The following table details the remaining obligations, including accrued interest, by fiscal year, as of the end of the quarter:

On April 10, 2012, we entered into an amended lease obligation to lease 8,582 square feet of office space in our current building at 1230 Peachtree NE in Atlanta, GA. The lease commences upon taking possession of the space and ends 72 months thereafter. We took possession of the space during the third quarter of fiscal 2012. Upon relocation, we completely vacated the previously leased premises within the building. The provisions of the lease provide for rent abatement for the first four months of the lease term, and a moving allowance of approximately $17,000. Upon taking possession of the premises, the rent abatement and allowance will be aggregated with the total expected rental expense, and will be amortized on a straight line basis over the term of the lease.

NOTE F —– DEBT

Term Loan and Line of Credit

On April 13,December 7, 2011, in conjunction with the Company’s wholly owned subsidiary, Streamline Health, Inc.,acquisition of the assets of Interpoint, we entered into a second amended and restated revolving notesubordinated credit agreement with Fifth Third Bank Cincinnati, OH. in which the bank provided us with a $4,120,000 term loan maturing on December 7, 2013 and a revolving line of credit maturing on October 1, 2013.

The termsproceeds from the term loan were used to finance the cash portion of the Interpoint acquisition purchase price, as well as pay down the outstanding balance of our existing revolving line of credit with Fifth Third Bank. The term loan remainand revolving line of credit are secured by substantially all of our and our subsidiaries’ assets. Borrowings under the same as set forth in the revolving note entered into on July 31, 2008, as amended on January 6, 2009,term loan bear interest at a rate of 12% and October 21, 2009, except as follows: (i) the maximum principal amount that can be borrowed was increased to $3,000,000 from the prior maximum amount of $2,750,000, subject to the borrowing base limitation; and (ii) the maturity date of the loan has been extended to October 1, 2013 from October 1, 2011. The interest rate on the outstanding principal balanceline of the loan accruescredit bears interest at an annuala floating rate of interest equal to the Adjusted Libor Rate (as defined in the revolving note)based on LIBOR plus 3.25%,an applicable margin, and is payable monthly. The interest rate on the note was 3.5%line of credit at July 31, 2011. In2012 approximated 3.4%. We paid a commitment fee in connection with the term loan of $120,000, which is included in deferred financing costs, and we will also be required to pay a success fee in accordance with the revised maturity date,loan, which is recorded in interest expense. We had no outstanding borrowings under the outstanding balance on the note is classifiedline of credit as a long-term obligation atof July 31, 2011.

Convertible Note

On December 7, 2011, as part of the purchase of the assets of Interpoint, we issued a convertible promissory note (the “Convertible Note”) for $3,000,000. The note accrued interest at a per annum rate of 8% from the Company pursuantdate of the note until the earlier of conversion or payment in full of all outstanding principal and accrued interest. Interest is payable quarterly in arrears on the first day of March, June, September, and December.

On June 15, 2012 Interpoint elected to security agreements entered intoconvert the balance of principal and interest on the note outstanding, net of working capital adjustments and related accrued interest owed to us, for 1,529,729 shares of common stock at $2.00 per share.

Contingent Earn-Out Provision

As part of the asset purchase, Interpoint is entitled to receive additional consideration contingent upon certain financial performance measurements during a one year earn-out period commencing June 30, 2012 and ending on June 30, 2013. The earn-out consideration is calculated as twice the recurring revenue for the earn-out period recognized by the Company.

Interpoint is entitled to additional earn-out consideration of fifty percent of any license sales of the developed software acquired, to specific clients as defined in the asset purchase agreement, for any sales prior to December 31, 2012.

At July 31, 2011. The Company pays a commitment fee on2012 we estimate the unused portion ofpayment obligation in connection with the facility of .06%. The Company had outstanding borrowings of $1,250,000 and $1,200,000 under this revolving loanearn-out will be $1,233,000. Future adjustments to the contingent obligation will be recorded as of July 31, 2011 and January 31, 2011, respectively.

NOTE G — COMMITTMENTS- COMMITMENTS AND CONTINGENCIES

We have entered into employment agreements with itsour officers and certain employees that generally provide annual salary, a minimum bonus, discretionary bonus, and stock incentive provisions.

NOTE H – SUBSEQUENT EVENTS

We evaluated all events or transactions that occurred after July 31, 2012 through the date the we issued these financial statements. On August 16, 2012, we acquired substantially all of the outstanding stock of New York City-based Meta Health Technology, Inc., a New York corporation (“Meta”). We paid a total purchase price of $15,000,000, consisting of cash payment of $13,400,000 and the issuance of 393,086 shares of our common stock at a price of $4.07 per share, which had an agreed upon value of approximately $1,600,000. For the three and six month periods ending July 31, 2012, we recorded $524,000 and $550,000, respectively, of acquisition costs related to the Meta transaction, which was recorded in selling, general and administrative expense.

In conjunction with the Meta acquisition, on August 16, 2012, we amended our current term loan and line of credit agreements with Fifth Third Bank, whereby Fifth Third Bank provided us with a $5,000,000 revolving line of credit, a $5,000,000 senior term loan and a $9,000,000 subordinated term loan, a portion of which was used to refinance the previously outstanding $4,120,000 subordinated term loan. These new term loans and revolving line of credit mature on August 16, 2014. Additionally, as part of the refinancing in August, we mutually agreed to settle the success fee included in the the current term loan for $700,000. The loans are secured by substantially all of our assets. Borrowing under the senior term loan bears interest at a rate of LIBOR plus 5.50%, and borrowing under the subordinated term loan bears interest at 10% from August 16, 2012 and thereafter. Borrowing under the revolving loan bears interest at a rate equal to LIBOR plus 3.00%. The loans are subject to certain customary financial covenants, including, without limitation, covenants that require us to maintain a minimum adjusted EBITDA, to maintain a funded debt to adjusted EBITDA ratio and to maintain a fixed charge coverage ratio. A commitment fee of 0.40% will be incurred on the unused revolving line of credit balance, and is payable quarterly. The proceeds of these loans were used to finance the cash portion of the acquisition purchase price and to cover any additional operation costs as a result of the Meta acquisition.

In a reductionseparate transaction on August 16, 2012, we completed a $12,000,000 equity investment with affiliated funds and accounts of Great Point Partners, LLC, and Noro-Moseley Partners VI, L.P., and another investor. The equity investment consisted of us issuing 2,416,785 shares of a new series A convertible preferred stock at $3.00 per share, warrants exercisable for up to 1,200,000 shares of our common stock at an exercise price of $3.99 per share, and convertible subordinated notes in force implemented by managementthe aggregate principal amount of $5,699,577, which, upon stockholder approval, convert into 1,583,210 shares of preferred stock. The preferred stock is convertible into shares of our common stock on a one-for-one basis at $3.00 per share at any time at the discretion of the holder of such preferred stock. The warrants may be exercised at any time during the quarter ended July 31, 2011,period beginning on February17, 2013 until 5 years from such initial exercise date. Direct costs of obtaining the Company expensed $100,000 infinancing were capitalized and will be amortized over the second quarterlife of fiscal 2011, in accordance with severance agreements.

the healthcare regulatory environment, potential changes in legislation, regulatoryregulation and government funding affecting the healthcare industry, healthcare information system budgets, availability of healthcare information systems trained personnel for implementation of new systems, as well as maintenance of legacy systems, fluctuations in operating results, and other risk factors that might cause such differences including those discussed herein, and including, effects of critical accounting policies and judgments, changes in accounting policies or procedures as may be required by the Financial AccountingAccountings Standards Board or other similar entities, changes in economic, business and market conditions impacting the healthcare industry generally and the markets in which the Company operates,we operate, and the Company’sour ability to maintain compliance with the terms of itsour credit facilities, and other risk factors that might cause such differences including those discussed herein, including, but not limited to, discussions in the most recent Form 10-K,sections entitled Part I, “Item 1 Business”,Financial Statements” and “Item 1A Risk Factors”, Part II, “Item 72 Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Item 8 Financial Statements and Supplemental Data.Operations.” In addition, other written or oral statements that constitute forward-looking statements may be made by us or on behalf of the Company.our behalf. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as of the date thereof. The Registrant undertakesWe undertake no obligation to publicly revise these forward-looking statements, to reflect events or circumstances that arise after the date hereof. Readers should carefully review the risk factors described in this and other documents Streamline Health Solutions, Inc. fileswe file from time to time with the Securities and Exchange Commission, including future Quarterly Reportsthe annual report on Form 10-K, quarterly reports on Form 10-Q and any Current Reportscurrent reports on Form 8-K.

Our discussion and analysis of itsour financial condition and results of operations are based upon itsour consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires Streamline Healthus to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses, and related disclosure of contingent liabilities. On an ongoing basis, Streamline Health evaluates itswe evaluate our estimates, including those related to product revenues, bad debts, capitalized software development costs, income taxes, support contracts, contingencies, and litigation. Streamline Health bases itsWe base our estimates on historical experience and on various other assumptions that Streamline Health believeswe believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities, and revenue and expense recognition. Actual results may differ from these estimates under different assumptions or conditions.

We recognized revenues in the three and six month periods ending July 31, 20112012 of $5,049,000 and $10,494,000, compared to $4,146,000 and $8,286,000 compared to $4,676,000 and $8,220,000; a decrease of $530,000 andfor the comparable prior year periods; an increase of $66,000$903,000 and $2,208,000 or 22% and 27%, respectively. The revenues recognizedRevenues are derived primarily from recurring revenues recognized from SaaS subscriptionssoftware as a service (referred to herein as “SaaS”) and recurring maintenance contracts. The Company earnedWe incurred an operating profitloss of $20,000$24,000 in the second quarter of fiscal 20112012, and incurredearned an operating lossprofit of $234,000$648,000 for the six month period ended July 31, 2011.2012. In the prior year comparable periods the Companywe earned an operating profit of $20,000 and incurred an operating lossesloss of $28,000 and $1,229,000,$234,000, respectively. Operating expenses for the three and six month periods ending July 31, 20112012 were $5,073,000 and $9,846,000, compared to $4,126,000 and $8,519,000 compared to $4,704,000 and $9,449,000 in the comparable prior year periods; a decreasean increase of $578,000$947,000 and $1,327,000, or 12%23% and $930,000 or 10%16%, respectively, over the prior year comparable periods.

Our revenues from proprietary systems sales have varied, and may continue to vary, significantly from quarter-to-quarter because of the volume and timing of systems sales and delivery. Professional services revenues also fluctuate from quarter-to-quarter because of the timing of the implementation services, project management, and timing of the recognition of revenues under generally accepted accounting principles. Conversely, revenues from SaaS, subscription sales, and maintenance services do not fluctuate significantly from quarter-to-quarter, but have been increasing, on an annual basis, as the number of customers increase.increase or customers expand their solutions. Substantial portions of the operating expenses are fixed; therefore operating profits are expected to vary depending primarily on the factors that drive fluctuations in revenues and the mix of proprietary system salesrevenue versus SaaS subscriptions sold.