4.52
|
|
|
Exercisable — end of year
|
1,192,220
|
|
|
3.83
|
|
|
Aggregate intrinsic value of outstanding options at year end
|
$
|
9,798,038
|
|
|
|
|
Aggregate intrinsic value of exercisable options at year end
|
$
|
4,792,724
|
|
|
|
|
2014
|
|
2013
|
|
2012
|
|||
Expected life
|
6 years
|
|
|
6 years
|
|
|
5 years
|
|
Risk-free interest rate
|
1.35
|
%
|
|
1.81
|
%
|
|
0.35
|
%
|
Weighted average volatility factor
|
0.60
|
|
|
0.66
|
|
|
0.57
|
|
Dividend yield
|
—
|
|
|
—
|
|
|
—
|
|
Forfeiture rate
|
22
|
%
|
|
21
|
%
|
|
—
|
|
|
Number of Options
|
|
Average Exercise Price
|
|
Remaining Life in Years
|
|||
January 31, 2015
|
|
|
|
|
|
|||
Outstanding
|
2,437,323
|
|
|
$
|
4.52
|
|
(1)
|
7.91
|
Exercisable
|
1,192,220
|
|
|
$
|
3.83
|
|
(2)
|
6.67
|
(1)
|
The exercise prices range from
$1.65
to
$8.17
, of which
463,924
shares are between
$1.65
and
$2.00
per share,
519,978
shares are between
$2.08
and
$4.00
per share, and
1,453,421
shares are between
$4.08
and
$8.17
per share.
|
(2)
|
The exercise prices range from
$1.65
to
$8.17
, of which
454,424
shares are between
$1.65
and
$2.00
per share,
280,667
shares are between
$2.08
and
$4.00
per share, and
457,129
shares are between
$4.08
and
$8.17
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
|
|
|
$
|
6.01
|
|
Granted
|
120,306
|
|
|
4.31
|
|
|
Vested
|
(29,698
|
)
|
|
6.65
|
|
|
Forfeited/expired
|
—
|
|
|
—
|
|
|
Non-vested balance at January 31, 2015
|
120,306
|
|
|
$
|
4.31
|
|
Fiscal 2014 (In thousands, except per share data):
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
|
2014
|
||||||||||
Revenues
|
$
|
6,951
|
|
|
$
|
7,242
|
|
|
$
|
6,837
|
|
|
$
|
6,595
|
|
|
$
|
27,625
|
|
Gross profit
|
3,398
|
|
|
4,221
|
|
|
3,793
|
|
|
3,209
|
|
|
14,621
|
|
|||||
Operating loss (d)
|
(3,593
|
)
|
|
(2,059
|
)
|
|
(2,713
|
)
|
|
(4,948
|
)
|
|
(13,312
|
)
|
|||||
Net loss
|
(2,671
|
)
|
|
(2,275
|
)
|
|
(2,256
|
)
|
|
(4,810
|
)
|
|
(12,011
|
)
|
|||||
Less: deemed dividends on Series A Preferred Shares
|
(230
|
)
|
|
(253
|
)
|
|
(269
|
)
|
|
(286
|
)
|
|
(1,038
|
)
|
|||||
Net loss attributable to common shareholders
|
(2,901
|
)
|
|
(2,528
|
)
|
|
(2,525
|
)
|
|
(5,096
|
)
|
|
(13,050
|
)
|
|||||
Basic net loss per share (c)
|
(0.16
|
)
|
|
(0.14
|
)
|
|
(0.14
|
)
|
|
(0.28
|
)
|
|
(0.71
|
)
|
|||||
Diluted net loss earnings per share (c)
|
(0.16
|
)
|
|
(0.14
|
)
|
|
(0.14
|
)
|
|
(0.28
|
)
|
|
(0.71
|
)
|
|||||
Basic and diluted weighted average shares outstanding
|
18,146
|
|
|
18,174
|
|
|
18,301
|
|
|
18,417
|
|
|
18,262
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
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
|
|
(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 fiscal 2014 includes a
$1,952,000
loss associated with the impairment of Meta trade name.
|
|
|
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
|
|
|
Accretion of Preferred Stock discount
|
—
|
|
|
1,038,310
|
|
|
Series A Preferred Stock, January 31, 2015
|
2,949,995
|
|
|
$
|
6,637,978
|
|
|
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, 2015:
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowance for doubtful accounts
|
$
|
267
|
|
|
$
|
441
|
|
|
$
|
1
|
|
|
$
|
(43
|
)
|
|
$
|
666
|
|
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
|
|
|
|
|
Changes through
|
|
|
||||||||||||||
Description
|
Balance at Beginning of Period
|
|
Tax Expense
|
|
Other Comprehensive Income
|
|
Goodwill
|
|
Balance at End of Period
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Year ended January 31, 2015:
|
|
|
|
|
|
|
|
|
|
||||||||||
Valuation allowance on deferred tax assets
|
$
|
7,667
|
|
|
$
|
4,031
|
|
|
$
|
(41
|
)
|
|
$
|
897
|
|
|
$
|
12,554
|
|
Year ended January 31, 2014:
|
|
|
|
|
|
|
|
|
|
||||||||||
Valuation allowance on deferred tax assets
|
$
|
7,835
|
|
|
$
|
(209
|
)
|
|
$
|
41
|
|
|
$
|
—
|
|
|
$
|
7,667
|
|
Year ended January 31, 2013:
|
|
|
|
|
|
|
|
|
|
||||||||||
Valuation allowance on deferred tax assets
|
$
|
9,835
|
|
|
$
|
(2,000
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,835
|
|
•
|
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.
|
•
|
Staffing: In addition to a realignment of our accounting staff structure and operations, we added a new revenue accounting specialist position to better ensure compliance with our revenue recognition policies.
|
•
|
Policies and procedures: We engaged external accounting experts to assist us with enhancing our policies and procedures related to revenue recognition, contracting and other areas reflected in the material weaknesses that existed at January 31, 2014.
|
•
|
Systems: We implemented a series of incremental software solutions to enhance our documentation in critical areas such as revenue recognition.
|
|
|
STREAMLINE HEALTH SOLUTIONS, INC.
|
|
By:
|
/
S
/ DAVID W. SIDES
|
|
|
David W. Sides
Chief Executive Officer
|
/
S
/ DAVID W. SIDES
|
Chief Executive Officer
and Director
(Principal Executive Officer)
|
April 16, 2015
|
David W. Sides
|
|
|
/s/ JONATHAN R. PHILLIPS
|
Director
|
April 16, 2015
|
Jonathan R. Phillips
|
|
|
/s/ EDWARD J. VONDERBRINK
|
Director
|
April 16, 2015
|
Edward J. VonderBrink
|
|
|
/s/ ANDREW L. TURNER
|
Director
|
April 16, 2015
|
Andrew L. Turner
|
|
|
/s/ MICHAEL K. KAPLAN
|
Director
|
April 16, 2015
|
Michael K. Kaplan
|
|
|
/s/ ALLEN S. MOSELEY
|
Director
|
April 16, 2015
|
Allen S. Moseley
|
|
|
/s/ MICHAEL G. VALENTINE
|
Director
|
April 16, 2015
|
Michael G. Valentine
|
|
|
/s/ ROBERT E. WATSON
|
Director
|
April 16, 2015
|
Robert E. Watson
|
|
|
/s/ JUDITH E. STARKEY
|
Director
|
April 16, 2015
|
Judith E. Starkey
|
|
|
/s/ NICHOLAS A. MEEKS
|
Chief Financial Officer (Principal Financial Officer)
|
April 16, 2015
|
Nicholas A. Meeks
|
|
|
/s/ MICHAEL W. HALLORAN
|
Controller
(Principal Accounting Officer)
|
April 16, 2015
|
Michael W. Halloran
|
|
2.1
|
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).
|
3.1
|
Certificate of Incorporation of Streamline Health Solutions, Inc. f/k/a/ LanVision Systems, Inc., as amended through August 19, 2014 (Incorporated by reference from Exhibit 3.1 of the Form 10-Q, as filed with the SEC on September 15, 2014).
|
3.2
|
Bylaws of Streamline Health Solutions, Inc., as amended and restated through March 28, 2014, (Incorporated herein by reference from Exhibit 3.1 of Form 8-K, as filed with the Commission on April 3, 2014).
|
3.3
|
Certificate of Designation of Preferences, Rights and Limitations of Series A 0% Convertible Preferred Stock of Streamline Health Solutions, Inc. (Incorporated herein by reference from Exhibit 10.1 of the Form 8-K, as filed with the Commission on November 1, 2012).
|
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 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).
|
10.2(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).
|
10.2(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).
|
10.2(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).
|
10.3#
|
Streamline Health Solutions, Inc. Amended and Restated 2013 Stock Incentive Plan (Incorporated herein by reference from Appendix A to the Definitive Proxy Statement on Schedule 14A, as filed with the Commission on July 21, 2014).
|
10.3(a)#
|
Form of Restricted Stock Award Agreement for Non-Employee Directors (Incorporated herein by reference from Exhibit 10.2 of the Form 8-K, as filed with the Commission August 25, 2014).
|
10.3(b)#
|
Form of Restricted Stock Award Agreement for Executives (Incorporated herein by reference from Exhibit 10.3 of the Form 8-K, as filed with the Commission August 25, 2014).
|
10.3(c)#
|
Form of Stock Option Agreement for Executives (Incorporated herein by reference from Exhibit 10.4 of the Form 8-K, as filed with the Commission August 25, 2014).
|
10.4#
|
Employment Agreement dated September 10, 2014 by and between Streamline Health Solutions, Inc. and David Sides (Incorporated herein by reference from Exhibit 10.1 of the Form 10-Q, as filed with the Commission on December 9, 2014).
|
10.4(a)#
|
Amendment to Employment Agreement dated January 8, 2015 by and between Streamline Health Solutions, Inc. and David Sides (Incorporated herein by reference from Exhibit 10.2 of the Form 8-K, as filed with the Commission on January 9, 2015).
|
10.5#
|
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).
|
10.6#
|
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).
|
10.6(a)#
|
Amendment No. 1 to Employment Agreement dated March 6, 2014 between Streamline Health Solutions, Inc. and Jack W. Kennedy Jr. (Incorporated by reference from Exhibit 10.14(b) of the Form 10-K, as filed with the Commission on June 13, 2014).
|
10.7#
|
Employment Agreement dated March 6, 2014 by and between Streamline Health Solutions, Inc. and Lois E. Rickard (Incorporated by reference from Exhibit 10.23 of the Form 10-K, as filed with the Commission on June 13, 2014).
|
10.8#
|
Employment Agreement dated February 3, 2014 by and between Streamline Health Solutions, Inc. and Randolph Salisbury (Incorporated by reference from Exhibit 10.24 of the Form 10-K, as filed with the Commission on June 13, 2014).
|
10.9#
|
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).
|
10.9(a)#
|
Separation and Release Agreement dated January 8, 2015 between Streamline Health Solutions, Inc. and Robert E. Watson (Incorporated herein by reference to Exhibit 10.1 of the Form 8-K, as filed with the Commission on January 9, 2015).
|
10.10#
|
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).
|
10.11
|
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).
|
10.11(a)
|
First Amendment to the Reseller Agreement between IDX Information Systems Corporation and Streamline Health Solutions, Inc. entered into on May 3, 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).
|
10.12
|
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).
|
10.13
|
Credit Agreement dated as of November 21, 2014 by and among Wells Fargo Bank, N.A., the lenders party thereto, Streamline Health Solutions, Inc. and Streamline Health, Inc. (Incorporated herein by reference from Exhibit 10.2 of the Form 10-Q, as filed with the Commission on December 9, 2014).
|
10.13(a)*
|
Waiver and First Amendment to Credit Agreement dated as of April 15, 2015 by and among Wells Fargo Bank, N.A., the lenders party thereto, Streamline Health Solutions, Inc. and Streamline Health, Inc.
|
10.14
|
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).
|
10.15
|
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).
|
10.16
|
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).
|
14.1*
|
Code of Business Conduct and Ethics
|
21.1*
|
Subsidiaries of Streamline Health Solutions, Inc.
|
23.1*
|
Consent of Independent Registered Public Accounting Firm - KPMG LLP
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23.2*
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Consent of Independent Registered Public Accounting Firm - BDO USA, LLP
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31.1*
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Certification by Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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31.2*
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Certification by Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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32.1*
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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.
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32.2*
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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.
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101
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The following financial information from Streamline Health Solutions, Inc.'s Annual Report on Form 10- K for the fiscal year ended January 31, 2015 filed with the SEC on April 16, 2015, formatted in XBRL includes: (i) Consolidated Balance Sheets at January 31, 2015 and 2014, (ii) Consolidated Statements of Operations for the three years ended January 31, 2015, (iii) Consolidated Statements of Changes in Stockholders' Equity for the three years ended January 31, 2015, (iv) Consolidated Statements of Cash Flows for the three years ended January 31, 2015, and (v) the Notes to Consolidated Financial Statements.
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*
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Filed herewith.
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#
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Management Contracts and Compensatory Arrangements.
|
Applicable Amount
|
Applicable Period
|
($2,500,000)
|
For the 4-quarter period
ending April 30, 2015 |
($1,750,000)
|
For the 4- quarter period
ending July 31, 2015 |
($750,000)
|
For the 4-quarter period
ending October 31, 2015 |
$500,000
|
For the 4-quarter period
ending January 31, 2016 |
Such amount as is agreed to by Borrower and Required Lenders within 30 days following delivery of, and based upon, the Projections then most recently delivered pursuant to Section 5.1 and approved by Required Lenders;
provided
, that if not approved by Required Lenders or if Borrower and Required Lenders have not agreed to such amounts for the remainder of the term of this Agreement, then an immediate breach of this Section 7(a) shall be deemed to have occurred.
|
For the 4-quarter period ending April 30, 2016 and for the 4-quarter period ending on each July 31, October 31, January 31 and April 30 thereafter
|
Level
|
Senior Leverage
Ratio Calculation |
Applicable Margin Relative to Base
Rate Loans (the " Base Rate Margin ") |
Applicable Margin
Relative to LIBOR Rate Loans (the " LIBOR Rate Margin ") |
I
|
If the Senior Leverage Ratio is greater than or equal to 4.25:1.0
|
5.25 percentage points
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6.25 percentage points
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II
|
If the Senior Leverage Ratio is greater than or equal to 3.25:1.0 or less than 4.25:1.00
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4.25 percentage points
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5.25 percentage points
|
III
|
If the Senior Leverage Ratio is greater than or equal to 2.25:1.0 and less than 3.25:1.0
|
3.75 percentage points
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4.75 percentage points
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IV
|
If the Senior Leverage Ratio is less than 2.25:1.0
|
3.25 percentage points
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4.25 percentage points
|
STREAMLINE HEALTH SOLUTIONS, INC.
, a Delaware corporation, as Parent
By: /s/ Nicholas Meeks Name: Nicholas Meeks Title: Senior Vice President & Chief Financial Officer |
STREAMLINE HEALTH, INC.
, an Ohio corporation, as Borrower
By: /s/ Nicholas Meeks Name: Nicholas Meeks Title: Senior Vice President & Chief Financial Officer |
WELLS FARGO BANK, NATIONAL ASSOCIATION
, a national banking association, as Agent and as a Lender
By: /s/ Name: Authorized Signatory |
UNIBASED SYSTEMS ARCHITECTURE, INC.
By: /s/ Nicholas Meeks Name: Nicholas Meeks Title: Senior Vice President & Chief Financial Officer |
Monthly (not later than the 10th day of each month after the end of each month) prior to Loan Parties' establishment of their primary cash management and treasury relationships with Wells Fargo
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(a)
bank statement(s) or screen shot(s) showing the cash balances of the Parent and its Subsidiaries as of the end of the prior month and an indication of the cash that is Qualified Cash.
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As soon as available, but in any event within 30 days
(45 days in the case of a month that is the end of one of Parent's fiscal quarters)
after the end of each month during each of Parent's fiscal years,
|
(b)
an unaudited consolidated and consolidating balance sheet, income statement, statement of cash flow, and statement of shareholder's equity covering Parent's and its Subsidiaries' operations during such period and compared to the prior period and plan, together with a corresponding discussion and analysis of results from management, and
(c)
a Credit Amount Certificate.
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As soon as available, but in any event within 45 days after the end of each of Parent's fiscal quarters,
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(d)
a Compliance Certificate along with the underlying calculations, including the calculations to arrive at EBITDA to the extent applicable,
(e)
report summarizing the following (i) recurring revenue type for the prior fiscal quarter, and (ii) recurring revenue type for the trailing twelve months,
(f)
a backlog report detailing all contracts which have been executed but not yet performed, and segmented by estimated period of recognition,
(g)
a bookings report for the following prior fiscal quarter and the trailing twelve month period by revenue type,
(h)
IP Reporting Certificate and a Perfection Certificate or a supplement to the Perfection Certificate,
(i)
attrition data by customer for the prior fiscal quarter by revenue type and for the trailing twelve month period consistent with what was previously provided, and
(j)
a report regarding Parent's and its Subsidiaries' accrued, but unpaid taxes, including but not limited to a detailed report regarding deemed dividend tax liability, if applicable.
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As soon as available, but in any event within 120 days after the end of each of Parent's fiscal years,
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(k)
consolidated and consolidating financial statements of Parent and its Subsidiaries for each such fiscal year, audited by independent certified public accountants reasonably acceptable to Agent and certified, without any qualifications (including any (A) "going concern" or like qualification or exception, (B) qualification or exception as to the scope of such audit, or (C) qualification which relates to the treatment or classification of any item and which, as a condition to the removal of such qualification, would require an adjustment to such item, the effect of which would be to cause any noncompliance with the provisions of
Section 7
of the Agreement), by such accountants to have been prepared in accordance with GAAP (such audited financial statements to include a balance sheet, income statement, statement of cash flow, and statement of shareholder's equity, and, if prepared, such accountants' letter to management),
(l)
a Compliance Certificate along with the underlying calculations, including the calculations to arrive at EBITDA to the extent applicable, and
(m)
a detailed calculation of Excess Cash Flow.
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As soon as available, but in any event within 30 days prior to the start of each of Parent's fiscal years,
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(n)
copies of Parent's Projections, in form and substance (including as to scope and underlying assumptions) satisfactory to Agent and, in its Permitted Discretion (it being understood that the form of the Projections delivered by Borrower to Agent on September 26, 2014 is acceptable), for the forthcoming 3 years, year by year, and for the forthcoming fiscal year, fiscal quarter by fiscal quarter, certified by the chief financial officer of Parent as being such officer's good faith estimate of the financial performance of Parent during the period covered thereby.
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If and when filed by Parent,
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(o)
Form 10-Q quarterly reports, Form 10-K annual reports, and Form 8-K current reports,
(p)
any other filings made by Parent with the SEC, and
(q)
any other information that is provided by Parent to its shareholders generally.
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Promptly, but in any event within 5 days after Borrower has knowledge of any event or condition that constitutes a Default or an Event of Default,
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(r)
notice of such event or condition and a statement of the curative action that Borrower proposes to take with respect thereto.
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Promptly after the commencement thereof, but in any event within 5 days after the service of process with respect thereto on Parent or any of its Subsidiaries,
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(s)
notice of all actions, suits, or proceedings brought by or against Parent or any of its Subsidiaries before any Governmental Authority which reasonably could be expected to result in a Material Adverse Effect.
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Upon the request of Agent,
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(t)
such other reports, including but not limited to a summary aging of the Borrower's Accounts, and a summary aging, by vendor, of Borrower's accounts payable, and any book overdrafts, and as to the Collateral or the financial condition of Parent and its Subsidiaries, as Agent may reasonably request, and
(u)
any other information reasonably requested relating to the financial condition of Parent or its Subsidiaries.
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•
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We
Respect
our stakeholders – fellow associates, clients, partners, and shareholders – by being polite and considerate and by acknowledging their needs and desires as we work toward delivering on-going positive financial results.
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•
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We value
Relationships
, with our clients and each other, and are committed to protecting and nurturing them.
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•
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We take
Responsibility
and accept accountability for our actions, the quality of our solutions, and the results we deliver.
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•
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We deliver meaningful and tangible
Results
for each and every stakeholder by executing our strategic and tactical plans to the best of our ability with commitment, passion, and enthusiasm.
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•
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Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
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•
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Full, fair, accurate, timely, and understandable disclosure in reports and documents we file with regulatory agencies and in our other public communications;
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•
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Compliance with applicable laws, rules, and regulations;
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•
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The prompt internal reporting of violations of the Code; and
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•
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Accountability for adherence to the Code.
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•
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Is this action legal, ethical, and socially responsible?
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•
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Does this action comply with both the spirit and the letter of our Code?
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•
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Will this action appear appropriate?
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•
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Is it clear that our company would not be embarrassed or compromised if this action were to become known within our company or publicly?
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•
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Filing or responding to a good faith complaint, or
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•
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Cooperating in an investigation.
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•
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Is this information unknown to people outside the company?
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•
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Would Streamline Health be disadvantaged or harmed if others knew this information?
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•
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Would your project be jeopardized if the information was not held in confidence?
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•
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Hacking
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•
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Pirating software or video/audio files
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•
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Soliciting
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•
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Distributing literature for outside entities
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•
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Sending inappropriate e-mail
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•
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Accessing inappropriate web sites (such as those advocating hate, violence, sexually explicit material, or promoting illegal activities)
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•
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Distributing confidential, proprietary or trade secret information of Streamline Health outside the company
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•
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Access the internal computer system (also known as “hacking”) or other resource of another entity without express written authorization from the entity responsible for operating that resource; or
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•
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Commit any unlawful or illegal act, including harassment, libel, fraud, sending of unsolicited bulk email (also known as “spam”) in violation of applicable law, trafficking in contraband of any kind or espionage.
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•
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Use of our company facilities for personal gain;
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•
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The excessive use of the telephone or facsimile long-distance for personal purposes;
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•
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The taking of office supplies or equipment for personal consumption or use at home, e.g., using our company equipment to repair personal property;
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•
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The unauthorized copying of computer software programs; and
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•
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The use of our company-issued credit card(s) for personal purchases.
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•
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Posting non-business messages to Internet discussion groups and bulletin boards
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•
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Accessing or transmitting sexually explicit, harassing, discriminatory or hateful material
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•
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Soliciting for commercial, charitable, religious or political causes, except as may be approved by company management
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•
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Sending chain mail letters or broadcasting personal messages
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•
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Sending inappropriate, offensive or disruptive messages
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•
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Gaining unauthorized access to databases or information sources at Streamline Health or any other site
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•
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Damaging computer equipment, software or data
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•
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Interfering with or disrupting network users, services or equipment.
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•
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Disclose non-public intellectual property inappropriately or without approval from the Legal department
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•
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Use company resources or time to create or invent something unrelated to our business
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•
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Use a previous employer’s intellectual property without that company’s permission
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•
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Make unauthorized copies of software or licensed information, except as specified in the licensing agreement
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•
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Photocopy magazine/journal articles or other publications unless you have the authority or license to do so
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•
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Hire a competitor's employee to obtain that competitor's trade secrets
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•
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Affix the trademark of another company to goods without authorization
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•
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Fail to remove another's trademark when the goods or parts are remanufactured
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•
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Erroneously allege patent infringement or mark a product with an untrue patent notice
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•
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Prices or pricing strategy,
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•
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Discounts,
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•
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Terms of our customer relationships,
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•
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Sales policies,
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•
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Marketing plans,
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•
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Customer selection,
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•
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Allocating customers or market areas, or
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•
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Contract terms and contracting strategies.
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•
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Cash
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•
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Gifts
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•
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Meals
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•
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Entertainment
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•
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Travel and lodging
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•
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Personal services
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•
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Charitable donations
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•
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Business opportunities
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•
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Favors
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•
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Offers of employment
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•
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Commercial bribery involves a situation where something of value is given to a current or prospective business partner with the intent to obtain business or influence a business decision.
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•
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Kickbacks are agreements to return a sum of money to another party in exchange for making or arranging a business transaction.
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•
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Any foreign government including any department, agency, military branch, court or legislature
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•
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Any partially or wholly-owned government entity, such as a nationalized corporation or industry, including government-owned hospitals and other healthcare providers
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•
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Any political party, including party officials or candidates
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•
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Employees of public international organizations (or any of their departments or agencies) such as The World Bank, the International Finance Corporation or the Red Cross
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•
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Any member of a royal family
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•
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A request that a commission be paid in cash, in another name, or to an address in another country
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•
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Unexplained large expenses on a travel & entertainment expense report
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•
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An agent demanding a higher than normal commission for a transaction
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•
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Any agent or salesperson who says he or she is working with a government official to give our company the contract
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•
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Never give or accept cash or its equivalent in connection with a business transaction.
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•
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Never promise or make loans or investments of any kind without first obtaining approval from the SVP, Chief Financial Officer and SVP, Chief Legal Counsel.
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•
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Is in cash,
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•
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Is not consistent with customary business practices,
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•
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Is extravagant in value,
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•
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Can be construed as a kickback, bribe or payoff in violation of any law, including a bribe to a government official in violation of the U.S. Foreign Corrupt Practices Act,
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•
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Violates any other laws or regulations, or
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•
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Could cause embarrassment to or discredit our company if disclosed.
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•
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Maintaining undisclosed or unrecorded funds or assets for any purpose.
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•
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Making, or asking others to make, false, misleading, or artificial entries on an expense report, time sheet or any other report.
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•
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Giving false quality or safety results.
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•
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Recording false sales or recording sales outside of the time period they actually occurred.
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•
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Understating or overstating known liabilities and assets.
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•
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Delaying the entry of items that should be current expenses.
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•
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Hiding the true nature of any transaction.
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•
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Providing inaccurate or misleading information for company benefit programs.
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•
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Never make, or ask others to make, a false or misleading entry or report. This applies whether the report is financial or non-financial or for internal or external use.
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•
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Always record business transactions and payments accurately and in accordance with our company policies.
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•
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Never use or transfer Streamline Health funds for any purpose that would be in violation of any law, regulation, or company policy.
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•
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If you have any questions or concerns about Streamline Health’s financial records, internal accounting controls, or audit practices, discuss the matter with your supervisor, manager, or the SVP, Chief Legal Counsel.
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•
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Owning, directly or indirectly, a significant financial interest in any entity that does business, seeks to do business, or competes with our company.
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•
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Holding a second job that interferes with your ability to do your regular job.
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•
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Employing, consulting, or serving on the board of a competitor, customer, supplier, or other service provider.
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•
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Hiring a supplier, distributor, or other agent managed or owned by a relative or close friend.
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•
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Soliciting or accepting any cash, gifts, entertainment, or benefits that are more than modest in value from any competitor, supplier, or customer.
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•
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Taking personal advantage of corporate opportunities.
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•
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Information about possible business deals, such as a merger, purchase, sale, or joint venture.
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•
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Financial results or changes in dividends.
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•
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Important management changes.
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•
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Significant solution, product or manufacturing process developments.
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•
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Gain or loss of a significant customer or supplier.
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•
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Major lawsuit or regulatory investigation.
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•
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Any other information that may positively or negatively affect the stock price of Streamline Health Solutions, Inc. or any other company.
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Name
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Jurisdiction of Incorporation
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|
% Owned
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Streamline Health, Inc.
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Ohio
|
|
100%
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Unibased Systems Architecture, Inc.
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Missouri
|
|
100%
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April 16, 2015
|
/s/ David W. Sides
|
|
Chief Executive Officer and
President
|
April 16, 2015
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/s/ Nicholas A. Meeks
|
|
Chief Financial Officer
|