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|
x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
Delaware
|
|
31-1455414
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(State or other jurisdiction of
incorporation or organization)
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|
(I.R.S. Employer
Identification No.)
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Large accelerated filer
¨
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Accelerated filer
¨
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Non-accelerated filer
¨
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Smaller reporting company
x
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(Do not check if a smaller reporting company)
|
||||||
Emerging growth company
¨
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|
|
|
|
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TABLE OF CONTENTS
|
||
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Page
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Part I.
|
FINANCIAL INFORMATION
|
|
Item 1.
|
Financial Statements
|
|
|
Condensed Consolidated Balance Sheets at July 31, 2017 and January 31, 2017
|
|
|
Condensed Consolidated Statements of Operations for the three and six months ended July 31, 2017 and 2016
|
|
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Condensed Consolidated Statements of Cash Flows for the six months ended July 31, 2017 and 2016
|
|
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Notes to Condensed Consolidated Financial Statements
|
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Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
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Item 4.
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Controls and Procedures
|
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Part II.
|
OTHER INFORMATION
|
|
Item 1.
|
Legal Proceedings
|
|
Item 1A.
|
Risk Factors
|
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Item 2.
|
Issuer Purchases of Equity Securities
|
|
Item 6.
|
Exhibits
|
|
|
Signatures
|
|
As of
|
||||||
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July 31, 2017
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|
January 31, 2017
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
2,916,459
|
|
|
$
|
5,654,093
|
|
Accounts receivable, net of allowance for doubtful accounts of $286,084 and $198,449, respectively
|
4,621,331
|
|
|
4,489,789
|
|
||
Contract receivables
|
69,625
|
|
|
466,423
|
|
||
Prepaid hardware and third-party software for future delivery
|
5,858
|
|
|
5,858
|
|
||
Prepaid client maintenance contracts
|
710,309
|
|
|
595,633
|
|
||
Other prepaid assets
|
861,300
|
|
|
732,496
|
|
||
Other current assets
|
665
|
|
|
439
|
|
||
Total current assets
|
9,185,547
|
|
|
11,944,731
|
|
||
Non-current assets:
|
|
|
|
||||
Property and equipment:
|
|
|
|
||||
Computer equipment
|
3,081,856
|
|
|
3,110,274
|
|
||
Computer software
|
831,242
|
|
|
827,642
|
|
||
Office furniture, fixtures and equipment
|
683,443
|
|
|
683,443
|
|
||
Leasehold improvements
|
729,348
|
|
|
729,348
|
|
||
|
5,325,889
|
|
|
5,350,707
|
|
||
Accumulated depreciation and amortization
|
(3,814,938
|
)
|
|
(3,447,198
|
)
|
||
Property and equipment, net
|
1,510,951
|
|
|
1,903,509
|
|
||
Capitalized software development costs, net of accumulated amortization of $17,688,421 and $16,544,797, respectively
|
4,285,069
|
|
|
4,584,245
|
|
||
Intangible assets, net of accumulated amortization of $6,473,451 and $5,807,338, respectively
|
6,330,485
|
|
|
6,996,599
|
|
||
Goodwill
|
15,537,281
|
|
|
15,537,281
|
|
||
Other
|
636,232
|
|
|
672,133
|
|
||
Total non-current assets
|
28,300,018
|
|
|
29,693,767
|
|
||
|
$
|
37,485,565
|
|
|
$
|
41,638,498
|
|
STREAMLINE HEALTH SOLUTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
|||||||
|
As of
|
||||||
|
July 31, 2017
|
|
January 31, 2017
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
1,566,454
|
|
|
$
|
1,116,525
|
|
Accrued compensation
|
481,528
|
|
|
496,706
|
|
||
Accrued other expenses
|
188,872
|
|
|
484,391
|
|
||
Current portion of term loan
|
596,980
|
|
|
655,804
|
|
||
Deferred revenues
|
9,298,192
|
|
|
9,916,454
|
|
||
Current portion of capital lease obligations
|
23,188
|
|
|
91,337
|
|
||
Total current liabilities
|
12,155,214
|
|
|
12,761,217
|
|
||
Non-current liabilities:
|
|
|
|
||||
Term loan, net of deferred financing cost of $163,743 and $199,211, respectively
|
4,164,381
|
|
|
4,883,286
|
|
||
Warrants liability
|
360
|
|
|
46,191
|
|
||
Royalty liability
|
2,423,602
|
|
|
2,350,754
|
|
||
Lease incentive liability
|
311,585
|
|
|
339,676
|
|
||
Deferred revenues, less current portion
|
363,910
|
|
|
568,515
|
|
||
Total non-current liabilities
|
7,263,838
|
|
|
8,188,422
|
|
||
Total liabilities
|
19,419,052
|
|
|
20,949,639
|
|
||
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 shares issued and outstanding, net of unamortized preferred stock discount of $0
|
8,849,985
|
|
|
8,849,985
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Common stock, $.01 par value per share, 45,000,000 shares authorized; 19,962,672 and 19,695,391 shares issued and outstanding, respectively
|
199,627
|
|
|
196,954
|
|
||
Additional paid in capital
|
81,183,325
|
|
|
80,667,771
|
|
||
Accumulated deficit
|
(72,166,424
|
)
|
|
(69,025,851
|
)
|
||
Total stockholders’ equity
|
9,216,528
|
|
|
11,838,874
|
|
||
|
$
|
37,485,565
|
|
|
$
|
41,638,498
|
|
|
Three Months Ended July 31
|
|
Six Months Ended July 31
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Systems sales
|
$
|
328,692
|
|
|
$
|
1,364,771
|
|
|
$
|
707,415
|
|
|
$
|
1,876,038
|
|
Professional services
|
571,812
|
|
|
548,080
|
|
|
991,847
|
|
|
1,238,695
|
|
||||
Audit services
|
294,441
|
|
|
—
|
|
|
639,460
|
|
|
—
|
|
||||
Maintenance and support
|
3,278,562
|
|
|
3,732,488
|
|
|
6,633,334
|
|
|
7,488,041
|
|
||||
Software as a service
|
1,442,652
|
|
|
1,728,724
|
|
|
2,867,784
|
|
|
3,438,510
|
|
||||
Total revenues
|
5,916,159
|
|
|
7,374,063
|
|
|
11,839,840
|
|
|
14,041,284
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of systems sales
|
596,799
|
|
|
671,631
|
|
|
1,162,850
|
|
|
1,417,115
|
|
||||
Cost of professional services
|
543,206
|
|
|
529,024
|
|
|
1,258,421
|
|
|
1,167,788
|
|
||||
Cost of audit services
|
391,439
|
|
|
—
|
|
|
832,078
|
|
|
—
|
|
||||
Cost of maintenance and support
|
768,140
|
|
|
835,353
|
|
|
1,574,662
|
|
|
1,693,171
|
|
||||
Cost of software as a service
|
285,832
|
|
|
455,370
|
|
|
625,208
|
|
|
939,613
|
|
||||
Selling, general and administrative
|
2,790,171
|
|
|
3,341,949
|
|
|
6,163,699
|
|
|
6,940,790
|
|
||||
Research and development
|
1,495,972
|
|
|
2,108,567
|
|
|
3,052,910
|
|
|
3,830,754
|
|
||||
Total operating expenses
|
6,871,559
|
|
|
7,941,894
|
|
|
14,669,828
|
|
|
15,989,231
|
|
||||
Operating loss
|
(955,400
|
)
|
|
(567,831
|
)
|
|
(2,829,988
|
)
|
|
(1,947,947
|
)
|
||||
Other income (expense):
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
(120,377
|
)
|
|
(120,014
|
)
|
|
(247,645
|
)
|
|
(282,026
|
)
|
||||
Miscellaneous (expense) income
|
(19,681
|
)
|
|
(44,756
|
)
|
|
(57,725
|
)
|
|
21,466
|
|
||||
Loss before income taxes
|
(1,095,458
|
)
|
|
(732,601
|
)
|
|
(3,135,358
|
)
|
|
(2,208,507
|
)
|
||||
Income tax expense
|
(2,607
|
)
|
|
(1,701
|
)
|
|
(5,215
|
)
|
|
(3,402
|
)
|
||||
Net loss
|
$
|
(1,098,065
|
)
|
|
$
|
(734,302
|
)
|
|
$
|
(3,140,573
|
)
|
|
$
|
(2,211,909
|
)
|
Less: deemed dividends on Series A Preferred Shares
|
—
|
|
|
(418,506
|
)
|
|
—
|
|
|
(803,225
|
)
|
||||
Net loss attributable to common stockholders
|
$
|
(1,098,065
|
)
|
|
$
|
(1,152,808
|
)
|
|
$
|
(3,140,573
|
)
|
|
$
|
(3,015,134
|
)
|
Basic net loss per common share
|
$
|
(0.06
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
(0.16
|
)
|
|
$
|
(0.16
|
)
|
Number of shares used in basic per common share computation
|
19,834,859
|
|
|
19,791,805
|
|
|
19,765,125
|
|
|
19,393,547
|
|
||||
Diluted net loss per common share
|
$
|
(0.06
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
(0.16
|
)
|
|
$
|
(0.16
|
)
|
Number of shares used in diluted per common share computation
|
19,834,859
|
|
|
19,791,805
|
|
|
19,765,125
|
|
|
19,393,547
|
|
|
Six Months Ended July 31
|
||||||
|
2017
|
|
2016
|
||||
Operating activities:
|
|
|
|
||||
Net loss
|
$
|
(3,140,573
|
)
|
|
$
|
(2,211,909
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
Depreciation
|
403,090
|
|
|
630,706
|
|
||
Amortization of capitalized software development costs
|
1,143,624
|
|
|
1,425,962
|
|
||
Amortization of intangible assets
|
666,114
|
|
|
650,892
|
|
||
Amortization of other deferred costs
|
161,064
|
|
|
115,113
|
|
||
Valuation adjustment for warrants liability
|
(45,831
|
)
|
|
(61,856
|
)
|
||
Share-based compensation expense
|
555,229
|
|
|
909,411
|
|
||
Other valuation adjustments
|
86,192
|
|
|
83,937
|
|
||
(Gain) loss on disposal of property and equipment
|
(720
|
)
|
|
567
|
|
||
Provision for accounts receivable
|
166,170
|
|
|
88,472
|
|
||
Changes in assets and liabilities, net of effects of acquisitions:
|
|
|
|
||||
Accounts and contract receivables
|
99,086
|
|
|
357,774
|
|
||
Other assets
|
(333,401
|
)
|
|
(214,327
|
)
|
||
Accounts payable
|
449,929
|
|
|
(403,600
|
)
|
||
Accrued expenses
|
(352,132
|
)
|
|
(472,420
|
)
|
||
Deferred revenues
|
(822,867
|
)
|
|
(759,411
|
)
|
||
Net cash (used in) provided by operating activities
|
(965,026
|
)
|
|
139,311
|
|
||
Investing activities:
|
|
|
|
||||
Purchases of property and equipment
|
(9,812
|
)
|
|
(60,518
|
)
|
||
Capitalization of software development costs
|
(844,448
|
)
|
|
(936,560
|
)
|
||
Net cash used in investing activities
|
(854,260
|
)
|
|
(997,078
|
)
|
||
Financing activities:
|
|
|
|
||||
Principal repayments on term loan
|
(813,197
|
)
|
|
(2,075,172
|
)
|
||
Principal payments on capital lease obligation
|
(68,149
|
)
|
|
(438,962
|
)
|
||
Proceeds from exercise of stock options and stock purchase plan
|
—
|
|
|
14,793
|
|
||
Payments related to settlement of employee shared-based awards
|
(37,002
|
)
|
|
(11,702
|
)
|
||
Net cash used in financing activities
|
(918,348
|
)
|
|
(2,511,043
|
)
|
||
Net decrease in cash and cash equivalents
|
(2,737,634
|
)
|
|
(3,368,810
|
)
|
||
Cash and cash equivalents at beginning of period
|
5,654,093
|
|
|
9,882,136
|
|
||
Cash and cash equivalents at end of period
|
$
|
2,916,459
|
|
|
$
|
6,513,326
|
|
|
Total Fair Value
|
|
Quoted Prices in Active Markets
(Level 1)
|
|
Significant Other Observable Inputs
(Level 2)
|
|
Significant Unobservable Inputs
(Level 3)
|
||||||||
At July 31, 2017
|
|
|
|
|
|
|
|
||||||||
Warrants liability (1)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Royalty liability (2)
|
2,424,000
|
|
|
—
|
|
|
—
|
|
|
2,424,000
|
|
||||
|
|
|
|
|
|
|
|
||||||||
At January 31, 2017
|
|
|
|
|
|
|
|
||||||||
Warrants liability (1)
|
$
|
46,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
46,000
|
|
Royalty liability (2)
|
2,351,000
|
|
|
—
|
|
|
—
|
|
|
2,351,000
|
|
(1)
|
The initial fair value of warrants liability was determined by management with the assistance of an independent third-party valuation specialist, and by management thereafter. Changes in fair value of the warrants are recognized within miscellaneous income in the condensed consolidated statements of operations.
|
(2)
|
The initial fair value of royalty liability was determined by management with the assistance of an independent third-party valuation specialist, and by management thereafter. The fair value of the royalty liability is determined based on the probability-weighted revenue scenarios for the Streamline Health® Clinical Analytics
TM
solution (“Clinical Analytics”) licensed from Montefiore Medical Center (discussed in Note 3 - Acquisitions and Divestitures). Fair value adjustments are included within miscellaneous income in the condensed consolidated statements of operations.
|
•
|
Persuasive evidence of an arrangement exists,
|
•
|
Delivery has occurred or services have been rendered,
|
•
|
The arrangement fees are fixed or determinable, and
|
•
|
Collectibility is reasonably assured.
|
•
|
VSOE (vendor-specific objective evidence) — the price at which an element is sold as a separate stand-alone transaction
|
•
|
TPE (third-party evidence) — the price of an element charged by another company that is largely interchangeable in any particular transaction
|
•
|
ESP (estimated selling price) — our best estimate of the selling price of an element of the transaction
|
|
Three Months Ended
|
||||||
|
July 31, 2017
|
|
July 31, 2016
|
||||
Net loss
|
$
|
(1,098,065
|
)
|
|
$
|
(734,302
|
)
|
Less: deemed dividends on Series A Preferred Stock
|
—
|
|
|
(418,506
|
)
|
||
Net loss attributable to common stockholders
|
$
|
(1,098,065
|
)
|
|
$
|
(1,152,808
|
)
|
Weighted average shares outstanding used in basic per common share computations
|
19,834,859
|
|
|
19,791,805
|
|
||
Stock options and restricted stock
|
—
|
|
|
—
|
|
||
Number of shares used in diluted per common share computation
|
19,834,859
|
|
|
19,791,805
|
|
||
Basic net loss per share of common stock
|
$
|
(0.06
|
)
|
|
$
|
(0.06
|
)
|
Diluted net loss per share of common stock
|
$
|
(0.06
|
)
|
|
$
|
(0.06
|
)
|
|
Six Months Ended
|
||||||
|
July 31, 2017
|
|
July 31, 2016
|
||||
Net loss
|
$
|
(3,140,573
|
)
|
|
$
|
(2,211,909
|
)
|
Less: deemed dividends on Series A Preferred Stock
|
—
|
|
|
(803,225
|
)
|
||
Net loss attributable to common stockholders
|
$
|
(3,140,573
|
)
|
|
$
|
(3,015,134
|
)
|
Weighted average shares outstanding used in basic per common share computations
|
19,765,125
|
|
|
19,393,547
|
|
||
Stock options and restricted stock
|
—
|
|
|
—
|
|
||
Number of shares used in diluted per common share computation
|
19,765,125
|
|
|
19,393,547
|
|
||
Basic net loss per share of common stock
|
$
|
(0.16
|
)
|
|
$
|
(0.16
|
)
|
Diluted net loss per share of common stock
|
$
|
(0.16
|
)
|
|
$
|
(0.16
|
)
|
|
Balance at September 8, 2016
|
||
Assets purchased:
|
|
||
Accounts and contracts receivable
|
792,000
|
|
|
Other assets
|
32,000
|
|
|
Internally-developed software
|
350,000
|
|
|
Intangible assets
|
650,000
|
|
|
Total assets purchased
|
1,824,000
|
|
|
Liabilities assumed:
|
|
||
Accounts payable and accrued liabilities
|
424,000
|
|
|
Net assets acquired
|
$
|
1,400,000
|
|
Cash paid
|
$
|
1,400,000
|
|
|
Facilities
|
|
Equipment
|
|
Fiscal Year Totals
|
||||||
2017 (six months remaining)
|
$
|
512,000
|
|
|
$
|
6,000
|
|
|
$
|
518,000
|
|
2018
|
1,039,000
|
|
|
11,000
|
|
|
1,050,000
|
|
|||
2019
|
967,000
|
|
|
11,000
|
|
|
978,000
|
|
|||
2020
|
504,000
|
|
|
11,000
|
|
|
515,000
|
|
|||
2021
|
519,000
|
|
|
2,000
|
|
|
521,000
|
|
|||
Thereafter
|
445,000
|
|
|
—
|
|
|
445,000
|
|
|||
Total
|
$
|
3,986,000
|
|
|
$
|
41,000
|
|
|
$
|
4,027,000
|
|
For the four-quarter period ending
|
|
Minimum EBITDA
|
||
July 31, 2017
|
|
$
|
(1,250,000
|
)
|
October 31, 2017
|
|
(1,000,000
|
)
|
|
January 31, 2018
|
|
(700,000
|
)
|
|
April 30, 2018
|
|
(35,869
|
)
|
|
July 31, 2018
|
|
414,953
|
|
|
October 31, 2018
|
|
1,080,126
|
|
|
January 31, 2019
|
|
1,634,130
|
|
|
April 30, 2019
|
|
1,842,610
|
|
|
July 31, 2019
|
|
2,657,362
|
|
|
October 31, 2019 and each fiscal quarter thereafter
|
|
3,613,810
|
|
|
July 31, 2017
|
|
January 31, 2017
|
||||
Senior term loan
|
$
|
4,761,000
|
|
|
$
|
5,539,000
|
|
Capital lease
|
23,000
|
|
|
91,000
|
|
||
Total
|
4,784,000
|
|
|
5,630,000
|
|
||
Less: Current portion
|
(620,000
|
)
|
|
(747,000
|
)
|
||
Non-current portion of debt
|
$
|
4,164,000
|
|
|
$
|
4,883,000
|
|
|
|
Senior Term Loan (1)
|
|
Capital Lease (2)
|
|
Total
|
||||||
2017
|
|
$
|
298,000
|
|
|
$
|
23,000
|
|
|
$
|
321,000
|
|
2018
|
|
597,000
|
|
|
—
|
|
|
597,000
|
|
|||
2019
|
|
4,030,000
|
|
|
—
|
|
|
4,030,000
|
|
|||
Total repayments
|
|
$
|
4,925,000
|
|
|
$
|
23,000
|
|
|
$
|
4,948,000
|
|
(1)
|
Term loan balance on the condensed consolidated balance sheet is reported net of deferred financing costs of
$164,000
.
|
(2)
|
Future minimum lease payments include principal plus interest.
|
•
|
competitive products and pricing;
|
•
|
product demand and market acceptance;
|
•
|
entry into new markets;
|
•
|
new product and services development and commercialization;
|
•
|
key strategic alliances with vendors and channel partners that resell our products;
|
•
|
uncertainty in continued relationships with clients due to termination rights;
|
•
|
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 organizations;
|
•
|
changes in economic, business and market conditions impacting the healthcare industry and the markets in which we operate; and
|
•
|
our ability to maintain compliance with the terms of our credit facilities.
|
|
Three Months Ended
|
|
|
|||||||||||
(in thousands):
|
July 31, 2017
|
|
July 31, 2016
|
|
Change
|
|
% Change
|
|||||||
Systems Sales:
|
|
|
|
|
|
|
|
|||||||
Proprietary software - perpetual license
|
$
|
55
|
|
|
$
|
1,003
|
|
|
$
|
(948
|
)
|
|
(95
|
)%
|
Term license
|
216
|
|
|
274
|
|
|
(58
|
)
|
|
(21
|
)%
|
|||
Hardware and third-party software
|
57
|
|
|
88
|
|
|
(31
|
)
|
|
(35
|
)%
|
|||
Professional services
|
572
|
|
|
548
|
|
|
24
|
|
|
4
|
%
|
|||
Audit Services
|
294
|
|
|
—
|
|
|
294
|
|
|
100
|
%
|
|||
Maintenance and support
|
3,279
|
|
|
3,732
|
|
|
(453
|
)
|
|
(12
|
)%
|
|||
Software as a service
|
1,443
|
|
|
1,729
|
|
|
(286
|
)
|
|
(17
|
)%
|
|||
Total Revenues
|
$
|
5,916
|
|
|
$
|
7,374
|
|
|
$
|
(1,458
|
)
|
|
(20
|
)%
|
|
Six Months Ended
|
|
|
|||||||||||
(in thousands):
|
July 31, 2017
|
|
July 31, 2016
|
|
Change
|
|
% Change
|
|||||||
System Sales:
|
|
|
|
|
|
|
|
|||||||
Proprietary software - perpetual license
|
$
|
170
|
|
|
$
|
1,021
|
|
|
$
|
(851
|
)
|
|
(83
|
)%
|
Term license
|
480
|
|
|
636
|
|
|
(156
|
)
|
|
(25
|
)%
|
|||
Hardware and third-party software
|
58
|
|
|
219
|
|
|
(161
|
)
|
|
(74
|
)%
|
|||
Professional services
|
992
|
|
|
1,239
|
|
|
(247
|
)
|
|
(20
|
)%
|
|||
Audit Services
|
639
|
|
|
—
|
|
|
639
|
|
|
100
|
%
|
|||
Maintenance and support
|
6,633
|
|
|
7,488
|
|
|
(855
|
)
|
|
(11
|
)%
|
|||
Software as a service
|
2,868
|
|
|
3,438
|
|
|
(570
|
)
|
|
(17
|
)%
|
|||
Total Revenues
|
$
|
11,840
|
|
|
$
|
14,041
|
|
|
$
|
(2,201
|
)
|
|
(16
|
)%
|
|
Three Months Ended
|
|
|
|
|
|||||||||
(in thousands):
|
July 31, 2017
|
|
July 31, 2016
|
|
Change
|
|
% Change
|
|||||||
Cost of systems sales
|
$
|
597
|
|
|
$
|
672
|
|
|
$
|
(75
|
)
|
|
(11
|
)%
|
Cost of professional services
|
543
|
|
|
529
|
|
|
14
|
|
|
3
|
%
|
|||
Cost of audit services
|
391
|
|
|
—
|
|
|
391
|
|
|
100
|
%
|
|||
Cost of maintenance and support
|
768
|
|
|
835
|
|
|
(67
|
)
|
|
(8
|
)%
|
|||
Cost of software as a service
|
286
|
|
|
455
|
|
|
(169
|
)
|
|
(37
|
)%
|
|||
Total cost of sales
|
$
|
2,585
|
|
|
$
|
2,491
|
|
|
$
|
94
|
|
|
4
|
%
|
|
Six Months Ended
|
|
|
|
|
|||||||||
(in thousands):
|
July 31, 2017
|
|
July 31, 2016
|
|
Change
|
|
% Change
|
|||||||
Cost of systems sales
|
$
|
1,163
|
|
|
$
|
1,417
|
|
|
$
|
(254
|
)
|
|
(18
|
)%
|
Cost of professional services
|
1,258
|
|
|
1,168
|
|
|
90
|
|
|
8
|
%
|
|||
Cost of audit services
|
832
|
|
|
—
|
|
|
832
|
|
|
100
|
%
|
|||
Cost of maintenance and support
|
1,575
|
|
|
1,693
|
|
|
(118
|
)
|
|
(7
|
)%
|
|||
Cost of software as a service
|
625
|
|
|
940
|
|
|
(315
|
)
|
|
(34
|
)%
|
|||
Total cost of sales
|
$
|
5,453
|
|
|
$
|
5,218
|
|
|
$
|
235
|
|
|
5
|
%
|
|
Three Months Ended
|
|
|
|
|
|||||||||
(in thousands):
|
July 31, 2017
|
|
July 31, 2016
|
|
Change
|
|
% Change
|
|||||||
General and administrative expenses
|
$
|
1,761
|
|
|
$
|
2,233
|
|
|
$
|
(472
|
)
|
|
(21
|
)%
|
Sales and marketing expenses
|
1,025
|
|
|
1,109
|
|
|
(84
|
)
|
|
(8
|
)%
|
|||
Total selling, general, and administrative expense
|
$
|
2,786
|
|
|
$
|
3,342
|
|
|
$
|
(556
|
)
|
|
(17
|
)%
|
|
Six Months Ended
|
|
|
|
|
|||||||||
(in thousands):
|
July 31, 2017
|
|
July 31, 2016
|
|
Change
|
|
% Change
|
|||||||
General and administrative expenses
|
$
|
3,993
|
|
|
$
|
4,688
|
|
|
$
|
(695
|
)
|
|
(15
|
)%
|
Sales and marketing expenses
|
2,171
|
|
|
2,253
|
|
|
(82
|
)
|
|
(4
|
)%
|
|||
Total selling, general, and administrative expense
|
$
|
6,164
|
|
|
$
|
6,941
|
|
|
$
|
(777
|
)
|
|
(11
|
)%
|
|
Three Months Ended
|
|
|
|
|
|||||||||
(in thousands):
|
July 31, 2017
|
|
July 31, 2016
|
|
Change
|
|
% Change
|
|||||||
Research and development expense
|
$
|
1,496
|
|
|
$
|
2,109
|
|
|
$
|
(613
|
)
|
|
(29
|
)%
|
Plus: Capitalized research and development cost
|
458
|
|
|
439
|
|
|
19
|
|
|
4
|
%
|
|||
Total research and development cost
|
$
|
1,954
|
|
|
$
|
2,548
|
|
|
$
|
(594
|
)
|
|
(23
|
)%
|
|
Six Months Ended
|
|
|
|
|
|||||||||
(in thousands):
|
July 31, 2017
|
|
July 31, 2016
|
|
Change
|
|
% Change
|
|||||||
Research and development expense
|
$
|
3,053
|
|
|
$
|
3,831
|
|
|
$
|
(778
|
)
|
|
(20
|
)%
|
Plus: Capitalized research and development cost
|
844
|
|
|
937
|
|
|
(93
|
)
|
|
(10
|
)%
|
|||
Total research and development cost
|
$
|
3,897
|
|
|
$
|
4,768
|
|
|
$
|
(871
|
)
|
|
(18
|
)%
|
|
Three Months Ended
|
|
|
|||||||||||
(in thousands):
|
July 31, 2017
|
|
July 31, 2016
|
|
Change
|
|
% Change
|
|||||||
Interest expense
|
$
|
(120
|
)
|
|
$
|
(120
|
)
|
|
$
|
—
|
|
|
—
|
%
|
Miscellaneous (expense) income
|
(20
|
)
|
|
(45
|
)
|
|
25
|
|
|
(56
|
)%
|
|||
Total other (expense) income
|
$
|
(140
|
)
|
|
$
|
(165
|
)
|
|
$
|
25
|
|
|
(15
|
)%
|
|
Six Months Ended
|
|
|
|||||||||||
(in thousands):
|
July 31, 2017
|
|
July 31, 2016
|
|
Change
|
|
% Change
|
|||||||
Interest expense
|
$
|
(248
|
)
|
|
$
|
(282
|
)
|
|
$
|
34
|
|
|
(12
|
)%
|
Miscellaneous (expense) income
|
(58
|
)
|
|
21
|
|
|
(79
|
)
|
|
(376
|
)%
|
|||
Total other (expense) income
|
$
|
(306
|
)
|
|
$
|
(261
|
)
|
|
$
|
(45
|
)
|
|
17
|
%
|
|
July 31, 2017
|
|
July 31, 2016
|
||||
Company proprietary software
|
$
|
11,458,000
|
|
|
$
|
15,133,000
|
|
Third-party hardware and software
|
50,000
|
|
|
200,000
|
|
||
Professional services
|
3,517,000
|
|
|
5,563,000
|
|
||
Audit services
|
1,454,000
|
|
|
—
|
|
||
Maintenance and support
|
16,583,000
|
|
|
19,569,000
|
|
||
Software as a service
|
13,300,000
|
|
|
13,177,000
|
|
||
Total
|
$
|
46,362,000
|
|
|
$
|
53,642,000
|
|
•
|
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 agreement;
|
•
|
EBITDA does not reflect income tax payments that we may be 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.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
In thousands, except per share data
|
July 31, 2017
|
|
July 31, 2016
|
|
July 31, 2017
|
|
July 31, 2016
|
||||||||
Net loss
|
$
|
(1,098
|
)
|
|
$
|
(734
|
)
|
|
$
|
(3,141
|
)
|
|
$
|
(2,212
|
)
|
Interest expense
|
120
|
|
|
120
|
|
|
248
|
|
|
282
|
|
||||
Income tax expense
|
3
|
|
|
2
|
|
|
5
|
|
|
3
|
|
||||
Depreciation
|
200
|
|
|
310
|
|
|
403
|
|
|
631
|
|
||||
Amortization of capitalized software development costs
|
572
|
|
|
710
|
|
|
1,144
|
|
|
1,426
|
|
||||
Amortization of intangible assets
|
333
|
|
|
325
|
|
|
666
|
|
|
651
|
|
||||
Amortization of other costs
|
43
|
|
|
36
|
|
|
126
|
|
|
80
|
|
||||
EBITDA
|
173
|
|
|
769
|
|
|
(549
|
)
|
|
861
|
|
||||
Share-based compensation expense
|
288
|
|
|
432
|
|
|
555
|
|
|
909
|
|
||||
(Gain) loss on disposal of fixed assets
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
1
|
|
||||
Associate severances and other costs relating to transactions or corporate restructuring
|
—
|
|
|
110
|
|
|
—
|
|
|
110
|
|
||||
Non-cash valuation adjustments to assets and liabilities
|
23
|
|
|
14
|
|
|
40
|
|
|
22
|
|
||||
Transaction related professional fees, advisory fees, and other internal direct costs
|
—
|
|
|
236
|
|
|
—
|
|
|
255
|
|
||||
Adjusted EBITDA
|
$
|
484
|
|
|
$
|
1,561
|
|
|
$
|
45
|
|
|
$
|
2,158
|
|
Adjusted EBITDA margin (1)
|
8
|
%
|
|
21
|
%
|
|
—
|
%
|
|
15
|
%
|
||||
|
|
|
|
|
|
|
|
||||||||
Loss per share — diluted
|
$
|
(0.06
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
(0.16
|
)
|
|
$
|
(0.16
|
)
|
Adjusted EBITDA per adjusted diluted share (2)
|
$
|
0.02
|
|
|
$
|
0.07
|
|
|
$
|
—
|
|
|
$
|
0.10
|
|
Diluted weighted average shares
|
19,834,859
|
|
|
19,791,805
|
|
|
19,765,125
|
|
|
19,393,547
|
|
||||
Includable incremental shares — adjusted EBITDA (3)
|
3,378,484
|
|
|
3,376,285
|
|
|
3,322,319
|
|
|
3,313,870
|
|
||||
Adjusted diluted shares
|
23,213,343
|
|
|
23,168,090
|
|
|
23,087,444
|
|
|
22,707,417
|
|
(1)
|
Adjusted EBITDA as a percentage of GAAP net revenues.
|
(2)
|
Adjusted EBITDA per adjusted diluted share for our common stock is computed using the more dilutive of the two-class method or the if-converted method.
|
(3)
|
The number of incremental shares that would be dilutive under an assumption that the Company is profitable during the reported period, which is only applicable for a period in which the Company reports a GAAP net loss. If a GAAP profit is earned in the reported periods, no additional incremental shares are assumed.
|
(in thousands)
|
July 31, 2017
|
|
January 31, 2017
|
||||
Term loans (1)
|
$
|
4,761
|
|
|
$
|
5,539
|
|
Capital leases (1)
|
23
|
|
|
91
|
|
||
Royalty liability (2)
|
2,424
|
|
|
2,351
|
|
(1)
|
See Note 5 to the condensed consolidated financial statements for additional information.
|
(2)
|
See Note 3 to the condensed consolidated financial statements for additional information.
|
(in thousands)
|
Six Months Ended
|
||||||
July 31, 2017
|
|
July 31, 2016
|
|||||
Net loss
|
$
|
(3,141
|
)
|
|
$
|
(2,212
|
)
|
Non-cash adjustments to net loss
|
3,135
|
|
|
3,843
|
|
||
Cash impact of changes in assets and liabilities
|
(959
|
)
|
|
(1,492
|
)
|
||
Operating cash flow
|
$
|
(965
|
)
|
|
$
|
139
|
|
(in thousands)
|
Six Months Ended
|
||||||
July 31, 2017
|
|
July 31, 2016
|
|||||
Purchases of property and equipment
|
$
|
(10
|
)
|
|
$
|
(61
|
)
|
Capitalized software development costs
|
(844
|
)
|
|
(937
|
)
|
||
Investing cash flow
|
$
|
(854
|
)
|
|
$
|
(998
|
)
|
(in thousands)
|
Six Months Ended
|
||||||
July 31, 2017
|
|
July 31, 2016
|
|||||
Principal repayments on term loan
|
$
|
(813
|
)
|
|
$
|
(2,075
|
)
|
Principal payments on capital lease obligations
|
(68
|
)
|
|
(439
|
)
|
||
Return of shares of common stock in connection with the vesting or exercise of equity incentive awards
|
(37
|
)
|
|
(12
|
)
|
||
Proceeds from the exercise of stock options and stock purchase plans
|
—
|
|
|
15
|
|
||
Financing cash flow
|
$
|
(918
|
)
|
|
$
|
(2,511
|
)
|
•
|
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 their 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.
|
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of
Publicly Announced Plans or Programs
|
|
Maximum Number of Shares that May Yet Be Purchased under the Plans or Programs (1)
|
|||||
May 1 - May 31
|
6,787
|
|
|
$
|
1.19
|
|
|
—
|
|
|
—
|
|
June 1 - June 30
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
July 1 - July 31
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Total
|
6,787
|
|
|
$
|
1.19
|
|
|
—
|
|
|
—
|
|
|
|
STREAMLINE HEALTH SOLUTIONS, INC.
|
DATE: September 13, 2017
|
By:
|
/
S
/ David W. Sides
|
|
|
David W. Sides
Chief Executive Officer
|
DATE: September 13, 2017
|
By:
|
/
S
/ Nicholas A. Meeks
|
|
|
Nicholas A. Meeks
Chief Financial Officer
|
Exhibit No.
|
Description of Exhibit
|
10.1
*
|
Third Amendment to Credit Agreement dated as of June 19, 2017 by and among Wells Fargo Bank, N.A., the lenders party thereto, Streamline Health Solutions, Inc. and Streamline Health, Inc.
|
31.1
*
|
Certification by Chief Executive Officer pursuant to Rule 13a-14(a) of the Exchange Act.
|
31.2
*
|
Certification by Chief Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act.
|
32.1
*
|
Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350.
|
32.2
*
|
Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350.
|
101
|
The following financial information from Streamline Health Solutions, Inc.’s Quarterly Report on Form 10-Q for the three-month period ended July 31, 2017 filed with the SEC on September 13, 2017, formatted in XBRL includes: (i) Condensed Consolidated Balance Sheets at July 31, 2017 and January 31, 2017, (ii) Condensed Consolidated Statements of Operations for three- and six-month periods ended July 31, 2017 and 2016, (iii) Condensed Consolidated Statements of Cash Flows for the six-month periods ended July 31, 2017 and 2016, and (iv) Notes to the Condensed Consolidated Financial Statements.
|
*
|
Filed herewith.
|
Applicable Amount
|
Applicable Period
|
$250,000
|
For the 4-quarter period ending April 30, 2017
|
$(1,250,000)
|
For the 4-quarter period ending July 31, 2017
|
$(1,000,000)
|
For the 4-quarter period ending October 31, 2017
|
$(700,000)
|
For the 4-quarter period ending January 31, 2018
|
$(35,869)
|
For the 4-quarter period ending April 30, 2018
|
$414,953
|
For the 4-quarter period ending July 31, 2018
|
$1,080,126
|
For the 4-quarter period ending October 31, 2018
|
$1,634,130
|
For the 4-quarter period ending January 31, 2019
|
$1,842,610
|
For the 4-quarter period ending April 30, 2019
|
$2,657,362
|
For the 4-quarter period ending July 31, 2019
|
$3,613,810
|
For the 4-quarter period ending October 31, 2019 and for the 4-quarter period ending on each July 31, October 31, January 31 and April 30 thereafter
|
September 13, 2017
|
/s/ David W. Sides
|
|
Chief Executive Officer and
President
|
September 13, 2017
|
/s/ Nicholas A. Meeks
|
|
Chief Financial Officer
|
|
(1)
|
The quarterly report on Form 10-Q of the Company for the quarter ended July 31, 2017 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition, and results of operations of the Company.
|
|
(1)
|
The quarterly report on Form 10-Q of the Company for the quarter ended July 31, 2017 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition, and results of operations of the Company.
|