(rounded to the nearest thousand dollars, except share and per share information)

	October 31, 2023		January 31, 2023
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	2,557,000	$	6,598,000
Accounts receivable, net of allowance for credit losses of $94,000 and $132,000, respectively		3,653,000		7,719,000
Contract receivables		763,000		960,000
Prepaid and other current assets		742,000		710,000
Total current assets		7,715,000		15,987,000
Non-current assets:
Property and equipment, net of accumulated amortization of $278,000 and $246,000 respectively		94,000		79,000
Right-of use asset for operating lease		—		32,000
Capitalized software development costs, net of accumulated amortization of $7,560,000 and $6,224,000, respectively		6,248,000		5,846,000
Intangible assets, net of accumulated amortization of $3,978,000 and $2,627,000, respectively		12,479,000		14,793,000
Goodwill		13,276,000		23,089,000
Other		1,293,000		1,695,000
Total non-current assets		33,390,000		45,534,000
Total assets	$	41,105,000	$	61,521,000

See accompanying notes to condensed consolidated financial statements.

~~Index~~

STREAMLINE HEALTH SOLUTIONS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)

(rounded to ~~Financial Statements~~

STREAMLINE HEALTH SOLUTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

As of
October 31, 2017 January 31, 2017
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 807,778
$ 1,116,525
Accrued compensation 593,510
496,706
Accrued other expenses 587,209
484,391
Current portion of term loan 596,984
655,804
Deferred revenues 6,130,259
9,916,454
Current portion of capital lease obligations —
91,337
Total current liabilities 8,715,740
12,761,217
Non-current liabilities:
Term loan, net of deferred financing cost of $146,009 and $199,211, respectively 4,032,865
4,883,286
Warrants liability 150,857
46,191
Royalty liability 2,456,233
2,350,754
Lease incentive liability 293,322
339,676
Deferred revenues, less current portion 487,832
568,515
Total non-current liabilities 7,421,109
8,188,422
Total liabilities 16,136,849
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; 19,984,743 and 19,695,391 shares issued and outstanding, respectively 199,847
196,954
Additional paid in capital 81,491,728
80,667,771
Accumulated deficit (72,162,935 ) (69,025,851 )
Total stockholders’ equity 9,528,640
11,838,874
$ 34,515,474
$ 41,638,498

the nearest thousand dollars, except share and per share information)

	October 31, 2023			January 31, 2023
		(Unaudited)
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	736,000		$	626,000
Accrued expenses		2,883,000			3,265,000
Current portion of term loan		1,250,000			750,000
Deferred revenues		5,983,000			8,361,000
Current portion of operating lease obligation		—			35,000
Acquisition earnout liability		1,833,000			3,738,000
Total current liabilities		12,685,000			16,775,000
Non-current liabilities:
Term loan, net of current portion and deferred financing costs		8,042,000			8,964,000
Line of credit		500,000			—
Deferred revenues, less current portion		127,000			167,000
Other non-current liabilities		—			104,000
Total non-current liabilities		8,669,000			9,235,000
Total liabilities		21,354,000			26,010,000
Commitments and contingencies – Note 8		-			-
Stockholders’ equity:
Common stock, $0.01 par value per share, 85,000,000 shares authorized; 58,793,990 and 57,567,210 shares issued and outstanding, respectively		588,000			576,000
Additional paid in capital		133,492,000			131,973,000
Accumulated deficit		(114,329,000	)		(97,038,000	)
Total stockholders’ equity		19,751,000			35,511,000
Total liabilities and stockholders’ equity	$	41,105,000		$	61,521,000

See accompanying notes to condensed consolidated financial statements.

~~Index to Financial Statements~~

STREAMLINE HEALTH SOLUTIONS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

~~(Unaudited)~~

Three Months Ended October 31 Nine Months Ended October 31
2017 2016 2017 2016
Revenues:
Systems sales $ 348,526
$ 314,218
$ 1,055,941
$ 2,190,256
Professional services 801,771
630,961
1,793,618
1,869,656
Audit services 280,025
234,347
919,485
234,347
Maintenance and support 3,250,229
3,749,596
9,883,563
11,237,637
Software as a service 1,718,748
1,706,366
4,586,532
5,144,876
Total revenues 6,399,299
6,635,488
18,239,139
20,676,772
Operating expenses:
Cost of systems sales 434,138
663,148
1,596,988
2,080,263
Cost of professional services 555,815
723,358
1,814,236
1,891,146
Cost of audit services 404,280
595,575
1,236,358
595,575
Cost of maintenance and support 667,307
790,291
2,241,969
2,483,462
Cost of software as a service 289,503
450,695
914,711
1,390,308
Selling, general and administrative 2,819,549
3,212,350
8,983,248
10,153,140
Research and development 932,251
1,969,415
3,985,161
5,800,169
Total operating expenses 6,102,843
8,404,832
20,772,671
24,394,063
Operating income (loss) 296,456
(1,769,344 ) (2,533,532 ) (3,717,291 )
Other expense:
Interest expense (113,078 ) (98,871 ) (360,723 ) (380,897 )
Miscellaneous expense (177,282 ) (60,555 ) (235,007 ) (39,089 )
Earnings (loss) before income taxes 6,096
(1,928,770 ) (3,129,262 ) (4,137,277 )
Income tax expense (2,607 ) (1,702 ) (7,822 ) (5,104 )
Net earnings (loss) $ 3,489
$ (1,930,472 ) $ (3,137,084 ) $ (4,142,381 )
Less: deemed dividends on Series A Preferred Shares —
(72,710 ) —
(875,935 )
Net earnings (loss) attributable to common stockholders $ 3,489
$ (2,003,182 ) $ (3,137,084 ) $ (5,018,316 )
Basic net earnings (loss) per common share $ —
$ (0.10 ) $ (0.16 ) $ (0.26 )
Number of shares used in basic per common share computation 19,985,822
19,645,521
19,838,691
19,477,538
Diluted net earnings (loss) per common share $ —
$ (0.10 ) $ (0.16 ) $ (0.26 )
Number of shares used in diluted per common share computation 23,068,423
19,645,521
19,838,691
19,477,538

(rounded to the nearest thousand dollars, except share and per share information)

	2023			2022			2023			2022
	Three Months Ended October 31,						Nine Months Ended October 31,
	2023			2022			2023			2022
Revenues:
Software as a service	$	3,924,000		$	3,209,000		$	10,630,000		$	9,157,000
Maintenance and support		1,070,000			1,120,000			3,327,000			3,348,000
Professional fees and licenses		1,139,000			1,888,000			3,278,000			5,639,000
Total revenues		6,133,000			6,217,000			17,235,000			18,144,000
Operating expenses:
Cost of software as a service		1,677,000			1,742,000			5,159,000			4,771,000
Cost of maintenance and support		129,000			84,000			250,000			220,000
Cost of professional fees and licenses		1,072,000			1,744,000			3,202,000			4,992,000
Cost of goods and services		1,072,000			1,744,000			3,202,000			4,992,000
Selling, general and administrative expense		4,122,000			4,055,000			12,079,000			12,629,000
Research and development		1,304,000			1,754,000			4,310,000			4,527,000
Impairment of goodwill		9,813,000			—			9,813,000			—
Impairment of long-lived assets		963,000			—			963,000			—
Total operating expenses		19,080,000			9,379,000			35,776,000			27,139,000
Operating loss		(12,947,000	)		(3,162,000	)		(18,541,000	)		(8,995,000	)
Other (expense) income:
Interest expense		(266,000	)		(198,000	)		(781,000	)		(519,000	)
Acquisition earnout valuation adjustments		1,182,000			163,000			1,905,000			188,000
Other		—			68,000			31,000			151,000
Loss before income taxes		(12,031,000	)		(3,129,000	)		(17,386,000	)		(9,175,000	)
Income tax benefit (expense)		120,000			(9,000	)		59,000			(22,000	)
Net loss	$	(11,911,000	)	$	(3,138,000	)	$	(17,327,000	)	$	(9,197,000	)
Basic and Diluted Earnings Per Share:
Net loss per common share – basic and diluted	$	(0.21	)	$	(0.07	)	$	(0.31	)	$	(0.19	)
Weighted average number of common shares – basic and diluted		56,710,335			47,730,009			56,346,300			47,329,923

See accompanying notes to condensed consolidated financial statements.

~~Index to Financial Statements~~

STREAMLINE HEALTH SOLUTIONS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF ~~CASH FLOWS~~

~~(Unaudited)~~

Nine Months Ended October 31
2017 2016
Operating activities:
Net loss $ (3,137,084 ) $ (4,142,381 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation 595,866
895,438
Amortization of capitalized software development costs 1,574,493
2,146,374
Amortization of intangible assets 922,462
976,338
Amortization of other deferred costs 229,780
192,947
Valuation adjustment for warrants liability 104,666
(36,875 )
Share-based compensation expense 844,960
1,342,513
Other valuation adjustments 124,423
120,912
(Gain) loss on disposal of property and equipment (14,871 ) 567
Provision for accounts receivable 181,859
136,693
Changes in assets and liabilities, net of effects of acquisitions:
Accounts and contract receivables 1,957,439
1,679,810
Other assets (671,254 ) 130,875
Accounts payable (308,747 ) (78,320 )
Accrued expenses 134,324
(814,707 )
Deferred revenues (3,866,878 ) (3,793,603 )
Net cash used in operating activities (1,328,562 ) (1,243,419 )
Investing activities:
Purchases of property and equipment (24,517 ) (501,148 )
Capitalization of software development costs (1,336,942 ) (1,420,678 )
Payment for acquisition, net of cash received —
(1,400,000 )
Net cash used in investing activities (1,361,459 ) (3,321,826 )
Financing activities:
Principal repayments on term loan (962,443 ) (2,243,624 )
Principal payments on capital lease obligation (91,337 ) (535,896 )
Proceeds from exercise of stock options and stock purchase plan 23,703
14,793
Payments related to settlement of employee shared-based awards (41,813 ) (11,702 )
Net cash used in financing activities (1,071,890 ) (2,776,429 )
Net decrease in cash and cash equivalents (3,761,911 ) (7,341,674 )
Cash and cash equivalents at beginning of period 5,654,093
9,882,136
Cash and cash equivalents at end of period $ 1,892,182
$ 2,540,462

STOCKHOLDERS’ EQUITY

(rounded to the nearest thousand dollars, except share information)


	Common stock (Shares)			Common stock (Amount)			Additional paid in capital			Accumulated deficit			Total stockholders’ equity

Balance at January 31, 2023		57,567,210		$	576,000		$	131,973,000		$	(97,038,000	)	$	35,511,000
Restricted stock issued		1,185,927			12,000			(12,000	)		—			—
Restricted stock forfeited		(28,400	)		(1,000	)		1,000			—			—
Surrender of shares		(88,326	)		(1,000	)		(178,000	)		—			(179,000	)
Share-based compensation		—			—			595,000			—			595,000
Adoption of ASU 2016-13		—			—			—			36,000			36,000
Net loss		—			—			—			(2,901,000	)		(2,901,000	)
Balance at April 30, 2023		58,636,411			586,000			132,379,000			(99,903,000	)		33,062,000

Restricted stock issued		385,720			4,000			(4,000	)		—			—
Restricted stock forfeited		(77,000	)		(1,000	)		1,000			—			—
Surrender of shares		(50,060	)		—			(73,000	)		—			(73,000	)
Share-based compensation		—			—			630,000			—			630,000
Net loss		—			—			—			(2,515,000	)		(2,515,000	)
Balance at July 31, 2023		58,895,071		$	589,000		$	132,933,000		$	(102,418,000	)	$	31,104,000

Restricted stock issued		176,054			2,000			(2,000	)		—			—
Restricted stock forfeited		(239,100	)		(2,000	)		2,000			—			—
Surrender of shares		(38,035	)		(1,000	)		(18,000	)		—			(19,000	)
Share-based compensation		—			—			577,000			—			577,000
Net loss		—			—			—			(11,911,000	)		(11,911,000	)
Balance at October 31, 2023		58,793,990		$	588,000		$	133,492,000		$	(114,329,000	)	$	19,751,000

	Common stock (Shares)			Common stock (Amount)			Additional paid in capital			Accumulated deficit			Total stockholders’ equity

Balance at January 31, 2022		47,840,950		$	478,000		$	119,225,000		$	(85,659,000	)	$	34,044,000
Restricted stock issued		408,031			4,000			(4,000	)		—			—
Restricted stock forfeited		(63,900	)		—			—			—			—
Surrender of shares		(95,701	)		(1,000	)		(140,000	)		—			(141,000	)
Share-based compensation		—			—			326,000			—			326,000
Net loss		—			—			—			(2,787,000	)		(2,787,000	)
Balance at April 30, 2022		48,089,380			481,000			119,407,000			(88,446,000	)		31,442,000

Exercise of stock options		5,000			—			6,000			—			6,000
Restricted stock issued		726,801			7,000			(7,000	)		—			—
Restricted stock forfeited		(20,000	)		—			—			—			—
Share-based compensation		—			—			331,000			—			331,000
Net loss		—			—			—			(3,272,000	)		(3,272,000	)
Balance at July 31, 2022		48,801,181		$	488,000		$	119,737,000		$	(91,718,000	)	$	28,507,000
Balance		48,801,181		$	488,000		$	119,737,000		$	(91,718,000	)	$	28,507,000

Restricted stock issued		118,836			1,000			(1,000	)		—			—
Restricted stock forfeited		(75,200	)		(1,000	)		1,000			—			—
Surrender of shares		(14,472	)		—			(24,000	)		—			(24,000	)
Share-based compensation		—			—			555,000			—			555,000
Issuance of common stock		6,299,989			63,000			8,253,000			—			8,316,000
Offering expenses		—			—			(52,000	)		—			(52,000	)
Net loss		—			—			—			(3,138,000	)		(3,138,000	)
Balance at October 31, 2022		55,130,334		$	551,000		$	128,469,000		$	(94,856,000	)	$	34,164,000
Balance		55,130,334		$	551,000		$	128,469,000		$	(94,856,000	)	$	34,164,000

See accompanying notes to condensed consolidated financial statements.

~~Index to Financial Statements~~

STREAMLINE HEALTH SOLUTIONS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(rounded to the nearest thousand dollars)

	2023			2022
	Nine months Ended October 31,
	2023			2022
Net loss	$	(17,327,000	)	$	(9,197,000	)

Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		3,264,000			3,272,000
Acquisition earnout valuation adjustments		(1,905,000	)		(188,000	)
Benefit for deferred income taxes		(104,000	)		—
Share-based compensation expense		1,626,000			1,212,000
Impairment of goodwill		9,813,000			—
Impairment of long-lived assets		963,000			—
Provision for credit losses		—			21,000
Changes in assets and liabilities:
Accounts and contract receivables		4,299,000			492,000
Other assets		(65,000	)		(868,000	)
Accounts payable		109,000			(373,000	)
Accrued expenses and other liabilities		(417,000	)		1,159,000
Deferred revenue		(2,417,000	)		(251,000	)
Net cash used in operating activities		(2,161,000	)		(4,721,000	)
Cash flows from investing activities:
Purchases of property and equipment		(47,000	)		(10,000	)
Capitalization of software development costs		(1,562,000	)		(1,435,000	)
Net cash used in investing activities		(1,609,000	)		(1,445,000	)
Cash flows from financing activities:
Repayment of bank term loan		(500,000	)		(125,000	)
Proceeds from line of credit		500,000			—
Proceeds from issuance of common stock		—			8,316,000
Payments for costs directly attributable to the issuance of common stock		—			(52,000	)
Payments related to settlement of employee share-based awards		(271,000	)		(165,000	)
Other		—			6,000
Net cash (used in) provided by financing activities		(271,000	)		7,980,000
Net (decrease) increase in cash and cash equivalents		(4,041,000	)		1,814,000
Cash and cash equivalents at beginning of period		6,598,000			9,885,000
Cash and cash equivalents at end of period	$	2,557,000		$	11,699,000

See accompanying notes to condensed consolidated financial statements.

STREAMLINE HEALTH SOLUTIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~(Unaudited)~~

October 31, ~~2017~~

2023

NOTE 1 — BASIS OF PRESENTATION

Streamline Health Solutions, Inc. and each of its wholly-owned subsidiaries, Streamline Health, LLC, Avelead Consulting, LLC, Streamline Consulting Solutions, LLC and Streamline Pay & Benefits, LLC, (collectively, unless the context requires otherwise, “we,” “us,” “our,” “Streamline,” or the “Company”), operate in one segment as a provider of healthcare information technology solutions and associated services. The Company provides these capabilities through the licensing of its Coding & Clinical Documentation Improvement (CDI) solutions, eValuator coding analysis platform, RevID, and other workflow software applications and the use of such applications by software as a service (“SaaS”). The Company also provides audit services to help clients optimize their internal clinical documentation and coding functions, as well as implementation and consulting services to complement its software solutions. The Company’s software and services enable hospitals and integrated healthcare delivery systems in the United States and Canada to capture, store, manage, route, retrieve and process patient clinical, financial and other healthcare provider information related to the patient revenue cycle.

The accompanying unaudited ~~Condensed Consolidated Financial Statements~~condensed consolidated financial statements have been prepared by ~~Streamline Health Solutions, Inc. (“we”, “us”, “our”, “Streamline”, or the “Company”),~~us pursuant to the rules and regulations applicable to quarterly reports on Form 10-Q of the U.S. Securities and Exchange ~~Commission.~~Commission (the “SEC”). Certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to those rules and regulations, although we believe that the disclosures made are adequate to make the information not misleading. The condensed consolidated financial statements include the accounts of Streamline Health Solutions, Inc. and each of its wholly-owned subsidiaries. In the opinion of ~~our~~the Company’s management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the ~~Condensed Consolidated Financial Statements~~condensed consolidated financial statements have been included. These ~~Condensed Consolidated Financial Statements~~condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in ~~our~~the Company’s most recent annual report on Form ~~10-K, Commission File Number 0-28132.~~10-K. Operating results for the three and nine months ended October 31, ~~2017~~2023 are not necessarily indicative of the results that may be expected for the fiscal year ending January 31, ~~2018.~~2024.

The Company has one operating segment and one reporting unit due to the singular nature of our products, product development and distribution process, and client base as a provider of computer software-based solutions and services for acute-care healthcare providers.

All amounts in the condensed consolidated financial statements, notes and tables have been rounded to the nearest thousand dollars, except share and per share amounts, unless otherwise indicated. All references to a fiscal year refer to the fiscal year commencing February 1 in that calendar year and ending on January 31 of the following calendar year.

Going Concern

The Company’s financial statements are prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of obligations in the normal course of business. To date, the Company has not generated sufficient revenues to allow it to generate cash flow from operations. The Company has historically accumulated losses and used cash from its financing activities to supplement its operations. Further, the Company’s current forecast projects the Company will not be able to maintain compliance with certain of its financial covenants under its current credit agreement in the next twelve months. These conditions raise substantial doubt about the ability of the Company to continue as a going concern within one year after the date that the financial statements are issued.

In view of these matters, continuation as a going concern is dependent upon the Company’s ability to achieve cash from operations and raise additional debt or equity capital to fund its ongoing operations. The Company expects to generate positive operating cash flow in the next two fiscal quarters based upon executed contracts which it expects to be fully implemented.

As of October 31, 2023, the Company had approximately $9.75 million of total outstanding debt associated with its term loan and revolver, $1.25 million of which is classified as a current liability. The Company is engaged in ongoing discussions with its current banking partner, Western Alliance Bank, with whom it maintains a good working relationship; however, the Company does not have written or executed agreements as of the issuance of this Form 10-Q. The Company’s ability to refinance its existing debt is based upon credit markets and economic forces that are outside of its control. There can be no assurance that the Company will be successful in raising additional capital or that such capital, if available, will be on terms that are acceptable to the Company.

The financial statements do not include any adjustments to the amount and classification of assets and liabilities that may be necessary should the Company not continue as a going concern.

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Our significant accounting policies are presented in “Note 2 – Significant Accounting Policies” in the fiscal year ~~2016~~2022 Annual Report on Form 10-K. Users of financial information for interim periods are encouraged to refer to the ~~footnotes~~notes to the consolidated financial statements contained in the Annual Report on Form 10-K when reviewing interim financial results.

Use of Estimates

The preparation of financial statements in conformity with ~~U.S. generally accepted accounting principles (“GAAP”)~~GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. On an ongoing basis, management evaluates its estimates and judgments, including those related to the recognition of revenue, share-based compensation, capitalization of software development costs, intangible assets, the allowance for credit losses, contingent consideration, and income taxes. Actual results could differ from those estimates.

Reclassification

Certain amounts for the three and nine months ended October 31, 2022 were reclassified to conform to the current period classification. For the three and nine months ended October 31, 2023, the Company incurred certain acquisition-related costs related to the acquisition of Avelead totaling $0 and $44,000, respectively, consisting primarily of professional service fees. For the three and nine months ended October 31, 2022, the Company incurred acquisition-related costs totaling $2,000 and $141,000, respectively, consisting primarily of professional service fees. The aforementioned acquisition-related costs for the three and nine months ended October 31, 2022 were previously presented in a separate, single caption and are now included in selling, general, and administrative expense in the accompanying condensed consolidated statements of operations, which is consistent with the presentation for the current period.

Fair Value of Financial Instruments

The Financial Accounting Standards Board’s (“FASB”) authoritative guidance on fair value measurements establishes a framework for measuring fair ~~value, and expands disclosure about fair value measurements.~~value. This guidance enables the reader of the financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values. Under this guidance, assets and liabilities carried at fair value must be classified and disclosed in one of the following three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable ~~market based~~market-based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value based on the short-term maturity of these instruments. Cash and cash equivalents are classified as Level 1. There were no transfers of assets or liabilities between Levels 1, 2, or 3 during the nine months ended October 31, 2023 and 2022.

The ~~carrying amount~~table below provides information on the fair value of our ~~long-term debt approximates~~liabilities:

SCHEDULE OF FAIR VALUE OF LIABILITIES

	Total Fair		Quoted Prices in Active Markets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Value		(Level 1)		(Level 2)		(Level 3)
At January 31, 2023
Acquisition earnout liability (1)	$	3,738,000	$	—	$	—	$	3,738,000
At October 31, 2023
Acquisition earnout liability (1)	$	1,833,000	$	—	$	—	$	1,833,333

(1)

The fair value of the acquisition earnout liability is based upon a probability-weighted discounted cash flow that was completed at the date of acquisition and updated as of October 31, 2023. The change in the fair value of the acquisition earnout liability decreased $1,182,000 and $1,905,000 for the three and nine months ended October 31, 2023, respectively. The change in the fair value is recognized in “Acquisition earnout valuation adjustments” in the accompanying condensed consolidated statement of operations.

The probability-weighted discounted cash flow is calculated using a Monte Carlo valuation method. The valuation model provides numerous outcomes. The outcomes are averaged and discounted to present value, which provides the current value point estimate. A range of possible outcomes is not available under the specific valuation method that was used in determining fair value of the acquisition earnout liability. The significant inputs include recorded Avelead SaaS revenue, the probabilities associated with each of (i) a change in control or (ii) a certain client termination, as well as other normal and customary inputs to financial models, including but not limited to, risk factors and interest rates.

The fair value ~~since~~of the Company’s term loan and outstanding balance of the revolving line of credit under its Second Amended and Restated Loan and Security Agreement (as amended and modified, the “Second Amended and Restated Loan Agreement”) was determined through an analysis of the interest rate spread from the date of closing the loan (August 2021) to the date of the most recent balance sheets, October 31, 2023 and January 31, 2023. The term loan bears interest at a per annum rate equal to the Prime Rate (as published in The Wall Street Journal) plus 1.5%, with a Prime “floor” rate of 3.25%. The prime rate is variable ~~interest rates being paid on the amounts approximate~~and, thus accommodates changes in the market interest rate. However, the interest rate spread (the 1.5% added to the Prime Rate) is fixed. We estimated the impact of the changes in the interest rate spread by analogizing the effect of the change in the published “Corporate Bond Rates,” reduced for any changes in the market interest rate.This provided us with an estimated change to the interest rate spread of approximately 0.5% from (i) the date we entered the Second Amended and Restated Loan Agreement for the term loan or (ii) the date of each draw on the revolving line of credit to the end of the fiscal third quarter, October 31, 2023, and end of the fiscal year, January 31, 2023. The fair value of the debt as of October 31, 2023 and January 31, 2023 was estimated to be $9,054,000 and $9,550,000, respectively, or a discount to book value of $196,000 and $200,000, respectively. The fair value of the line of credit as of October 31, 2023 and January 31, 2023 was estimated to be $488,000 and $0, respectively, or a discount to book value of $12,000 and $0, respectively. Long-term debt is classified as Level 2.

~~The table below provides information on our liabilities that are measured at fair value on a recurring basis:~~

~~Index to Financial Statements~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

Total Fair Value
Quoted Prices in Active Markets
(Level 1)

Significant Other Observable Inputs
(Level 2)

Significant Unobservable Inputs
(Level 3)
At October 31, 2017
Warrants liability (1) $ 151,000
$ —
$ —
$ 151,000
Royalty liability (2) 2,456,000
—
—
2,456,000

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 expense 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 expense in the condensed consolidated statements of operations.

Revenue Recognition

We derive revenue from the sale of internally-developed software, either by licensing for local installation or by ~~software as~~ a ~~service (“SaaS”)~~SaaS delivery model, through ~~our~~the Company’s direct sales force or through third-party resellers. Licensed, locally-installed ~~clients~~customers on a perpetual model utilize ~~our~~the Company’s support and maintenance services for a separate fee, whereas term-based locally installed license fees and SaaS fees include support and maintenance. We also derive revenue from professional services that support the implementation, configuration, training and optimization of the applications, as well as audit services ~~provided to help clients review their internal coding audit processes. Additional revenues are also derived from reselling third-party software~~ and ~~hardware components.~~

consulting services.

We recognize revenue in accordance with Accounting Standards Codification (ASC) ~~985-605,~~ ~~Software-Revenue Recognition,~~ ~~ASC 605-25,~~ 606, Revenue ~~Recognition — Multiple-Element Arrangements~~from Contracts with Customers, ~~and ASC 605-10-S99.~~

~~We commence~~under the core principle of recognizing revenue ~~recognition when all~~to depict the transfer of ~~the following criteria have been met:~~

~~Persuasive evidence of an arrangement exists,~~

~~Delivery has occurred~~promised goods or services ~~have been rendered,~~to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

Disaggregation of Revenue

The ~~arrangement fees are fixed or determinable,~~following table provides information about disaggregated revenue by type and

~~Collectibility is reasonably assured.~~

~~If we determine that any~~ nature of ~~the above criteria have not been met, we will defer recognition~~revenue stream:

SCHEDULE OF DISAGGREGATION OF REVENUE

	October 31, 2023		October 31, 2022		October 31, 2023		October 31, 2022
	Three Months Ended				Nine Months Ended
	October 31, 2023		October 31, 2022		October 31, 2023		October 31, 2022
Over time revenue	$	6,133,000	$	6,217,000	$	17,161,000	$	18,021,000
Point in time revenue		—		—		74,000		123,000
Total revenue	$	6,133,000	$	6,217,000	$	17,235,000	$	18,144,000

The Company includes revenue categories of ~~the~~(i) over time and (ii) point in time revenue. The Company includes revenue ~~until all the criteria have been met. Maintenance and support and~~categories of (i) SaaS, agreements are generally non-cancelable or contain significant penalties for early cancellation, although clients typically have the right to terminate their contracts for cause if we fail to perform material obligations. However, if non-standard acceptance periods, non-standard performance criteria, or cancellation or right of refund terms are required, revenue is recognized upon the satisfaction of such criteria, as applicable.

~~Multiple Element Arrangements~~

~~We follow the accounting revenue guidance under Accounting Standards Update (ASU) 2009-13,~~ ~~Multiple-Deliverable Revenue Arrangements — a consensus of the FASB Emerging Issues Task Force~~.

~~Terms used in evaluation are as follows:~~

~~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~~

~~Index to Financial Statements~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

We follow accounting guidance for revenue recognition of multiple-element arrangements to determine whether such arrangements contain more than one unit of accounting. Multiple-element arrangements require the delivery or performance of multiple solutions, services and/or right-to-use assets. To qualify as a separate unit of accounting, the delivered item must have value to the client on a stand-alone basis. An item has stand-alone value to a client when it can be sold separately by any vendor or the client could resell the item on a stand-alone basis. Additionally, if the arrangement includes a general right of return relative to the delivered item, delivery or performance of the undelivered item or items must be considered probable and substantially in the control of the vendor.

We have a defined pricing methodology for all elements of the arrangement and proper review of pricing to ensure adherence to our policies. Pricing decisions include cross-functional teams of senior management, which use market conditions, expected contribution margin, size of the client’s organization and pricing history for similar solutions when establishing the selling price.

~~Software as a Service~~

We use ESP to determine the value for a software-as-a-service arrangement as we cannot establish VSOE, and TPE is not a practical alternative due to differences in functionality from our competitors. Similar to proprietary license sales, pricing decisions rely on the relative size of the client purchasing the solution and include calculating the equivalent value of(ii) maintenance and support, ~~on a present value basis~~(iii) professional services, and (iv) audit services as over time revenue. For point in time revenue, the ~~term of the initial agreement period. Typically, revenue recognition commences once the client goes live on the system and~~performance obligation is recognized ~~ratably over~~as the ~~contract term.~~

~~Systems Sales~~

~~We use~~point in time when the ~~residual method to determine fair value for proprietary perpetual~~obligation is fully satisfied. The Company includes (i) software licenses ~~sold~~as point in ~~a multi-element arrangement. Under the residual method, we allocate the total value of the arrangement first~~time revenue.

Contract Receivables and Deferred Revenues

The Company receives payments from customers based upon contractual billing schedules. Contract receivables include amounts related to the ~~undelivered elements based~~Company’s contractual right to consideration for completed performance obligations not yet invoiced. Deferred revenue includes payments received in advance of performance under the contract. The Company’s contract receivables and deferred revenue are reported on ~~their VSOE and allocate~~an individual contract basis at the ~~remainder to the proprietary perpetual software license fees.~~

~~Typically, pricing decisions for proprietary software rely on the relative size and complexity~~end of ~~the client purchasing the solution. Third-party components~~each reporting period. Contract receivables are resold at prices based on a cost-plus margin analysis. The proprietary software and third-party components do not need any significant modification to achieve their intended use. When these revenues meet all criteria for revenue recognition, and are determined to be separate units of accounting, revenue is recognized. Typically, this is upon shipment of componentsclassified as current or ~~electronic download of software. Proprietary licenses are perpetual in nature, and license fees do not include rights to version upgrades, bug fixes or service packs.~~

~~Maintenance and Support Services~~

The maintenance and support components are not essential to the functionality of the software, and clients renew maintenance contracts separately from software purchases at renewal rates materially similar to the initial rate charged for maintenance on the initial purchase of software. We use VSOE of fair value to determine fair value of maintenance and support services. Rates are set based on market rates for these types of services, and our rates are comparable to rates charged by our competitors, which arenoncurrent based on the ~~knowledge~~timing of when we expect to bill the ~~marketplace by senior management. Generally, maintenance and support~~customer. Deferred revenue is ~~calculated~~classified as a percentage of the list price of the proprietary license being purchased by a client. Clients have the option of purchasing additional annual maintenance service renewals each year for which rates are not materially different from the initial rate but typically include a nominal rate increasecurrent or noncurrent based on the ~~consumer price index. Annual maintenance and support agreements entitle clients~~timing of when we expect to ~~technology support, version upgrades, bug fixes and service packs.~~

~~Term Licenses~~

~~We cannot establish VSOE fair value~~recognize revenue. During the nine months ended October 31, 2023, the Company recognized approximately $6,772,000 in revenue from deferred revenues outstanding as of January 31, 2023. Revenue allocated to remaining performance obligations was $23,045,000 as of October 31, 2023, of which the ~~undelivered element in term license arrangements. However, as the only undelivered element is post-contract customer support, the entire fee is recognized ratably~~Company expects to recognize approximately 56% over the next 12 months and the remainder thereafter.

Deferred costs (costs to fulfill a contract ~~term. Typically, revenue recognition commences once~~and contract acquisition costs)

The Company defers the client goes live on the system. Similar to proprietary license sales, pricing decisions rely on the relative size of the client purchasing the solution. The software portion of our Streamline Health® Coding & CDI^TM ~~(“CDI”) products generally does not require material modification to achieve its contracted function.~~

~~Software-Based Solution Professional Services~~

~~Professional services components that are not essential to the functionality of the software, from time to time, are sold separately by us. Similar services are sold by other vendors,~~direct costs, which include salaries and ~~clients can elect to perform similar services in-house. When~~benefits, for professional ~~services revenues are a separate unit of accounting, revenues are recognized as the services are performed.~~

~~Professional~~ services related to ~~coding compliance, recovery audit contractor consulting, and ICD-10 readiness are considered~~SaaS contracts as a ~~single unit of accounting where we recognize revenue using proportional performance over the service period when all applicable revenue recognition criteria have been met.~~

~~Index~~cost to ~~Financial Statements~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~Professional services components related to SaaS and term licenses that are essential to the functionality of the software and are not considered~~fulfill a separate unit of accounting are recognized in revenue ratably over the life of the client, which approximates the duration of the initial contract term. We defer the associated direct costs for salaries and benefits expense for professional services contracts.contract. These deferred costs will be amortized on a straight-line basis over the ~~identical term as~~period of expected benefit which is the ~~associated revenues.~~contractual term. As of October 31, ~~2017~~2023 and January 31, ~~2017, we~~2023, the Company had deferred costs of ~~$506,000~~$98,000 and ~~$500,000,~~$94,000, respectively, net of accumulated amortization of ~~$283,000~~$235,000 and ~~$370,000,~~$176,000, respectively. Amortization expense of these costs was ~~$51,000~~$24,000 and ~~$36,000~~$22,000 for the three months ended October 31, ~~2017~~2023 and ~~2016,~~2022, respectively, and ~~$177,000~~$59,000 and ~~$80,000~~$62,000 for the nine months ended October 31, ~~2017~~2023 and ~~2016, respectively.~~

~~Professional service components that~~2022, respectively, and is included in cost of SaaS in the condensed consolidated statements of operations.

Contract acquisition costs, which consist of sales commissions paid or payable, are ~~essential to the functionality~~considered incremental and recoverable costs of ~~perpetually licensed software~~obtaining a contract with a customer. Sales commissions for initial and renewal contracts are ~~not considered~~deferred and then amortized on a ~~separate unit of accounting are recognized using the percentage-of-completion method~~straight-line basis over the ~~professional service period.~~

~~If services~~contract term. As a practical expedient, the Company expenses sales commissions as incurred when the amortization period of related deferred commission costs is expected to be one year or less.

As of October 31, 2023 and January 31, 2023, deferred commission costs paid and payable, which are ~~sold with perpetually licensed software, we use VSOE of fair value based~~included on the ~~hourly rate charged when services are sold separately to determine fair value~~consolidated balance sheets within other non-current assets totaled $1,195,000 and $1,534,000, respectively, net of ~~professional services. We typically sell professional services on an hourly or fixed fee basis. We monitor projects to assure that~~accumulated amortization and impairment totaling $1,238,000 and $820,000, respectively. Amortization expense associated with deferred sales commissions, which is included in selling, general and administrative expense in the ~~expected~~condensed consolidated statements of operations, was $129,000 and ~~historical rate earned remains within a reasonable range to the established selling price.~~

~~Audit Services~~

Professional services relating to audit services are provided separately from software solutions, even those that may relate to coding and coding audit processes. These services are not essential to any software offering and are a separate unit of accounting. Accordingly, the revenues are recognized as the services are performed.

~~Severance~~

~~From time to time, we enter into termination agreements with associates that may include supplemental cash payments, as well as contributions to health and other benefits~~$110,000 for ~~a specific time period subsequent to termination. For~~ the three months ended October 31, ~~2017~~2023 and ~~2016, we incurred zero and $110,000 in severance expenses, respectively, and $58,000 and $227,000~~2022, respectively. Amortization expense for the nine months ended October 31, 2023 and 2022 was $383,000 and $298,000, respectively. For the three and nine months ended October 31, ~~2017~~2023, the Company recorded an impairment of $35,000 for deferred commission costs related to the client termination notification received in October 2023. There were no impairment charges recorded for the three and ~~2016, respectively. At~~nine months ended October 31, ~~2017 and January 31, 2017, we had accrued severance expenses of zero and $9,000, respectively.~~2022.

Equity Awards

~~We account~~

The Company accounts for share-based payments based on the grant-date fair value of the awards with compensation cost recognized as expense over the requisite ~~vesting period. We~~service period, and forfeitures are recognized as incurred. For awards to non-employees, the Company recognizes compensation expense in the same manner as if the entity had paid cash for the goods or services. The Company incurred total compensation expense related to ~~stock-based~~share-based awards ~~of $290,000 and $432,000~~ for the three ~~months ended October 31, 2017~~ and ~~2016, respectively, and $845,000 and $1,343,000 for the~~ nine months ended October 31, 2023 of $517,000 and $1,626,000, respectively, which includes $60,000 and $176,000, respectively, of capitalized non-employee stock compensation, compared to share-based compensation expense of $555,000 and $1,212,000, respectively, for the three and nine months ended October 31, ~~2017~~2022. During third quarter of fiscal year 2023, the Company accelerated the vesting of approximately 260,000 previously outstanding and ~~2016, respectively.~~

unvested shares of restricted common stock of the Company.

The fair value of ~~the~~ stock options granted isare estimated at the date of grant using a Black-Scholes option pricing model. ~~The option~~Option pricing model ~~inputs (such~~input assumptions such as expected term, expected volatility and risk-free interest ~~rate)~~rate impact the fair value estimate. ~~Further, the forfeiture rate impacts the amount of aggregate compensation.~~ These assumptions are subjective and are generally derived from external (such as, risk-free rate of interest) and historical data (such as, volatility factor and expected ~~term, and forfeiture rates) data.~~term). Future grants of equity awards accounted for as ~~stock-based~~share-based compensation could have a material impact on reported expenses depending upon the number, value and vesting period of future awards.

~~We issue~~

The Company issues restricted stock awards in the form of ~~our~~Company common stock. The fair value of these awards is based on the market closing price per share on the ~~date~~grant date. For the three and nine months ended October 31, 2023, the Company issued 45,000 and 1,130,000 shares of ~~grant. We expense~~restricted common stock to employees, respectively, compared to 65,000 and 865,000 shares of restricted common stock for the three and nine months ended October 31, 2022, respectively. The Company expenses the compensation cost of these awards as the restriction period lapses, which is typically a ~~one-year service period to~~three-year period. For the ~~Company. In the~~three and nine months ended October 31, ~~2017, 32,033~~ 2023, the Company issued 0 and 258,621 shares of restricted common stock ~~were surrendered~~ to the ~~Company~~Board of Directors, respectively, compared to ~~satisfy tax withholding obligations totaling $42,000 in connection with the vesting~~0 and 200,731 shares of restricted common stock ~~awards. Shares surrendered by~~for the ~~restricted stock award recipients in accordance with the applicable plan are deemed canceled,~~three and ~~therefore are not available to be reissued. In the~~ nine months ended October 31, 2022, respectively. For the three and nine months ended October 31, ~~2017,~~2023, the Company ~~awarded 220,337~~ issued 131,054 and 359,080 shares of restricted common stock to ~~directors~~consultants, respectively, compared to 53,836 and 187,937 shares of restricted common stock for the ~~Company.~~

three and nine months ended October 31, 2022, respectively.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax ~~basis~~bases and for tax credit and loss carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. In assessing net deferred tax assets, ~~we consider~~the Company considers whether it is more likely than not that some or all of the deferred tax assets will not be realized. ~~We establish~~The Company establishes a valuation allowance when it is more likely than not that all or a portion of deferred tax assets will not be realized.

~~Index~~ Refer to ~~Financial Statements~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~We provide~~Note 6 – Income Taxes for further details.

The Company provides for uncertain tax positions and the related interest and penalties based upon management’s assessment of whether certain tax positions are more likely than not to be sustained upon examination by tax authorities. ~~We believe we have~~The Company believes it has appropriately accounted for any uncertain tax ~~positions. The Company has recorded $262,000 and $263,000 in reserves for uncertain tax~~ positions ~~and corresponding interest and penalties~~ as of October 31, ~~2017 and January 31, 2017, respectively.~~

2023.

Net ~~Earnings (Loss)~~Loss Per Common Share

~~We present~~

The Company presents basic and diluted earnings per share (“EPS”) data for ~~our~~the Company’s common stock. Basic EPS is calculated by dividing the net earnings (loss) attributable to common stockholders of the Company by the weighted average number of shares of common stock outstanding during the period. Diluted EPS is calculated based on the profit or loss attributable to common stockholders and the weighted average number of shares of common stock outstanding, adjusted for the effects of all potential dilutive common stock issuances related to options, unvested restricted stock, warrants and convertible preferred stock. Potential common stock dilution related to outstanding stock options, unvested restricted stock and warrants is determined using the treasury stock method, while potential common stock dilution related to Series A Convertible Preferred Stock is determined using the “if converted” method.

~~Our unvested restricted stock awards and Series A Convertible Preferred Stock are considered participating securities under ASC 260,~~ ~~Earnings Per Share, which means the security may participate in undistributed earnings with common stock. Our~~

The Company’s unvested restricted stock awards are considered ~~participating~~non-participating securities because ~~they entitle~~ holders are not entitled to non-forfeitable rights to dividends or dividend equivalents during the vesting term. The holders of the Series A Convertible Preferred Stock would be entitled to share in dividends, on an as-converted basis, if the holders of common stock were to receive dividends, other than dividends in the form of common stock. In accordance with ASC 260, a company is required to use the two-class method when computing EPS when a company has a security that qualifies as a “participating security.” The two-class method is an earnings allocation formula that determines EPS for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. In determining the amount of net earnings to allocate to common stockholders, earnings are allocated to both common and participating securities based on their respective weighted-average shares outstanding for the period. Diluted EPS for ~~our~~the Company’s common stock is computed using the ~~more dilutive of the two-class method or the if-converted~~treasury stock method.

In accordance with ASC 260, securities are deemed not to be participating in losses if there is no obligation to fund such losses. As of October 31, 2017, there were 2,949,995 shares of preferred stock outstanding, each of which is convertible into one share of our common stock. For the three and nine months ended October 31, 2017 and 2016, the Series A Convertible Preferred Stock would have an anti-dilutive effect if included in diluted EPS and therefore, was not included in the calculation. For the three months ended October 31, 2016 and the nine months ended October 31, 2017 and 2016, 821,587 and 828,225, respectively, unvested restricted shares of common stock were excluded from the diluted EPS calculation as their effect would have been anti-dilutive. For the three months ended October 31, 2017, the effect of unvested restricted stock awards and the Series A Convertible Preferred Stock to the earnings per share calculation was immaterial.

~~Index to Financial Statements~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

The following is the calculation of the basic and diluted net ~~earnings (loss)~~loss per share ~~of common stock:~~

Three Months Ended
October 31, 2017 October 31, 2016
Net earnings (loss) $ 3,489
$ (1,930,472 )
Less: deemed dividends on Series A Preferred Stock —
(72,710 )
Net earnings (loss) attributable to common stockholders $ 3,489
$ (2,003,182 )
Weighted average shares outstanding used in basic per common share computations 19,985,822
19,645,521
Restricted stock and Series A Convertible Preferred Stock 3,082,601
—
Number of shares used in diluted per common share computation 23,068,423
19,645,521
Basic net earnings (loss) per share of common stock $ 0.00
$ (0.10 )
Diluted net earnings (loss) per share of common stock $ 0.00
$ (0.10 )

Nine Months Ended
October 31, 2017 October 31, 2016
Net loss $ (3,137,084 ) $ (4,142,381 )
Less: deemed dividends on Series A Preferred Stock —
(875,935 )
Net loss attributable to common stockholders $ (3,137,084 ) $ (5,018,316 )
Weighted average shares outstanding used in basic per common share computations 19,838,691
19,477,538
Restricted stock and Series A Convertible Preferred Stock —
—
Number of shares used in diluted per common share computation 19,838,691
19,477,538
Basic net loss per share of common stock $ (0.16 ) $ (0.26 )
Diluted net loss per share of common stock $ (0.16 ) $ (0.26 )

~~Diluted net earnings (loss) per share excludes the effect of outstanding stock options that relate to 2,203,156 and 2,172,480 shares~~ of common stock for the three and nine months ended October 31, ~~2017~~2023 and ~~2016,~~2022:

SCHEDULE OF BASIC AND DILUTED NET LOSS PER SHARE OF COMMON STOCK

	October 31, 2023			October 31, 2022			October 31, 2023			October 31, 2022
	Three Months Ended						Nine Months Ended
	October 31, 2023			October 31, 2022			October 31, 2023			October 31, 2022
Basic and diluted loss per share:
Net loss	$	(11,911,000	)	$	(3,138,000	)	$	(17,327,000	)	$	(9,197,000	)
Basic and diluted net loss per share of common stock from operations	$	(0.21	)	$	(0.07	)	$	(0.31	)	$	(0.19	)
Weighted average shares outstanding – basic and diluted (1)(2)		56,710,335			47,730,009			56,346,300			47,329,923
Weighted average shares outstanding - basic		56,710,335			47,730,009			56,346,300			47,329,923

(1)	Includes the effect of vested and excludes the effect of unvested restricted shares of common stock, which are considered non-participating securities. As of October 31, 2023 and 2022, there were 1,980,471 and 1,501,031 unvested restricted shares of common stock outstanding, respectively.

(2)	Diluted net loss per share excludes the effect of shares that are anti-dilutive. For the three and nine months ended October 31, 2023, diluted earnings per share excludes 418,836 outstanding stock options and 1,980,471 unvested restricted shares of common stock. For the three and nine months ended October 31, 2022, diluted earnings per share excludes 628,958 outstanding stock options and 1,501,031unvested restricted shares of common stock.

Restructuring

On October 16, 2023, the Company announced it was executing a strategic restructuring designed to reduce expenses while maintaining the Company’s ability to expand its SaaS business. The ~~inclusion~~strategic restructuring initiatives included a reduction in force, resulting in the termination of ~~these stock options would have been anti-dilutive.~~ 26employees, approximately 24% of the Company’s workforce. To execute the strategic restructuring, the Company estimates the one-time restructuring costs associated with the workforce reduction to be approximately $900,000, and the Company expects the expenses associated with the strategic restructuring to be substantially recognized by the end of fiscal year 2023. The estimated costs pertain to severance and other employee termination-related costs and various professional fees the Company may require to assist with execution of the strategic restructuring. The following is a reconciliation of the strategic restructuring liability that is reflected on the Company’s condensed consolidated balance sheet under “Accrued expenses”.

SCHEDULE OF RECONCILIATION OF THE RESTRUCTURING LIABILITY

	(in thousands)
									As of October 31, 2023
	Accrued Balance as of January 31, 2023		2023 Expenses to Date		2023 Cash Payments		Accrued Balance as of October 31, 2023		Total Costs Incurred to Date		Total Expected Costs
Severance expense
Cost of sales	$	—	$	154	$	—	$	154	$	154	$	154
Selling, general, and administrative		—		350		—		350		350		350
Research and development		—		227		—		227		227		227
Total severance expense	$	—	$	731	$	—	$	731	$	731	$	731
Professional fees		—		18		—		18		18	$	169
Total	$	—	$	749	$	—	$	749	$	749		900

Non-Cash Items

For the three and nine months ended October 31, ~~2017~~2023, the Company recorded capitalized software purchased with stock, totaling $60,000 and ~~2016, the warrants~~$176,000, respectively, as non-cash items as it relates to ~~purchase~~ ~~1,400,000~~ ~~shares of common stock would have an anti-dilutive effect if included in diluted net earnings (loss) per share, and therefore were not included~~non-cash investing activities in the ~~calculation.~~

~~Recent~~ condensed consolidated statements of cash flow.

Accounting Pronouncements

~~In May 2014, the FASB issued ASU 2014-09,~~ ~~Revenue from Contracts with Customers~~ (Topic 606), which supersedes the revenue recognition requirements in ASC 605, Revenue Recognition. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In July 2016, the FASB delayed the effective date by one year and the guidance will now be effective for us on Recently Adopted

On February 1, ~~2018. Early adoption~~2023, the Company adopted ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of ~~the update is permitted. The guidance is~~Credit Losses on Financial Instruments (“ASU 2016-13”), as amended. ASU 2016-13 requires an allowance for expected credit losses to be applied ~~using one~~to financial assets at inception and reflect the risk of ~~two retrospective application methods. We are in~~credit loss over the ~~process of applying the five-step model~~life of the ~~new standard~~asset. The Company estimated current expected credit losses based on historical credit loss rates and applied an increase to ~~customer contracts and will compare~~account for future economic conditions. The Company’s allowance for doubtful accounts as of January 31, 2023, prior to the ~~results to our~~adoption of ASU 216-13, was $132,000. The Company estimated the current ~~accounting practices. We plan to adopt ASU 2014-09, as well as other clarifications and technical guidance issued by the FASB~~expected credit loss related to this new revenue standard, on February 1, 2018. We elected the modified retrospective transition method, which would result in an adjustment to retained earnings for the cumulative effect, if any, of applying the standard to contracts in processaccounts receivable as of the adoption ~~date. Under this method, we would~~date of February 1, 2023 to be $96,000. The Company recorded the adjustment in accounting policy change of $36,000 to the opening accumulated deficit balance for the year of adoption.

SCHEDULE OF ACCOUNTING PRONOUNCEMENTS RECENTLY ADOPTED

		January 31, 2023				CECL Adoption				Provision adjustments				Write-offs & Recoveries				October 31, 2023
Allowance for credit losses		$	(132,000	)		$	36,000				—				—			$	(96,000	)

For the period ended October 31, 2023, the Company estimated the current expected credit loss related to accounts receivable using historical credit loss rates and applied an adjustment to account for future economic conditions in accordance with ASU 2016-13. The Company had no further impact on the allowance for credit losses during the nine-month period ended October 31, 2023.

Recent Accounting Pronouncements Not Yet Adopted

The Company does not ~~restate~~believe there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

NOTE 3 — BUSINESS COMBINATION

Avelead Acquisition

The Company acquired all the ~~prior financial statements presented. Therefore, the new standard requires additional disclosures~~equity interests of Avelead Consulting, LLC (“Avelead”) as part of the ~~amount by which each financial statement line item is affected~~Company’s strategic expansion into the acute-care health care revenue cycle management industry (the “Transaction”). The Transaction was completed on August 16, 2021.

On November 21, 2022, the Company made cash payments of $2,012,000 and issued 1,871,037 unregistered securities in the ~~fiscal~~form of restricted common stock, par value $0.01 per share, with respect to the first year ~~2018 reporting period. We are currently~~earnout consideration. The estimated aggregate value of the first year earnout payment was $5,000,000. The second (and final) year earnout payment is expected to be paid during the quarter ending January 31, 2024 and consists of $1,214,000 of cash payments and 1,589,342 unregistered securities in the ~~process~~form of ~~assessing~~restricted common stock, par value $0.01 per share. These liabilities are reflected at the ~~impact~~estimated fair value of the ~~new standard~~future commitment on the Company’s condensed consolidated balance sheet as “Acquisition Earnout Liability” and ~~have not yet determined~~totaled $1,833,000 as of October 31, 2023.

NOTE 4 — OPERATING LEASES

We determine whether an arrangement is a lease at inception. Right-of-use assets represent our right to use an underlying asset for the ~~effect of the standard on our consolidated financial statements.~~

~~In February 2016, the FASB issued ASU 2016-02,~~ ~~Leases~~ ~~(Topic 842), to increase transparency and comparability among organizations by recognizing~~ lease ~~assets~~term and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The ASU is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. The update will be effective for us on February 1, 2019. Early adoption of the update is permitted. We are currently evaluating the impact of the adoption of this update onrepresent our ~~consolidated financial statements and related disclosures.~~

~~Index~~obligation to ~~Financial Statements~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~In March 2016, the FASB issued ASU 2016-09,~~ ~~Compensation - Stock Compensation~~ (Topic 718), to improve the accounting for employee share-based payments. The guidance simplifies the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The guidance is effective for annual and interim periods beginning after December 15, 2016, and early adoption is permitted. The update became effective for us on February 1, 2017. The adoption of this ASU did not have a significant impact on our consolidated financial statements.

~~In August 2016, the FASB issued ASU 2016-15,~~ ~~Statement of Cash Flows(Topic 230): Classification of Certain Cash Receipts and Cash Payments, to clarify how certain cash receipts and cash~~make lease payments should be presented and classified in the statement of cash flows. The ASU should be applied using a retrospective transition method to each period presented. The standard will be effective for us on February 1, 2018. Early adoption of this update is permitted. We are currently evaluating the impact of the adoption of this new standard on our consolidated financial statements and related disclosures.

~~In January 2017, the FASB issued ASU 2017-01,~~ ~~Business Combinations (Topic 805): Clarifying the Definition of a Business~~, to clarify the definition of a business to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The standard will be effective for us on February 1, 2018. We do not expect that the adoption of this ASU will have a significant impact on our consolidated financial statements.

~~In January 2017, the FASB issued ASU 2017-04,~~ ~~Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which removes Step 2~~arising from the ~~goodwill impairment test. The standard will be effective for us~~lease. Operating lease right-of-use assets and liabilities are recognized at commencement date based on ~~February 1, 2020. Early adoption of this update is permitted. We do not expect that the adoption of this ASU will have a significant impact on our consolidated financial statements.~~

~~In May 2017, the FASB issued ASU 2017-09,~~ ~~Compensation - Stock Compensation(Topic 718), Scope of Modification Accounting~~, to clarify which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The update will be effective for us on February 1, 2018. We do not expect that the adoption of this ASU will have a significant impact on our consolidated financial statements.

~~NOTE 3 — ACQUISITIONS AND DIVESTITURES~~

~~Acquisition of a Montefiore Medical Center Solution~~

On October 25, 2013, we entered into a Software License and Royalty Agreement (the “Royalty Agreement”) with Montefiore Medical Center (“Montefiore”) pursuant to which Montefiore granted us an exclusive, worldwide 15-year license of Montefiore’s proprietary clinical analytics platform solution, Clinical Looking Glass® (“CLG”), now known as our Clinical Analytics solution. In addition, Montefiore assigned to us the existing license agreement with a customer using CLG. As consideration under the Royalty Agreement, we paid Montefiore a one-time initial base royalty fee of $3,000,000, and we are obligated to pay on-going quarterly royalty amounts related to future sublicensing of CLG by us. Additionally, we have committed that Montefiore will receive at least an additional $3,000,000 of on-going royalty payments within the first six and one-half years of the license term. As of October 31, 2017 and January 31, 2017, the present value of ~~this royalty liability~~lease payments over the expected lease term. Since our lease arrangements do not provide an implicit rate, we use our incremental borrowing rate for the expected remaining lease term at commencement date for new and existing leases in determining the present value of future lease payments. Operating lease expense is recognized on a straight-line basis over the lease term.

Alpharetta Office Lease

On October 1, 2021, the Company entered into an agreement with a third-party to sublease its office space in Alpharetta, Georgia. The sublease term was ~~$2,456,000 and $2,351,000, respectively.~~

~~Acquisition of Unibased Systems Architecture, Inc. and Related Divestiture~~

~~On February 3, 2014, we completed~~for 18 months, which coincided with the acquisition of Unibased Systems Architecture, Inc. (“Unibased”), a provider of patient access solutions, including enterprise scheduling and surgery management software, for healthcare organizations throughout the United States, pursuant to an Agreement and Plan of Merger dated January 16, 2014 (the “Merger Agreement”)Company’s underlying lease (see below). The ~~total purchase price for Unibased was $6,500,000, subject to net working capital and other customary adjustments.~~

~~On December 1, 2016, we~~Company received ~~a cash payment of $2,000,000 for~~$292,000 from the ~~sale of our Patient Engagement suite of solutions (“Patient Engagement”), which is based upon~~sublessee over the legacy ForSite2020 solution acquired from Unibased in February 2014. As a result, we recognized a gain on sale of business of $238,000 in the fourth quarter of fiscal 2016, which represents the amount by which the sale proceeds exceeded net assets associated with Patient Engagement operations, including accounts receivable, intangible assets and deferred revenue. We used the proceeds to make two prepayments of $500,000 on our term ~~loan with Wells Fargo, one in the fourth quarter of fiscal 2016 and another in the second quarter of fiscal 2017.~~

~~Acquisition of Opportune IT Healthcare Solutions, Inc.~~

~~On September 8, 2016, we completed the acquisition of substantially all~~ of the ~~assets~~sublease. The sublease did not relieve the Company of Opportune IT Healthcare Solutions, Inc. (“Opportune IT”), a provider of coding compliance, recovery audit contractor consulting, and ICD-10 readiness and training to hospitals, physicians and medical groups. As considerationits original obligation under the lease, and therefore the Company did not adjust the operating lease right-of-use asset ~~purchase agreement, we made a cash~~

~~Index to Financial Statements~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~payment for the total purchase price of $1,400,000.~~and related liability. The ~~Company also assumed certain current operating liabilities of Opportune IT. The purchase price has been allocated to the tangible and intangible assets acquired and liabilities assumed based~~sublease terminated on ~~their estimated fair values as of the acquisition date as follows, pending final valuation of internally-developed software and intangible assets:~~

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

~~The operating results of Opportune IT are not material for purposes of proforma disclosure.~~

~~NOTE 4 — LEASES~~

We rent office space and equipment under non-cancelable operating leases that expire at various times through fiscal year 2022. Future minimum lease payments under non-cancelable operating leases for the next five fiscal years are as follows:

Facilities Equipment Fiscal Year Totals
2017 (three months remaining) $ 256,000
$ 3,000
$ 259,000
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 $ 3,730,000
$ 38,000
$ 3,768,000

~~Rent and leasing expense for facilities and equipment was $295,000 and $309,000 for~~March 31, 2023. For the three and nine months ended October 31, ~~2017~~2023, the Company recorded $0 and ~~2016,~~$32,000, respectively, as other income related to the sublease. For the three and ~~$920,000~~nine months ended October 31, 2022, the Company recorded $49,000 and ~~$955,000~~ $145,000, respectively, as other income related to the sublease.

The Company entered into a lease for office space in Alpharetta, Georgia, on March 1, 2020. The lease terminated on March 31, 2023. At inception, the Company recorded a right-of use asset of $540,000, and related current and long-term operating lease obligation in the accompanying consolidated balance sheet. The Company used a discount rate of 6.5% to determine the lease liability. For the three and nine months ended October 31, 2023, the Company had lease operating costs of approximately $0 and $32,000, respectively. For the three and nine months ended October 31, 2022, the Company had lease operating costs of approximately $48,000 and $145,000, respectively.

Suwanee Office Lease

Upon acquiring Avelead on August 16, 2021 (refer to Note 3 – Business Combination), the Company assumed an operating lease agreement for the corporate office space of Avelead. The lessor is an entity controlled by one of the sellers of Avelead and that seller is a former employee of the Company. The initial 36-month term lease commenced March 1, 2019 and expired on February 28, 2022. The Company previously renewed the lease for an additional 12-month term which expired February 28, 2023 and was not renewed. For the three and nine months ended October 31, 2023, the Company recorded rent expense of $0 and $6,000, respectively. For the three and nine months ended October 31, 2022, the Company recorded rent expense of $18,000 and $55,000, respectively.

NOTE 5 — DEBT

Outstanding principal balances consisted of the following at:

SCHEDULE OF OUTSTANDING PRINCIPAL BALANCES

	October 31, 2023			January 31, 2023
Term loan	$	9,250,000		$	9,750,000
Financing cost payable		120,000			69,000
Deferred financing cost		(78,000	)		(105,000	)
Total		9,292,000			9,714,000
Less: Current portion of term loan		(1,250,000	)		(750,000	)
Non-current portion of term loan		8,042,000			8,964,000
Non-current portion of line of credit		500,000			—
Total non-current portion of debt	$	8,542,000		$	8,964,000

Term Loan and Revolving Line of Credit

On November 29, 2022, the Company executed a Second Modification to Second Amended and Restated Loan Agreement (the “Second Modification”). The Second Modification includes an expansion of the Company’s total borrowing to include a $2,000,000 non-formula revolving line of credit. The revolving line of credit will be co-terminus with the term loan and matures on August 26, 2026. There are no requirements to draw on the line of credit. Amounts outstanding under the line of credit portion of the Second Amended and Restated Loan Agreement bear interest at a per annum rate equal to the Prime Rate (as published in The Wall Street Journal) plus 1.5%, with a Prime “floor” rate of 3.25%. The Second Modification amended certain financial covenants in the Second Amended and Restated Loan Agreement. At January 31, 2023 and October 31, 2023, there was $0 and $500,000 outstanding on the revolving line of credit, respectively.

Under the Second Amended and Restated Loan Agreement, the Company has a term loan facility with an initial maximum principal amount of $10,000,000. Amounts outstanding under the Second Amended and Restated Loan Agreement bear interest at a per annum rate equal to the Prime Rate (as published in The Wall Street Journal) plus 1.5%, with a Prime “floor” rate of 3.25%. The Second Amended and Restated Loan Agreement has a five-year term, and the maximum principal amount was advanced in a single-cash advance on or about the original closing date (August 2021). Interest is due monthly, and the Company shall make monthly interest-only payments through the one-year anniversary of the original closing date. Under the Second Amended and Restated Loan Agreement, principal repayments are required of $500,000 in the second year, $1,000,000 in the third year, $2,000,000 in the fourth year, and $3,000,000 in the fifth year with the remaining outstanding principal balance and all accrued but unpaid interest due in full on the maturity date. The Second Amended and Restated Loan Agreement may also require early repayments if certain conditions are met.

The Second Amended and Restated Loan Agreement includes customary financial covenants as follows:

	●	Minimum Cash. Borrowers shall, at all times, maintain unrestricted cash of Borrowers at Bank in an amount not less than Two Million Dollars ($2,000,000).

	●	Maximum Debt to ARR Ratio. Borrowers’ Maximum Debt to ARR Ratio, measured on a quarterly basis as of the last day of each fiscal quarter, shall not be greater than the amount set forth under the heading “Maximum Debt to ARR Ratio” as of, and for each of the dates appearing adjacent to such “Maximum Debt to ARR Ratio”.

SCHEDULE OF MAXIMUM DEBT TO ARR RATIO

Quarter Ending		Maximum Debt to ARR Ratio
October 31, 2022		0.80 to 1.00
January 31, 2023		0.70 to 1.00
April 30, 2023		0.65 to 1.00
July 31, 2023		0.60 to 1.00
October 31, 2023		0.55 to 1.00
January 31, 2024		0.50 to 1.00

●

Maximum Debt to Adjusted EBITDA Ratio. Commencing with the quarter ending April 30, 2024, Borrowers’ Maximum Debt to Adjusted EBITDA Ratio, measured on a quarterly basis as of the last day of each fiscal quarter for the trailing four (4) quarter period then ended, shall not be greater than the amount set forth under the heading “Maximum Debt to Adjusted EBITDA Ratio” as of, and for each of the dates appearing adjacent to such “Maximum Debt to Adjusted EBITDA Ratio”.

SCHEDULE OF MAXIMUM DEBT TO ADJUSTED EBITDA RATIO

Quarter Ending

Maximum

Debt to Adjusted

EBITDA

Ratio

April 30, 2024

3.50 to 1.00

July 31, 2024 and on the last day of each quarter thereafter

2.00 to 1.00

●

Fixed Charge Coverage Ratio. Commencing with the quarter ending April 30, 2024, Borrowers shall maintain a Fixed Charge Coverage Ratio of not less than 1.20 to 1.00, measured on a quarterly basis as of the last day of each fiscal quarter for the trailing four (4) quarter period then ended.

The Second Amended and Restated Loan Agreement also includes customary negative covenants, subject to exceptions, which limit transfers, capital expenditures, indebtedness, certain liens, investments, acquisitions, dispositions of assets, restricted payments, and the business activities of the Company, as well as customary representations and warranties, affirmative covenants and events of default, including cross defaults and a change of control default. The line of credit also is subject to customary prepayment requirements. Substantially all the assets of the Company are collateralized by the Second Amended and Restated Loan Agreement. For the periods ended January 31, 2023 and October 31, 2023, the Company was in compliance with the Second Amended and Restated Loan Agreement covenants. However, the Company’s current forecast projects the Company may not be able to maintain compliance with certain of its financial covenants under the Second Amended and Restated Loan Agreement in the future. The Company is forecasted to miss certain future covenants. See Note 1 – Basis of Presentation for detail regarding the Company’s assessment as a going concern.

The Company records costs related to the maintenance of the Second Amended and Restated Loan Agreement as deferred financing costs, net of the term loan. These deferred financing costs are being amortized over the remaining term of the loan. The Company has incurred $250,000 in financing costs which becomes payable at the earlier of the term date of the loan, or pre-payment. These costs are being accreted, through interest expense, to the full value of the $250,000 over the remaining term of the loan.

NOTE 6 — INCOME TAXES

Income tax benefit increased to $59,000for the nine months ended October 31, ~~2017~~2023 compared to expense of $22,000in the prior year comparable period. The effective income tax rate on continuing operations of approximately -0-% differs from our combined federal and ~~2016, respectively.~~state statutory rate of 25% primarily due to the full valuation allowance the Company currently maintains on its net deferred tax asset.

The Company ~~had capital leases~~has recorded $340,000 and $333,000 in reserves for uncertain tax positions as of October 31, 2023 and January 31, 2023, respectively.

The Company and its subsidiaries are subject to ~~finance office equipment purchases~~U.S. federal income tax as well as income taxes in multiple state and local jurisdictions. The Company has concluded all U.S. federal tax matters for years through January 31, 2019. All material state and local income tax matters have been concluded for years through January 31, 2018. The Company is no longer subject to IRS examination for periods prior to the tax year ended January 31, 2019; however, carryforward losses that ~~continued~~were generated prior to the tax year ended January 31, 2019 may still be adjusted by the IRS if they are used in a future period.

NOTE 7 — EQUITY

Capital Raise

On October 24, 2022, the Company entered into purchase agreements with certain investors pursuant to which the ~~third quarter~~Company agreed to issue and sell in a registered direct offering (the “2022 Offering”) an aggregate of ~~fiscal 2017.~~6,299,989 shares of common stock, par value $0.01 per share, at a purchase price of $1.32 per share. The ~~amortization expense~~gross proceeds to the Company from the 2022 Offering were approximately $8,316,000. The Company used the proceeds of the ~~leased equipment was included in depreciation expense. As~~2022 Offering for general corporate purposes. The 2022 Offering closed on October 26, 2022.

Registration of ~~October 31, 2017,~~Shares Issued to 180 Consulting

On June 22, 2022, the Company ~~had no capital lease obligations outstanding.~~filed a Registration Statement on Form S-3 (Registration No. 333-265773) for the purpose of registering for resale 272,653 shares of common stock issued to 180 Consulting, LLC (“180 Consulting”). The Registration Statement was declared effective by the SEC on July 1, 2022.

On June 28, 2023, the Company filed a Registration Statement on Form S-3 (Registration No. 333-272993) for purpose of registering for resale 394,127 shares of common stock issued to 180 Consulting, LLC (“180 Consulting”). The Registration Statement was declared effective by the SEC on July 10, 2023.

Authorized Shares Increase

At the Annual Meeting of Stockholders held on June 7, 2022, the Company’s stockholders approved an amendment to the Streamline Health Solutions, Inc. Third Amended and Restated 2013 Stock Incentive Plan to increase the number of shares of the Company’s common stock authorized for issuance thereunder by 2,000,000 shares, from 8,223,246 shares to 10,223,246 shares. The Company’s stockholders also approved an amendment to the Company’s Certificate of Incorporation, as amended, to increase the total number of authorized shares of the Company’s common stock from 65,000,000 shares to 85,000,000 shares.

At the Annual Meeting of Stockholders held on June 15, 2023, the Company’s stockholders approved an amendment to the Streamline Health Solutions, Inc. Third Amended and Restated 2013 Stock Incentive Plan to increase the available number of shares of the Company’s common stock authorized for issuance thereunder by 1,000,000 shares, from 10,223,246 shares to 11,223,246 shares.

NOTE 58 — ~~DEBT~~

~~Term Loan and Line of Credit~~

COMMITMENTS AND CONTINGENCIES

Consulting Agreement with 180 Consulting, LLC

On ~~November 21, 2014, we~~March 19, 2020, the Company entered into a ~~Credit~~Master Services Agreement (the ~~“Credit Agreement”~~“MSA”) with ~~Wells Fargo Bank, N.A., as administrative agent,~~180 Consulting, pursuant to which 180 Consulting has provided and ~~other lender parties thereto. Pursuant to the Credit Agreement, the lenders agreed~~will continue to provide a ~~$10,000,000 senior term loan~~variety of consulting services in support of eValuator products including product management, operational consulting, staff augmentation, internal systems platform integration and software engineering services, among others, through separate executed statements of work (“SOWs”). On September 20, 2021, the Company entered into a ~~$5,000,000 revolving line~~separate MSA in support of ~~credit~~Avelead products. Certain of the SOWs include the ability of 180 Consulting to ~~our primary operating subsidiary. Amounts outstanding~~earn common stock of the company at a conversion rate to be calculated 20 days after the execution of the related SOW. The MSA includes a termination clause upon a 90-day written notice. While no related party has a direct or indirect material interest in this MSA or the related SOWs, individuals providing services to the Company under the Credit Agreement bear interest at either LIBOR or the base rate, as elected by the Company, plus an applicable margin. Subject to the Company’s leverage ratio, under the terms of the original Credit Agreement, the applicable LIBOR rate margin varied from 4.25% to 5.25%,MSA and the ~~applicable base rate margin varied from 3.25% to 4.25%~~SOWs may share workspace and administrative costs with 121G Consulting, LLC (“121G”). ~~Pursuant to the terms~~Mr. Green is a “member” of ~~the amendment to the Credit Agreement entered into as of April 15, 2015, the applicable LIBOR rate margin was amended to vary from 4.25% to 6.25%,~~121G, and, the applicable base rate margin was amended to vary from 3.25% to 5.25%. The term loan and line of credit mature on November 21, 2019 and provide support for working capital, capital expenditures and other general corporate purposes, including permitted acquisitions. The outstanding senior term loan is secured by substantially all of our assets. The senior term loan principal balance is payable in quarterly installments, which started in March 2015 and

~~Index to Financial Statements~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

will continue through the maturity date, with the full remaining unpaid principal balance due at maturity. In November 2014, the Company repaid indebtedness under its prior credit facility using approximately $7,400,000 of the proceeds provided by the term loan. The prior credit facility with Fifth Third Bank was terminated concurrent with the entry into the Credit Agreement. Financing costs of $355,000 associated with the new credit facility are being amortized over its term on a straight-line basis, which is not materially different from the effective interest method.

The Credit Agreement includes customary financial covenants, including the requirements that the Company maintain minimum liquidity and achieve certain minimum EBITDA levels (as defined in the Credit Agreement). In addition, the Credit Agreement prohibits the Company from paying dividends on the common and preferred stock. Pursuant to the terms of the third amendment to the Credit Agreement entered into as of June 19, 2017, the Company is required to maintain minimum liquidity of at least (i) $5,000,000 through January 31, 2018, (ii) $4,000,000 from February 1, 2018 through and including January 31, 2019, and (iii) $3,000,000 from February 1, 2019 through and including the maturity date of the credit facility.

~~The following table shows our minimum trailing four quarter period EBITDA covenant thresholds, as modified by the third amendment to the Credit Agreement:~~

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

~~The Company was in compliance with the applicable loan covenants at October 31, 2017.~~

As of October 31, 2017, the Company had no outstanding borrowings under the revolving line of credit, and had accrued $12,000 in unused line fees. Based upon the borrowing base formula set forth in the Credit Agreement, as of October 31, 2017, the Company had access to the full amount of the $5,000,000 revolving line of credit.

~~Outstanding principal balances on debt consisted of the following at:~~

October 31, 2017 January 31, 2017
Senior term loan $ 4,630,000
$ 5,539,000
Capital lease —
91,000
Total 4,630,000
5,630,000
Less: Current portion (597,000 ) (747,000 )
Non-current portion of debt $ 4,033,000
$ 4,883,000

In May 2016, as a result of excess cash flows achieved as of January 31, 2016 and as required pursuant to the mandatory prepayment provisions of the Credit Agreement, we made a $1,738,000 payment of principal towards the term loan with Wells Fargo. We used the proceeds from the sale of our Patient Engagement suite of solutions to make two prepayments on our term loan with Wells Fargo, one in December 2016 and one in June 2017, each in the amount of $500,000. As a result of these prepayments, the schedule of future principal payments was revised to reduce each future principal payment on a pro rata basis.

~~Future principal repayments of debt consisted of the following at~~ ~~October 31, 2017~~:

~~Index to Financial Statements~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

Senior Term Loan (1)
2017 $ 149,000
2018 597,000
2019 4,030,000
Total repayments $ 4,776,000

~~_______________~~


~~(1)~~	~~Term loan balance on the condensed consolidated balance sheet is reported net of deferred financing costs of $146,000.~~

~~NOTE 6 — CONVERTIBLE PREFERRED STOCK~~

~~Series A Convertible Preferred Stock~~

At October 31, 2017, we had 2,949,995 shares of Series A Convertible Redeemable Preferred Stock (the “Preferred Stock”) outstanding. Each share of the Preferred Stock is convertible into one share of the Company's common stock. The Preferred Stock does not pay a dividend; however, the holders are entitled to receive dividends equal (on an as-if-converted-to-common-stock basis) to and in the same form as dividends (other than dividends in the form of common stock) actually paid on shares of the common stock. The Preferred Stock has voting rights on a modified as-if-converted-to-common-stock-basis. The Preferred Stockaccordingly, has a ~~non-participating liquidation right equal to the original issue price plus accrued unpaid dividends, which are senior to the Company’s common stock. The Preferred Stock can be converted to common~~financial interest in that entity. 180 Consulting earned 100,037 and 358,190 shares ~~at any time by the holders, or at the option of the Company if the arithmetic average of the daily volume weighted average price of the common stock~~ for the ~~10 day period prior to the measurement date is greater than $8.00 per share,~~three and ~~the average daily trading volume for the 60 day period immediately prior to the measurement date exceeds 100,000 shares. The conversion price is $3.00 per share, subject to certain adjustments.~~

At any time following August 31, 2016, subject to the terms of the Subordination and Intercreditor Agreement among the preferred stockholders, the Company and Wells Fargo, which prohibits the redemption of the Preferred Stock without the consent of Wells Fargo, each share of Preferred Stock is redeemable at the option of the holder for an amount equal to the initial issuance price of $3.00 (adjusted to reflect stock splits, stock dividends or similar events) plus any accrued and unpaid dividends thereon. The Preferred Stock is classified as temporary equity as the securities are redeemable solely at the option of the holder.

~~NOTE 7 — INCOME TAXES~~

~~Income tax expense consists of federal, state and local tax provisions. For the nine months ended~~ ~~October 31, 2017~~ ~~and~~ ~~2016, we recorded federal tax expense of zero. For the~~ nine months ended October 31, ~~2017~~2023, respectively, and ~~2016, we~~has earned an aggregate of 1,273,394 shares of the Company’s common stock through October 31, 2023. 180 Consulting earned 183,284 and 293,190 shares for the three and nine months ended October 31, 2022, respectively. For services rendered by 180 Consulting during the three and nine months ended October 31, 2023, the Company incurred fees of $639,000 and $2,558,000, respectively, and capitalized non-employee stock compensation of $60,000 and $176,000, respectively. The Company paid fees of $751,000 and $1,781,000 for services rendered by 180 Consulting during the three and nine months ended October 31, 2022.

Inclusive of the MSA executed with 180 Consulting are SOWs that provide for the Company to sublicense software through 180 Consulting that is owned by 121G. This is a services agreement for access to software that assists the Company in implementing and integrating with our clients’ technology. The license agreement is designed such that there is no material financial benefit that accrues to 121G. 180 Consulting licenses the software from 121G at cost. The Company paid approximately $87,000 and $468,000 for the SOWs that include the sublicense agreement for the three and nine months ended October 31, 2023, respectively, which are included in the aforementioned totals above.

NOTE 9 — GOODWILL AND INTANGIBLE ASSETS

Goodwill represents the excess cost over fair value of the net assets of acquired businesses and is not amortized. The Company performs an impairment assessment of goodwill annually during the fourth quarter of its fiscal year with a valuation date of November 1, or more frequently if a triggering event occurs.

The Company’s intangible assets consist of client relationships, acquired and developed technology, and trade names. These assets are recorded ~~state~~at cost, less accumulated amortization and ~~local tax~~impairment, if any. All the Company’s intangible assets are definite lived and amortized on a straight-line basis over their estimated useful lives. Subsequent testing of intangible assets is conducted when a triggering event occurs that would indicate impairment may exist.

In October 2023, the Company was notified by a legacy client of its intent to not renew its contract as of its end date on December 31, 2023. At that time, the Company elected to accelerate the execution of a planned strategic restructuring that was designed to reduce costs while maintaining the Company’s ability to expand its SaaS business. Both the client termination and the execution of the strategic restructuring were announced on October 16, 2023. Following these announcements, the Company’s share price declined significantly. Based on these events (collectively, the “Triggering Events”), the Company identified indicators of possible impairment and initiated testing using a valuation date of October 31, 2023. The impairment tests were conducted under guidance of ASC Topic 360, Impairment and Disposal of Long-Lived Assets (“ASC 360”) for certain long-lived assets, including capitalized contract costs, developed technology, client relationships and trade names, and in accordance with ASC Topic 350, Intangibles – Goodwill and Other (“ASC 350”) with respect to the reporting unit’s goodwill.

Goodwill

The changes in the carrying amount of goodwill were as follows:

SCHEDULE OF CARRYING AMOUNT OF GOODWILL

	Nine Months Ended
	October 31, 2023
Balance as of January 31, 2023	$	23,089,000
Impairment		(9,813,000	)
Balance as of October 31, 2023	$	13,276,000

The Company determined that effective January 31, 2023, it had one reporting unit for purposes of evaluation of goodwill. Based on the Triggering Events and in conjunction with its preparation of its financial statements for the three and nine months ended October 31, 2023, the Company tested the reporting unit’s goodwill for possible impairment as of October 31, 2023. The testing for impairment was performed under the guidance of ASC 360. The testing utilized a discounted debt-free net cash flow (“DCF”) method under the income approach and the market capitalization method (“MCM”) under the market approach. The sum of the weighted values of each method was used to derive the fair value of the Company’s equity.

The MCM calculates the aggregate market value of the Company based on the total number of shares outstanding and the current market price of the shares as of the valuation date. Data on similar mergers and acquisitions within healthcare technology are observed to determine control premium that represents a stock premium percentage offered by an acquirer to a public company. The control premium applied to the aggregate market value represents MCM calculated fair value.

The DCF incorporates the use of projected financial information and a discount rate using a weighted average cost of capital with cost of equity estimated based on the capital asset pricing model. The cash-flow projections are based on financial forecasts developed by management that include forecasts of future operating results based on internal budgets and strategic plans to invest in working capital to support anticipated revenue growth. External factors and business conditions are considered by management when setting the long-term growth rates. The selected discount rate considers the risk and nature of the reporting unit’s cash flows and the rates of return market participants would require to invest their capital in the Company.

The Company concluded that its goodwill was impaired based on the weighted combination of the DCF and MCM value estimates which resulted in a calculated fair value lower than the equity carrying value. The Company recorded an impairment of goodwill in the amount of $9,813,000 reported as “Goodwill Impairment” on its Condensed Consolidated Statement of Operations for the period ended October 31, 2023.

Intangible Assets

The changes in the carrying amounts of the Company’s finite-lived assets were as follows:

SCHEDULE OF FINITE-LIVED INTANGIBLE ASSETS

		October 31, 2023
	Estimated Useful Life	Gross Assets		Accumulated Amortization		Impairment		Net Assets
Finite-lived assets:
Client relationships	8-10 years	$	9,700,000	$	2,216,000	$	963,000	$	6,521,000
Internally developed software	9 years		6,380,000		1,565,000		—	$	4,815,000
Trademarks and tradenames	15 years		1,340,000		197,000		—	$	1,143,000
Total		$	17,420,000	$	3,978,000		963,000	$	12,479,000

ASC 360 defines a multi-step process to test long-lived assets, including intangible assets, for recoverability that if failed would indicate impairment. First, the Company must consider whether indicators of impairment of long-lived assets are present, which the Company determined the Triggering Events in conjunction with preparation of its financial statements for the three and nine months ended October 31, 2023 provided such indication.

Next, the Company must review the long-lived assets to define asset group(s) that would reflect the lowest level of assets to which discrete cash flows are identifiable. In performing this review, the Company identified that the long-lived asset “client relationships” related to Avelead should be classified as abandoned (the “Abandoned Asset”) with the Company determining that it no longer has plans to provide the corresponding consulting service. The Abandoned Asset’s carrying value would need to be set to its salvage value which would be zero given no future cash flows.

The Company determined the lowest level of discrete cash flows is at the reporting unit level, and all remaining long-lived assets (excluding the Abandoned Asset) and goodwill would represent its only asset group. Recoverability is assessed by comparing that the sum of the discrete undiscounted cash flows exceeds the carrying value of the asset group. The undiscounted cash flow projections are based on 8-year (representing the useful life of the primary asset in the asset group) financial forecasts developed by management that include forecasts of future operating results based on internal budgets and strategic plans to investment in working capital to support anticipated revenue growth.

The undiscounted cash flows for the long-lived assets were above the carrying amounts indicating that the long-lived asset group is recoverable and no further impairment to long-lived assets exists as of October 31, 2023. For the three-month period ended October 31, 2023, the Company recorded $963,000 as “Impairment of long-lived assets” on its Condensed Consolidated Statement of Operations to adjust the Abandoned Asset to its salvage value of zero.

NOTE 10 - RELATED PARTY TRANSACTIONS

Refer to Note 3 – Business Combination. The Company acquired Avelead on August 16, 2021. Accordingly, the Company assumed a lease for corporate office space from a selling equity-holder of Avelead that is a former employee of the Company. This lease term ended February 2023. For the three and nine months ended October 31, 2023, the Company recorded rent expense of ~~$8,000~~$0 and ~~$5,000,~~$6,000, respectively.

~~NOTE 8 — SUBSEQUENT EVENTS~~

~~We have evaluated subsequent events occurring after~~ For the three and nine months ended October 31, ~~2017,~~2022, the Company recorded rent expense of $18,000 and ~~based on our evaluation we did not identify any events that would have required recognition or disclosure in these condensed consolidated financial statements.~~$55,000, respectively (refer to Note 4 – Operating Leases).

~~Index to Financial Statements~~

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

We make forward-looking statements in this Quarterly Report on Form 10-Q (this “Report”) and in other materials we file with the ~~Securities and Exchange Commission (“SEC”)~~SEC or otherwise make public. ~~In this~~This Report, ~~Part I, Item 2, “Management’s Discussion~~therefore, contains statements about future events and ~~Analysis~~expectations which are forward-looking statements within the meaning of ~~Financial Condition~~Sections 27A of the Securities Act of 1933, as amended (the “Securities Act”), and ~~Results~~21E of ~~Operations,” contains forward-looking statements.~~the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In addition, our senior management makes forward-looking statements to analysts, investors, the media and others. Statements with respect to expected revenue, income, receivables, backlog, client attrition, acquisitions and other growth opportunities, sources of funding operations and acquisitions, the integration of our solutions, the performance of our channel partner relationships, the sufficiency of available liquidity, research and development, and other statements of our plans, beliefs or expectations are forward-looking statements. These and other statements using words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “project,” “target,” “can,” “could,” “may,” “should,” “will,” “would” and similar expressions also are forward-looking statements. Each forward-looking statement speaks only as of the date of the particular statement. The forward-looking statements we make are not guarantees of future performance, and we have based these statements on our assumptions and analyses in light of our experience and perception of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. Forward-looking statements by their nature involve substantial risks and uncertainties that could significantly affect expected results, and actual future results could differ materially from those described in such statements. Management cautions against putting undue reliance on forward-looking statements or projecting any future results based on such statements or present or historical earnings levels.

Among the factors that could cause actual future results to differ materially from our expectations are the risks and uncertainties described under “Risk Factors” ~~set forth~~and elsewhere in ~~Part II, Item 1A,~~our Annual Report on Form 10-K for the fiscal year ended January 31, 2023 and ~~the other cautionary statements~~ in ~~other documents we file~~our subsequent filings with the SEC, ~~including~~and include among others, the following:

	●	competitive products and pricing;

	●	product demand and market acceptance;

	●	entry into new markets;

	●	the possibility that any of the anticipated benefits of the acquisition of Avelead Consulting, LLC (“Avelead”) will not be realized or will not be realized within the expected time period, the businesses of the Company and the Avelead segment may not be integrated successfully, or such integration may be more difficult, time-consuming or costly than expected, or revenues following the Avelead acquisition may be lower than expected;

	●	new product and services development and commercialization;

	●	key strategic alliances with vendors and channel partners that resell our products;

	●	uncertainty in continued relationships with customers due to termination rights;

	●	our ability to control costs;

	●	availability, quality and security of products produced, and services provided by third-party vendors;

	●	the healthcare regulatory environment;

	●	potential changes in legislation, regulation and government funding affecting the healthcare industry;

	●	healthcare information systems budgets;

~~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.~~

	●	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;

	●	our future cash needs;

	●	the consummation of resources in researching acquisitions, business opportunities or financings and capital market transactions;

	●	the failure to adequately integrate past and future acquisitions into our business;

	●	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;

	●	impairment of our goodwill and other intangible assets;

	●	the extent to which health epidemics and other outbreaks of communicable diseases could disrupt our operations and/or materially and adversely affect our business and financial conditions;

	●	our ability to maintain compliance with the terms of our credit facilities; and

	●	our ability to maintain compliance with the continued listing standards of the Nasdaq Capital Market (“Nasdaq”).

Most of these risk factors are beyond our ability to predict or control. Any of these factors, or a combination of these factors, could materially affect our future financial condition or results of operations and the ultimate accuracy of our forward-looking statements. There also are other factors that we may not describe (generally because we currently do not perceive them to be material) that could cause actual results to differ materially from our expectations.

~~Index to Financial Statements~~

We expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

On August 16, 2021, the Company entered into a Unit Purchase Agreement (“UPA”) to acquire Avelead, a recognized leader in providing solutions and services to improve revenue integrity for healthcare providers nationwide. The Company believes Avelead’s solutions will complement and extend the value the Company can deliver to its customers. Operations for Avelead are included in the Company’s consolidated financial information from the acquisition date. Refer to Note 3 – Business Combination in our unaudited condensed consolidated financial statements included in Part I, Item I, “Financial Statements” for further information on the Avelead acquisition.

During the fiscal third quarter ended October 31, 2022, the Company strengthened its balance sheet through a capital raise. On October 24, 2022, the Company entered into purchase agreements with certain investors pursuant to which the Company agreed to issue and sell in a registered direct offering (the “2022 Offering”), an aggregate of 6,299,989 shares of common stock, par value $0.01 per share, at a purchase price of $1.32 per share. The gross proceeds to the Company from the 2022 Offering were approximately $8.3 million. The 2022 Offering closed on October 26, 2022.

The Company expanded its existing relationship with its debt partner, Western Alliance Bank, in the fourth quarter of 2022. On November 29, 2022, the Company executed a Second Modification to the Second Amended and Restated Loan Agreement (“Second Modification”). The Second Modification includes an expansion of the Company’s total borrowing to include a $2,000,000 non-formula revolving line of credit. The revolving line of credit is co-terminus with the term loan, which matures on August 26, 2026. The Second Modification includes modified covenants through the term of the Second Amended and Restated Loan Agreement. See Item 1, Note 5 - Debt, for discussion of the Second Modification.

On October 16, 2023, the Company announced it was executing a strategic restructuring designed to reduce expenses while maintaining the Company’s ability to expand its SaaS business. The strategic restructuring initiatives included a reduction in force, resulting in the termination of 26 employees, or approximately 24% of the Company’s workforce. To execute the strategic restructuring, the Company estimates the one-time restructuring costs associated with the workforce reduction to be approximately $900,000, and the Company expects the expenses associated with the strategic restructuring to be substantially recognized by the end of fiscal year 2023. The Company recorded $749,000 of the estimated expenses in the three months ending October 31, 2023, which consisted of approximately $730,000 in severance and other employee termination-related expenses and approximately $19,000 in incurred legal fees. The remaining estimated cost pertains to various professional fees the Company may require to assist with execution of the strategic restructuring. The Company expects to realize approximately $5,800,000 in annualized cost savings as a result of the strategic restructuring. Approximately 60% of the expected savings are related to the reduction in force and will be realized beginning in the fourth quarter of fiscal year 2023. The remaining expected savings are vendor related expenses which are expected to result in cost savings beginning in the first quarter of fiscal year 2024.

Results of Operations

Revenues

Three Months Ended
(in thousands): October 31, 2017 October 31, 2016 Change % Change
Systems Sales:
Proprietary software - perpetual license $ 79
$ 20
$ 59
295 %
Term license 257
269
(12 ) (4 )%
Hardware and third-party software 13
25
(12 ) (48 )%
Professional services 802
631
171
27 %
Audit Services 280
234
46
20 %
Maintenance and support 3,250
3,750
(500 ) (13 )%
Software as a service 1,718
1,706
12
1 %
Total Revenues $ 6,399
$ 6,635
$ (236 ) (4 )%

Nine Months Ended
(in thousands): October 31, 2017 October 31, 2016 Change % Change
System Sales:
Proprietary software - perpetual license $ 249
$ 1,040
$ (791 ) (76 )%
Term license 736
905
(169 ) (19 )%
Hardware and third-party software 71
245
(174 ) (71 )%
Professional services 1,794
1,870
(76 ) (4 )%
Audit Services 919
234
685
293 %
Maintenance and support 9,884
11,238
(1,354 ) (12 )%
Software as a service 4,586
5,145
(559 ) (11 )%
Total Revenues $ 18,239
$ 20,677
$ (2,438 ) (12 )%

~~Proprietary~~

	Three Months Ended
($ in thousands):	October 31, 2023		October 31, 2022		Change			% Change

Software as a service	$	3,924	$	3,209	$	715			22	%
Maintenance and support		1,070		1,120		(50	)		(4	)%
Professional fees and licenses		1,139		1,888		(749	)		(40	)%
Total Revenues	$	6,133	$	6,217	$	(84	)		(1	)%

	Nine Months Ended
($ in thousands):	October 31, 2023		October 31, 2022		Change			% Change

Software as a service	$	10,630	$	9,157	$	1,473			16	%
Maintenance and support		3,327		3,348		(21	)		(1	)%
Professional fees and licenses		3,278		5,639		(2,361	)		(42	)%
Total Revenues	$	17,235	$	18,144	$	(909	)		(5	)%

Software as a Service (SaaS) — Revenue from SaaS for the three- and nine-month periods ended October 31, 2023 increased by $715,000 and $1,473,000, respectively, compared to the prior year periods. The increase in SaaS revenue for the three and nine-month period ended October 31, 2023 is primarily due to new clients on the Company’s eValuator, RevID and Compare products offset by non-renewals of certain clients. Beginning in the first quarter of fiscal 2024, we anticipate lower SaaS revenue for the short term due primarily to a large client non-renewal of RevID and Compare.

We have approximately $2.7 million of annualized contract value of SaaS contracts to be implemented as of October 31, 2023. The industry has been impacted by hospital personnel shortages and a backlog of hospital IT projects. This has resulted in slower contract-to-implementation timelines, which is delaying revenue recognition for such contracts. It is uncertain how long these headwinds will impact our implementation timelines.

Maintenance and support — For both the three- and nine-month periods ended October 31, 2023, revenue from maintenance and support remained relatively consistent compared to the prior year periods. The Company does not anticipate maintenance and support growth due to the Company’s shift to its growth products that are classified as software as a service.

Professional fees and ~~term~~ licenses — Proprietary software revenue ~~recognized~~ for the ~~three months~~three- and nine-month periods ended October 31, ~~2017 increased by $59,000 over~~2023 remained consistent compared to the prior ~~comparable period due~~year periods. The Company has primarily shifted the business from perpetual software licenses to ~~improved~~a SaaS model. Software license sales ofcome solely from our ~~CDI solution in~~channel partners; therefore, the ~~third quarter of fiscal 2017. Proprietary software revenue recognized for~~periodic amounts are less predictable and consistent than recurring revenues.

For the ~~nine months~~three- and nine-month periods ended October 31, ~~2017~~2023, revenue from professional services decreased by ~~$791,000 over~~$749,000 and $2,110,000, respectively, compared to the prior ~~comparable period. This~~year periods. The decrease in professional fees is ~~attributable to a larger perpetual license sale~~primarily driven by the termination of ~~our Streamline Health® Abstracting™ solution in~~client consulting agreements at the ~~second quarter~~close of fiscal ~~2016. The $169,000~~year 2022 that did not align with the Company’s long-term strategy. These terminations resulted in a decrease in ~~term license~~professional services revenue for the nine months ended October 31, 2017 over the prior comparable period is primarily due to the expiration of one Clinical Analytics contract and the reduction of license fees on a separate Clinical Analytics contract.

~~Hardware and third-party software~~ ~~— Revenue from hardware and third-party software sales~~ for the three and nine months ended October 31, ~~2017 decreased by $12,000~~2023 of $884,000 and ~~$174,000,~~$2,572,000, respectively, ~~over~~compared to the prior ~~comparable~~year periods. ~~Fluctuations from period to period are a function~~The Company is primarily focused on growth of ~~client demand.~~its SaaS products, and, accordingly, is not expecting growth in professional services for the remainder of the fiscal year.

~~Professional services~~ —

For the three-month period ended October 31, ~~2017, revenues~~2023, revenue from ~~professional~~audit services ~~increased by $171,000 from~~remained consistent compared to the prior ~~comparable~~year period. This increase is primarily due to a software version upgrade by a customer of our Streamline Health® Enterprise Content Management™ (“ECM”) solution and partially offsets the decrease in revenues forFor the nine-month period ended October ~~31, 2017, which resulted~~31,2023, audit services revenue overall decreased by $201,000 compared to the prior year period. This decrease included $938,000 of revenue in the prior year nine-month period for agreements not renewed by clients that was offset by $611,000 from new audit service agreements plus $126,000 of additional revenue from amended agreements with increased scope. The company is primarily focused on utilizing audit services to support its eValuator product. Accordingly, the Company does not expect revenue growth in the future in audit services.

Cost of Sales

	Three Months Ended
(in thousands):	October 31, 2023		October 31, 2022		Change			% Change
Cost of software as a service	$	1,677	$	1,742	$	(65	)		(4	)%
Cost of maintenance and support		129		84		45			54	%
Cost of professional fees and licenses		1,072		1,744		(672	)		(39	)%
Total cost of sales	$	2,878	$	3,570	$	(692	)		(19	)%

	Nine Months Ended
(in thousands):	October 31, 2023		October 31, 2022		Change			% Change
Cost of software as a service	$	5,159	$	4,771	$	388			8	%
Cost of maintenance and support		250		220		30			14	%
Cost of professional fees and licenses		3,202		4,992		(1,790	)		(36	)%
Total cost of sales	$	8,611	$	9,983	$	(1,372	)		(14	)%

Cost of software as a service (SaaS) - The cost of SaaS solutions is comprised of salaries, amortization of capitalized software development and third-party content provider costs. Certain costs in SaaS solutions are tied to volumes, such as number of users. These costs include coding tools supporting eValuator and a third-party system that enable the Company’s products to ingest data from the ~~sale~~hospital system. For the three months ended October 31, 2023, the cost of ~~our Patient Engagement suite~~SaaS solutions decreased $65,000 compared to the prior year period. The decrease is driven by lower personnel costs of $216,000 offset by an increase in amortization of capitalized assets for RevID and Compare of $69,000 compared to the prior year three-month period. For the nine months ended October 31,2023 the cost of software as a service increased $388,000 compared to the prior year period. The increase was driven by an increase in vendor costs of $1,008,000 offset by lower personnel costs of $690,000 compared to the prior year nine-month period. The Company expects the cost of SaaS solutions ~~in the fourth quarter of fiscal 2016,~~will continue to increase as ~~well as cancellations by two customers of our Streamline Health® Financial Management™ solution (“Financial Management”).~~

~~Audit services~~ ~~— Audit services~~ revenue ~~recognized for~~increases.

For the three and nine months ended October 31, ~~2017 increased by $46,000 and $685,000, respectively, over~~2023, the ~~prior comparable periods. The Company began offering audit services in September 2016, following the acquisition of Opportune IT.~~

~~Maintenance and support~~ — Revenue from maintenance and support for the three and nine months ended October 31, 2017 decreased by $500,000 and $1,354,000, respectively, from the prior comparable periods. These decreases were primarily

~~Index to Financial Statements~~

~~the result of the sale of our Patient Engagement suite of solutions in the fourth quarter of fiscal 2016, as well as cancellations by two customers of our ECM solution.~~

~~Software as a Service (SaaS)~~ — Revenue from SaaS for the nine months ended October 31, 2017 decreased by $559,000 from the prior comparable period. This decrease resulted primarily from cancellations by a few customers of our Financial Management and ECM solutions, as well as the sale of our Patient Engagement suite of solutions in the fourth quarter of fiscal 2016.

~~Cost of Sales~~

Three Months Ended
(in thousands): October 31, 2017 October 31, 2016 Change % Change
Cost of systems sales $ 434
$ 663
$ (229 ) (35 )%
Cost of professional services 556
723
(167 ) (23 )%
Cost of audit services 404
596
(192 ) (32 )%
Cost of maintenance and support 667
790
(123 ) (16 )%
Cost of software as a service 290
451
(161 ) (36 )%
Total cost of sales $ 2,351
$ 3,223
$ (872 ) (27 )%

Nine Months Ended
(in thousands): October 31, 2017 October 31, 2016 Change % Change
Cost of systems sales $ 1,597
$ 2,080
$ (483 ) (23 )%
Cost of professional services 1,814
1,891
(77 ) (4 )%
Cost of audit services 1,236
596
640
107 %
Cost of maintenance and support 2,242
2,483
(241 ) (10 )%
Cost of software as a service 915
1,390
(475 ) (34 )%
Total cost of sales $ 7,804
$ 8,440
$ (636 ) (8 )%

~~The decrease in overall~~ cost of ~~sales for the three~~SaaS solutions includes non-cash charges of $572,000 and ~~nine months ended October 31, 2017 from the comparable prior periods is primarily due~~$1,692,000, respectively, related to the ~~reduction in~~ amortization of capitalized software, costs as a result of a few assets becoming fully amortized, as well as the sale of our Patient Engagement suite of solutions in the fourth quarter of fiscal 2016. In addition, the decrease in overall cost of sales for the three months ended October 31, 2017 from the comparable prior period is further attributed to the reduction in audit services personnel costs following the acquisition of Opportune IT in September 2016.

~~Cost of systems sales includes amortization~~which impacts SaaS margin by 15% and ~~impairment of capitalized software expenditures, royalties, and the cost of third-party hardware and software.~~16%, respectively. The decrease in expense for the three- and nine-month periods ended October 31, 2017 was primarily due to the reduction in amortization of capitalized software costs as a result of the sale of our Patient Engagement suite of solutions in the fourth quarter of fiscal 2016, as well as the internally-developed software acquired from Meta Health Technology, Inc. in 2012 reaching the end of its assigned economic life in the third quarter of fiscal 2017.

The cost of professional services includes compensation and benefits for personnel and related expenses. The decrease in expense for the three- and nine-month periods from the prior comparable periods is primarily due to the increase in professional servicesCompany expects margins related to SaaS ~~and term licenses, for which costs are deferred and amortized ratably over the initial contract term, as well as the decrease in personnel costs.~~

~~The cost of audit services includes compensation and benefits for audit services personnel, and related expenses. The~~solutions to increase in ~~expense~~the future for clients currently in the ~~nine-month period ended October 31, 2017~~process of implementation. Certain costs, such as labor and third-party content providers, impact the gross margin before a customer is ~~due to the Company beginning to offer audit services in September 2016, following the acquisition~~fully implemented and revenue is recognized.

Cost of ~~Opportune IT. The decrease in expense for the three-month period ended October 31, 2017 is attributed to the reduction in associate~~maintenance and ~~contractor costs from synergies resulting from the full integration of the acquired business.~~

support - The cost of maintenance and support includes compensation and benefits for client support personnel and the cost of third-party ~~maintenance~~content provider contracts. The ~~decrease in expense~~costs for the ~~three-~~three and ~~nine-month periods was primarily due to a decrease in third-party maintenance contracts costs and personnel costs, and is in line~~nine months ended October 31, 2023 remained consistent with the ~~decrease in the associated maintenance~~comparable prior year periods.

Cost of professional fees and ~~support revenue.~~

licenses – The cost of ~~SaaS solutions is relatively fixed, subject to inflation~~professional fees and licenses include each of professional services, audit and coding services and software licenses. The overall change for cost of professional fees and licenses for the ~~goods~~three and ~~services it requires. The decrease in the three-~~nine months ended October 31, 2023 decreased $672,000 and ~~nine-month periods from~~$1,790,000, respectively, compared to the prior ~~comparable periods was primarily~~year periods.

The cost of professional fees includes compensation and benefits for personnel and related expenses. For the three and nine months ended October 31, 2023, professional services costs decreased by $659,000 and $1,847,000, respectively, compared to the prior year periods. These decreases were driven by a ~~reduction in personnel costs, as~~

~~Index to Financial Statements~~

~~well as in depreciation and amortization expense as several assets, including the internally-developed software acquired from Interpoint Partners, LLC in 2011, reached~~large customer contract cancellation at the end of ~~their assigned economic lives.~~fiscal year 2022 resulting in lower personnel and third-party contractor costs. This lower cost of professional fees is expected to continue, when compared with the prior year, throughout fiscal year 2023.

The cost of audit services includes compensation and benefits for audit services personnel, and related expenses. The costs for the three months ended October 31, 2023 remained consistent compared to the prior year period with a slight increase of $13,000. The costs for the nine months ended October 31, 2023 increased, compared to the corresponding prior year period, by $159,000 due to an increase in employee related expenses.

The cost of software licenses for the three and nine months ended October 31, 2023 decreased by $27,000 and $102,000, respectively, compared to the prior year periods due to lower amortization of development costs related to the Company’s coding/CDI product. The Company expects software license costs to continue to decrease due to the maturity of the non-SaaS software products.

Selling, General and Administrative Expense

Three Months Ended
(in thousands): October 31, 2017 October 31, 2016 Change % Change
General and administrative expenses $ 1,681
$ 1,980
$ (299 ) (15 )%
Sales and marketing expenses 1,139
1,232
(93 ) (8 )%
Total selling, general, and administrative expense $ 2,820
$ 3,212
$ (392 ) (12 )%

Nine Months Ended
(in thousands): October 31, 2017 October 31, 2016 Change % Change
General and administrative expenses $ 5,673
$ 6,668
$ (995 ) (15 )%
Sales and marketing expenses 3,310
3,485
(175 ) (5 )%
Total selling, general, and administrative expense $ 8,983
$ 10,153
$ (1,170 ) (12 )%

	Three Months Ended
($ in thousands):	October 31, 2023		October 31, 2022		Change			% Change
General and administrative expenses	$	2,798	$	2,692	$	106			4	%
Sales and marketing expenses		1,324		1,363		(39	)		(3	)%
Total selling, general, and administrative expense	$	4,122	$	4,055	$	67			2	%

	Nine Months Ended
($ in thousands):	October 31, 2023		October 31, 2022		Change			% Change
General and administrative expenses	$	8,220	$	8,253	$	(33	)		(0	)%
Sales and marketing expenses		3,859		4,376		(517	)		(12	)%
Total selling, general, and administrative expense	$	12,079	$	12,629	$	(550	)		(4	)%

General and administrative expenses consist primarily of compensation and related benefits, reimbursable travel and entertainment expenses related to our executive and administrative staff, general corporate expenses, amortization of intangible assets, and occupancy costs. ~~The decrease~~For the three months ended October 31, 2023, the increase in general and administrative expenses ~~for~~of $106,000 was driven primarily by an increase in stock compensation expense of $207,000 due to accelerated vesting of grants, as well as an increase of severance expense of $278,000, offset by decreased employee salaries, bonuses, and benefits of $208,000. The Company also saw a decrease in rent expense of $57,000 and a decrease of $77,000 related to computer equipment and software. For the ~~three and~~ nine months ended October 31, ~~2017 from~~2023, the ~~comparable~~general and administrative expenses remained generally consistent compared to the prior ~~periods was primarily due to a reduction in personnel costs, stock compensation and severance expense, as well as a reduction in professional fees for accounting and legal services.~~

year period.

Sales and marketing expenses consist primarily of compensation and related benefits and ~~reimbursable~~ travel and entertainment expenses related to our sales and marketing staff, as well as advertising and marketing expenses, including trade shows. ~~The decrease in~~For the three months ended October 31, 2023, sales and marketing expenses remained consistent compared to the prior year period. For the nine months ended October 31, 2023, the decrease of $517,000 was primarily driven by a decrease in professional services and marketing expenses of $446,000, severance expense of $105,000, and travel-related expenses of $60,000, offset by an increase in salaries, bonuses, commissions, and benefits of $77,000, compared to the prior year period.

Research and Development

	Three Months Ended
($ in thousands):	October 31, 2023		October 31, 2022		Change			% Change
Research and development expense	$	1,304	$	1,754	$	(450	)		(26	)%
Capitalized research and development cost		535		563		(28	)		(5	)%

	Nine Months Ended
($ in thousands):	October 31, 2023		October 31, 2022		Change			% Change
Research and development expense	$	4,310	$	4,527	$	(217	)		(5	)%
Capitalized research and development cost		1,556		1,450		106			7	%

Research and development expense consists primarily of compensation and related benefits and the use of independent contractors for specific near-term development projects. Research and development expenses for the three and nine months ended October 31, ~~2017~~2023 decreased by $450,000 and $217,000, respectively, compared to the prior year periods. The prior year comparable periods included additional one-time non-capitalizable projects completed by our third-party partner plus higher headcount from operating separate product innovation teams. The consolidation of the ~~comparable prior periods was primarily due to a reduction in stock compensation~~teams and ~~severance expense.~~

~~Product Research and Development~~

Three Months Ended
(in thousands): October 31, 2017 October 31, 2016 Change % Change
Research and development expense $ 932
$ 1,969
$ (1,037 ) (53 )%
Plus: Capitalized research and development cost 493
484
9
2 %
Total research and development cost $ 1,425
$ 2,453
$ (1,028 ) (42 )%

Nine Months Ended
(in thousands): October 31, 2017 October 31, 2016 Change % Change
Research and development expense $ 3,985
$ 5,800
$ (1,815 ) (31 )%
Plus: Capitalized research and development cost 1,337
1,421
(84 ) (6 )%
Total research and development cost $ 5,322
$ 7,221
$ (1,899 ) (26 )%

~~Product~~completion of the one-time projects reduced the overall research and development ~~cost consists primarily of compensation and related benefits, the use of independent contractors~~expense for ~~specific near-term development projects, and an allocated portion of general overhead costs, including occupancy. The decrease in total~~fiscal year 2023.

Capitalized research and development ~~cost~~costs for the three months ended October 31, 2023 remained consistent with the prior year period. Capitalized research and development costs for the nine months ended October 31, 2023 increased by approximately $106,000 compared to the prior year period due to additional projects being capitalized for the products. With the recent strategic restructuring, the Company expects capitalization rates will decrease.

Impairment of Goodwill

	Three Months Ended
($ in thousands):	October 31, 2023		October 31, 2022		Change		% Change
Impairment of Goodwill	$	9,813	$	—	$	9,813		100	%

	Nine Months Ended
($ in thousands):	October 31, 2023		October 31, 2022		Change		% Change
Impairment of Goodwill	$	9,813	$	—	$	9,813		100	%

Based on the Triggering Events and in conjunction with its preparation of its financial statements for the three and nine months ended October 31, 2023, the Company tested the reporting unit’s goodwill for possible impairment as of October 31, 2023. Refer to the Goodwill section of Note 9 — Goodwill and Intangible Assets of the unaudited condensed consolidated financial statements included in Part I, Item I, “Financial Statements” for more information on the goodwill impairment testing.

The Company concluded that goodwill was impaired based on the weighted combination of the DCF and MCM value estimates which resulted in a calculated fair value lower than its carrying value. The Company recorded an impairment of goodwill in the amount of $9,813,000 for the three- and nine-month periods ended October 31, ~~2017 from~~2023, with no goodwill impairments reported in the prior year comparable ~~periods is primarily due to a reduction~~periods.

Impairment of long-lived assets

	Three Months Ended
($ in thousands):	October 31, 2023		October 31, 2022		Change		% Change
Impairment of long-lived assets	$	963	$	—	$	963		100	%

	Nine Months Ended
($ in thousands):	October 31, 2023		October 31, 2022		Change		% Change
Impairment of long-lived assets	$	963	$	—	$	963		100	%

Based on the Triggering Events and in ~~development personnel headcount and consultant fees and $366,000 in research and development tax credits awarded by the State~~conjunction with its preparation of ~~Georgia in fiscal 2017. Research and development expenses~~its financial statements for the three and nine months ended October 31, ~~2017~~2023, the Company tested long-lived assets, including intangible assets, for recoverability that, if failed, would indicate impairment. The Company, in reviewing long-lived assets to define asset group(s), identified an abandoned asset. A separate long-lived asset for “client relationships” related to Avelead was no longer going to be used following the Company’s determination that these services were not part of its core offerings going forward. The Company adjusted the abandoned asset’s carrying value to its salvage value which would be zero given no future cash flows.

Refer to the Intangible Assets section of Note 9 — Goodwill and ~~2016, as a percentage~~Intangible Assets of ~~revenues, were 22% and 28%, respectively.~~

~~Other Income (Expense)~~

Three Months Ended
(in thousands): October 31, 2017 October 31, 2016 Change % Change
Interest expense $ (113 ) $ (99 ) $ (14 ) 14 %
Miscellaneous expense (177 ) (61 ) (116 ) 190 %
Total other expense $ (290 ) $ (160 ) $ (130 ) 81 %

~~Index to Financial Statements~~

Nine Months Ended
(in thousands): October 31, 2017 October 31, 2016 Change % Change
Interest expense $ (361 ) $ (381 ) $ 20
(5 )%
Miscellaneous expense (235 ) (39 ) (196 ) 503 %
Total other expense $ (596 ) $ (420 ) $ (176 ) 42 %

~~Interest expense consists of interest and commitment fees~~the unaudited condensed consolidated financial statements included in Part I, Item I, “Financial Statements” for more information on the line of credit, interest on the term loans, and is inclusive of deferred financing cost amortization expense. Interest expense decreased for the nine months ended October 31, 2017 from the prior comparable period primarily due to the expiration of two capital lease arrangements. The increase in interest expense for the three months ended October 31, 2017 from the prior comparable period is attributed to an increase in interest rate on our term loan. Fluctuation in miscellaneous expense forlong-lived asset impairment testing.

For the three- and nine-month periods ended October 31, ~~2017~~2023, the Company recorded $963,000 representing the impairment of the Abandoned Asset with no other long-lived impairments reported in the prior year comparable periods.

Other Income (Expense)

	Three Months Ended
($ in thousands):	October 31, 2023			October 31, 2022			Change			% Change
Interest expense	$	(266	)	$	(198	)	$	(68	)		34	%
Acquisition earnout valuation adjustments		1,182			163			1,019			625	%
Miscellaneous income		—			68			(68	)		(100	)%
Total other income	$	916		$	33		$	883			2,676	%

	Nine Months Ended
($ in thousands):	October 31, 2023			October 31, 2022			Change			% Change
Interest expense	$	(781	)	$	(519	)	$	(262	)		50	%
Acquisition earnout valuation adjustments		1,905			188			1,717			913	%
Miscellaneous income		31			151			(120	)		(79	)%
Total other (expense) income	$	1,155		$	(180	)	$	1,335			(742	)%

Interest expense consists of interest associated with the term loan, deferred financing costs, and line of credit, less interest related to capitalization of software. Interest expense increased for the three and nine months ended October 31, 2023 from the comparable prior ~~comparable~~year periods is primarily due to ~~revaluation adjustments~~the $10,000,000 term loan and $500,000 outstanding line or credit with Western Alliance Bank (See Note 5 – Debt) and the associated increased interest rate on that debt. Interest rate increases are expected to ~~our warrant liability, which were driven~~continue to increase interest expense (year-over-year) through the remainder of fiscal year 2023.

The acquisition earnout valuation is related to the liabilities associated with the Avelead acquisition (Refer to Note 3 – Business Combination of the unaudited condensed consolidated financial statements included in Part I, Item I, “Financial Statements”). For the three and nine months ended October 31, 2023, the Company recorded a valuation income adjustment of $1,182,000 and $1,905,000, respectively, compared to $163,000 and $188,000, respectively, for the comparable prior year periods. The valuation adjustment is caused by the ~~fluctuations~~decrease in the ~~Company’s~~value of the stock ~~price.~~to be transferred under the arrangement.

Miscellaneous income is primarily from the sublease of the Alpharetta location (Refer to Note 4 – Operating Leases of the unaudited condensed consolidated financial statements included in Part I, Item I, “Financial Statements”).

Provision for Income Taxes

We recorded an income tax benefit of $120,000 and income tax expense of ~~$3,000 and $2,000, respectively,~~$9,000 for the three months ended October 31, ~~2017~~2023 and ~~2016,~~2022, respectively, and ~~$8,000~~income tax benefit of $59,000 and ~~$5,000, respectively,~~income tax expense of $22,000 for the nine months ended October 31, ~~2017~~2023 and ~~2016,~~2022, respectively, which is comprised of estimated federal, state and local income tax provisions.

~~Backlog~~

October 31, 2017 October 31, 2016
Company proprietary software $ 10,892,000
$ 15,551,000
Third-party hardware and software —
200,000
Professional services 2,824,000
4,973,000
Audit services 1,454,000
1,849,000
Maintenance and support 18,256,000
19,413,000
Software as a service 14,242,000
12,929,000
Total $ 47,668,000
$ 54,915,000

~~At October 31, 2017, we had contracts~~The Company has a substantial amount of net operating losses for federal and ~~purchase orders~~state income tax purposes. The effective income tax rate on continuing operations of approximately 0% differs from ~~clients~~our combined federal and ~~remarketing partners for systems and related services that have not been delivered or installed, which if fully performed, would generate future revenues~~state statutory rate of ~~$47,668,000 compared with $54,915,000 at October 31, 2016.~~

The Company’s proprietary software backlog consists of signed agreements to purchase either perpetual software licenses or term licenses. Typically, perpetual licenses included in backlog are either not yet generally available or the software is generally available and the client has not taken possession of the software. Term licenses included in backlog consist of signed agreements where the client has already taken possession, but the payment for the software is bundled with maintenance and support fees over the life of the contract. The decrease in backlog is25% primarily due to the ~~sale of our Patient Engagement suite of solutions in the fourth quarter of fiscal 2016.~~

Third-party hardware and software backlog consists of signed agreements to purchase third-party hardware or third-party software licenses that have not been delivered to the client. These are products that we resell as components of the solution a client purchases and are expected to be delivered in the next twelve months as implementations commence.

Professional services backlog consists of signed contracts for services that have yet to be performed. Typically, backlog is recognized within twelve months of the contract signing. The decrease in professional services backlog is a result of several large projects nearing their completion. Professional services backlog was further reduced by the sale of our Patient Engagement suite of solutions in the fourth quarter of fiscal 2016. Our new eValuator solution requires less in terms of professional services efforts, and thusly the SaaS backlog increase does not result in a corresponding effect in our professional services backlog.

Audit services backlog consists of signed contracts for audit services that have yet to be performed. Typically, backlog is recognized within twelve months of the contract signing. The Company began offering audit services in September 2016, following the acquisition of Opportune IT. As we became more familiar with the changing nature of some audit services engagements, we adjusted the backlog calculation to only include agreements that have clearly definable service periods. The decrease in audit services backlog is primarily due this adjustment.

~~Index to Financial Statements~~

Maintenance and support backlog consists of maintenance agreements for perpetual licenses and/or third-party software or hardware, in each case consisting of signed agreements to purchase such services but that represent future performance for the contracted maintenance and support term. Clients typically prepay maintenance and support fees on an annual basis with some monthly pre-payment arrangements existing. Maintenance and support fees are generally billed 30-60 days prior to the beginning of the maintenance period. The Company does not expect any significant client attrition over the next 12 months outside of the ordinary course of business. Maintenance and support backlog at October 31, 2017 was $18,256,000 as compared to $19,413,000 at October 31, 2016. The decrease in maintenance and support backlog is primarily a result of the sale of our Patient Engagement suite of solutions in the fourth quarter of fiscal 2016.

~~Relating specifically to SaaS-model client agreements signed as of October 31, 2017,~~full valuation allowance the Company expects to generate revenues of $14,242,000 from such SaaS agreements through their respective renewal dates in fiscal years 2017 through 2022. The commencement of revenue recognition for SaaS varies dependingcurrently maintains on the size and complexity of the system, the implementation schedule requested by the client and ultimately the official go-live on the system. Therefore, it is difficult for the Company to accurately predict the revenue it expects to recognize in any particular period. The increase in SaaS backlog is primarily due to a sale of our CDI solution in the fourth quarter of fiscal 2016 and sale of multiple Streamline Health® eValuator™ software contracts in the third quarter of fiscal 2017. The increase in SaaS backlog resulting from these sales was partially offset by the sale of our Patient Engagement suite of solutions in the fourth quarter of fiscal 2016.

~~Additional commentary regarding the average duration of client contracts and risks relating to termination can be found in Part II, Item 1A, “Risk Factors” herein.~~

Termination rights in the Company’s master agreements are generally limited to termination for cause, except for select exceptions. However, there can be no assurance that a client will not cancel all or any portion of an agreement or delay portions of an agreement, as further discussed in Part II, Item 1A, “Risk Factors” herein. Such events could have a material adverse effect on the Company’s ability to recognize amounts and the Company’s financial condition and results of operations.

~~Index to Financial Statements~~

its net deferred tax asset.

Use of Non-GAAP Financial Measures

In order to provide investors with greater insight and allow for a more comprehensive understanding of the information used by management and the Board of Directors in its financial and operational decision-making, the Company has supplemented the ~~Condensed Consolidated Financial Statements~~condensed consolidated financial statements presented on a GAAP basis in this ~~quarterly report on Form 10-Q~~Report with the following non-GAAP financial measures: EBITDA, Adjusted EBITDA ~~Adjusted EBITDA Margin~~ and Adjusted EBITDA ~~per diluted share.~~

Margin.

These non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of Company results as reported under GAAP. The Company compensates for such limitations by relying primarily on our GAAP results and using non-GAAP financial measures only as supplemental data. We also provide a reconciliation of non-GAAP to GAAP measures used. Investors are encouraged to carefully review this reconciliation. In addition, because these non-GAAP measures are not measures of financial performance under GAAP and are susceptible to varying calculations, these measures, as defined by us, may differ from and may not be comparable to similarly titled measures used by other companies.

EBITDA, Adjusted EBITDA, ~~Adjusted EBITDA Margin,~~ and Adjusted EBITDA ~~per diluted share~~

Margin

We define: (i) EBITDA as net earnings (loss) before net interest expense, income tax expense (benefit), depreciation and amortization; (ii) Adjusted EBITDA as net earnings (loss) before net interest expense, income tax expense (benefit), depreciation, amortization, ~~stock-based~~share-based compensation expense, transaction related expenses and other expenses that do not relate to our core ~~operations;~~operations such as severances and impairment charges; and (iii) Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of GAAP net ~~revenue; and (iv) Adjusted EBITDA per diluted share as Adjusted EBITDA divided by adjusted diluted shares outstanding.~~revenue. EBITDA, Adjusted EBITDA ~~Adjusted EBITDA Margin~~ and Adjusted EBITDA ~~per diluted share~~Margin are used to facilitate a comparison of our operating performance on a consistent basis from period to period and provide for a ~~more complete~~supplemental understanding of factors and trends affecting our business than GAAP measures alone. These measures assist management and the ~~board~~Board of Directors, and may be useful to investors in comparing our operating performance consistently over time as they remove the impact of our capital structure (primarily interest charges), asset base (primarily depreciation and amortization), items outside the control of the management team (taxes), and expenses that do not relate to our core operations including: transaction-related expenses (such as professional and advisory services), corporate restructuring expenses (such as severances), and other operating costs that are expected to be non-recurring. Adjusted EBITDA removes the impact of share-based compensation expense, which is another non-cash item. ~~Adjusted EBITDA per diluted share includes incremental shares in the share count that are considered anti-dilutive in a GAAP net loss position.~~

The Board of Directors and management also use these measures (i) as ~~(i)~~ one of the primary methods for planning and forecasting overall expectations and for evaluating, on at least a quarterly and annual basis, actual results against such expectations; and (ii) as a performance evaluation metric in determining achievement of certain executive and associate incentive compensation programs.

Our lender uses a measurement that is similar to the Adjusted EBITDA measurement described herein to assess our operating performance. The lender under our ~~Credit~~Second Amended and Restated Loan Agreement requires delivery of compliance reports certifying compliance with financial covenants, certain of which are based on a measurement that is similar to the Adjusted EBITDA measurement reviewed by our management and Board of Directors.

EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin are not measures of liquidity under GAAP or otherwise and are not alternatives to cash flow from continuing operating activities, despite the ~~advantages~~supplemental information provided by these measures regarding the use and analysis of these measures as mentioned above. EBITDA, Adjusted EBITDA, ~~Adjusted EBITDA Margin,~~ and Adjusted EBITDA ~~per diluted share,~~Margin, as disclosed in this ~~quarterly report on Form 10-Q,~~Report have limitations as analytical tools, and you should not consider these measures in isolation or as a substitute for analysis of our results as reported under GAAP; nor are these measures intended to be measures of liquidity or free cash flow for our discretionary use. Some of the limitations of EBITDA and its variations are:

~~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.

~~Index to Financial Statements~~

	●	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 Second Amended and Restated Loan 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.

Adjusted EBITDA has all the inherent limitations of EBITDA. To properly and prudently evaluate our business, ~~we encourage~~the Company encourages readers to review the GAAP financial statements included elsewhere in this ~~quarterly report on Form 10-Q,~~Report, and not rely on any single financial measure to evaluate our business. We also strongly urge readers to review the reconciliation of these non-GAAP financial measures to the most comparable GAAP measure in this section, along with the ~~Condensed Consolidated Financial Statements~~condensed consolidated financial statements included ~~elsewhere in this quarterly report on Form 10-Q.~~

above.

The following table ~~sets forth a reconciliation of~~reconciles EBITDA and Adjusted EBITDA to net loss ~~a comparable GAAP-based measure, as well as Adjusted EBITDA per diluted share to loss per diluted share.~~from continuing operations for the three and nine months ended October 31, 2023 (amounts in thousands). All of the items included in the reconciliation from EBITDA and Adjusted EBITDA to net loss ~~and the related per share calculations~~ are either recurring non-cash items, or items that management does not consider in assessing our on-going operating performance. In the case of the non-cash items, management believes that investors may find it useful to assess ~~our~~the Company’s comparative operating performance because the measures without such items are less susceptible to variances in actual performance resulting from depreciation, amortization and other expenses that do not relate to our core operations and are more reflective of other factors that affect operating performance. In the case of items that do not relate to our core operations, management believes that investors may find it useful to assess our operating performance if the measures are presented without these items because their financial impact does not reflect ongoing operating performance.

Three Months Ended Nine Months Ended
In thousands, except per share data October 31, 2017 October 31, 2016 October 31, 2017 October 31, 2016
Net earnings (loss) $ 3
$ (1,930 ) $ (3,137 ) $ (4,142 )
Interest expense 113
99
361
381
Income tax expense 3
2
8
5
Depreciation 193
265
596
895
Amortization of capitalized software development costs 431
720
1,574
2,146
Amortization of intangible assets 256
325
922
976
Amortization of other costs 51
60
177
140
EBITDA 1,050
(459 ) 501
401
Share-based compensation expense 290
433
845
1,343
(Gain) loss on disposal of fixed assets (14 ) —
(15 ) 1
Associate severance and other costs relating to transactions or corporate restructuring —
89
—
199
Non-cash valuation adjustments to assets and liabilities 188
62
229
84
Transaction related professional fees, advisory fees, and other internal direct costs —
103
—
358
Adjusted EBITDA $ 1,514
$ 228
$ 1,560
$ 2,386
Adjusted EBITDA margin (1) 24 % 3 % 9 % 12 %

Earnings (loss) per share — diluted $ —
$ (0.10 ) $ (0.16 ) $ (0.26 )
Adjusted EBITDA per adjusted diluted share (2) $ 0.07
$ 0.01
$ 0.07
$ 0.10
Diluted weighted average shares 23,068,423
19,645,521
19,838,691
19,477,538
Includable incremental shares — adjusted EBITDA (3) —
3,340,390
3,242,413
3,322,710
Adjusted diluted shares 23,068,423
22,985,911
23,081,104
22,800,248

~~_______________~~

	Three Months Ended						Nine Months Ended
In thousands, except per share data	October 31, 2023			October 31, 2022			October 31, 2023			October 31, 2022
Adjusted EBITDA Reconciliation
Net Loss	$	(11,911	)	$	(3,138	)	$	(17,327	)	$	(9,197	)
Interest expense		266			198			781			519
Income tax (benefit) expense		(120	)		9			(59	)		22
Depreciation and amortization		1,105			1,053			3,186			3,212
EBITDA	$	(10,660	)	$	(1,878	)	$	(13,419	)	$	(5,444	)
Share-based compensation expense		517			555			1,626			1,212
Impairment of goodwill		9,813			—			9,813			—
Impairment of long-lived assets		963			—			963			—
Non-cash valuation adjustments		(1,182	)		(163	)		(1,905	)		(188	)
Acquisition-related costs, severance, and transaction-related bonuses		213			387			389			1,010
Restructuring charges		749			—			749			—
Other non-recurring charges		—			(73	)		(33	)		(140	)
Adjusted EBITDA	$	413		$	(1,172	)	$	(1,817	)	$	(3,550	)
Adjusted EBITDA margin (1)		7	%		(19	)%		(11	)%		(20	)%

(1)
~~(1)~~	Adjusted EBITDA as a percentage of GAAP net ~~revenues.~~revenue.


~~(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.~~28


~~(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.

~~Index to Financial Statements~~

Application of Critical Accounting Policies

The preparation of financial statements in conformity with GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenue and expenses during the reporting period. Management considers an accounting policy to be critical if the accounting policy requires management to make particularly difficult, subjective, or complex judgments about matters that are inherently uncertain. A summary of our critical accounting policies is included in Note 2 to our consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended January 31, ~~2017. There~~2023. Except as discussed below, there have been no material changes to the critical accounting policies disclosed in our Annual Report on Form 10-K for the fiscal year ended January 31, ~~2017.~~

2023.

Goodwill and Intangible Assets

The Company completed its annual goodwill assessment during the fourth quarter of fiscal year 2022. We determined, as of January 31, 2023, the Company has one reporting unit for purposes of evaluation of goodwill as a result of the Company’s consolidation of operations of Streamline and Avelead at the end of fiscal year 2022. We used a weighted sum of income and market approaches to determine the fair value of the Company’s goodwill. Under the income approach, the fair value was based on the present value of the estimated debt-free, discounted cash flows that the reporting unit is expected to generate. Cash flow projections were based on management’s estimates of revenue growth rates and operating margins, taking into consideration industry and market conditions. The discount rate was based on the weighted average cost of capital appropriate for the Company.

In the third quarter of 2023, the Company received a notice from a significant SaaS client of its intent not to renew its contract following the expiration of the current term on December 31, 2023. The Company also announced it was accelerating a planned strategic restructuring to allow it to reduce costs while continuing to focus on expanding its SaaS operations. These announcements triggered a significant decrease in the Company’s share price. Based on these factors, we determined there were indicators that the goodwill may be impaired, and accordingly, performed an interim goodwill impairment test as of October 31, 2023. The results of the impairment test showed that the fair value of the reporting unit was lower than the carrying value, resulting in a $9.8 million goodwill impairment charge. As of October 31, 2023, the remaining goodwill balance of the Company after recording the goodwill impairment charge was $13 million.

Also, during the third quarter of 2023, due to the factors discussed above, we assessed whether the carrying amounts of the Company’s long-lived assets may not be recoverable and, therefore, impaired. Our assessment resulted in an impairment charge of $1 million, primarily related to client relationships related to a subset of consulting related services the Company expects to not be a core part of its business going forward. The charge was calculated using the asset’s salvage value as it was considered no longer held for use.

The fair value of our reporting unit and intangible assets is subjective in nature and involves the use of significant estimates and assumptions, particularly related to future operating results and cash flows. These estimates and assumptions include, but are not limited to, revenue growth rates and operating margins used to calculate projected future cash flows, risk-adjusted discount rates, and future economic and market conditions. If we do not achieve our forecasts or the Company’s share price declines further, it is possible the goodwill of the Company could be deemed to be impaired again in a future period.

The risks and potential impacts on the fair value of our goodwill and long-lived assets are included in our risk factor disclosures referenced under “Item 1A. Risk Factors” in the Company’s Quarterly Report on Form 10-Q for the quarter ended October 31, 2023.

Liquidity, ~~and~~ Capital Resources,

~~Our~~ and Going Concern

The Company’s liquidity is dependent upon numerous factors including: (i) the timing and amount of ~~revenues~~revenue and collection of contractual amounts from ~~clients,~~customers, (ii) amounts invested in research and development and capital expenditures, and (iii) the level of operating expenses, all of which can vary significantly from ~~quarter-to-quarter. Our~~quarter to quarter. The Company’s primary cash requirements include regular payment of payroll and other business expenses, principal and interest payments on debt and capital ~~expenditures. Capital~~ expenditures, which generally include computer ~~hardware and computer software to support internal development efforts or infrastructure in the SaaS data center.~~hardware. Operations are funded with cash generated by operations and borrowings under credit facilities. ~~The Company believes that cash flows from operations and available credit facilities are adequate to fund current obligations for~~Information concerning the ~~next twelve months.~~Company’s assessment as a going concern is included in Note 1 – Basis of Presentation in our unaudited condensed consolidated financial statements included in Part I, Item I, “Financial Statements”. Cash and cash equivalent balances at October 31, ~~2017~~2023 and January 31, ~~2017~~2023 were ~~$1,892,000~~approximately $2,557,000 and ~~$5,654,000,~~$6,598,000, respectively. The decrease in cash during the current fiscal period was primarily the result of significant payments made towards our debt and interest thereon, as well as payroll and accounts payable. Continued expansion may require

On October 24, 2022, the Company entered into purchase agreements with certain investors pursuant to ~~take on additional debt or raise capital through issuance of equities, or a combination of both. There can be no assurance~~which the Company ~~will be able~~agreed to ~~raise~~issue and sell in a registered direct offering (the “2022 Offering”) an aggregate of 6,299,989 shares of common stock, par value $0.01 per share, at a purchase price of $1.32 per share. The gross proceeds to the ~~capital required~~Company from the 2022 Offering were approximately $8.3 million. The Company intends to ~~fund further expansion.~~

use the proceeds of the 2022 Offering for general corporate purposes. The 2022 Offering closed on October 26, 2022.

The Company has liquidity through the ~~Credit~~Second Amended and Restated Loan Agreement described in more detail in Note 5 to– Debt in our condensed consolidated financial statements included herein. The Company’s primary operating subsidiary has a $5,000,000 revolving line of credit that has not been drawn upon as of the date of this report. In order to draw upon the revolving line of credit, the Company’s primary operating subsidiary must comply with customary financial covenants, including the requirement that the Company maintain minimum liquidity of at least (i) $5,000,000 through January 31, 2018, (ii) $4,000,000 from February 1, 2018 through and including January 31, 2019, and (iii) $3,000,000 from February 1, 2019 through and including the maturity date of the credit facility. Pursuant to the Credit Agreement’s definition, the liquidity of the Company’s primary operating subsidiary as of October 31, 2017 was $6,892,000, which satisfies the minimum liquidity financial covenant in the Credit Agreement.

The Credit Agreement also requires the Company to achieve certain minimum EBITDA levels, calculated pursuant to the Credit Agreement and measured on a quarter-end basis, of at least the required amounts in the relevant table set forth in Note 5 to ourunaudited condensed consolidated financial statements included in Part I, ~~Item1 herein~~Item I, “Financial Statements”. The Company has a term loan facility with an initial, maximum, principal amount of $10,000,000. Amounts outstanding under the Second Amended and Restated Loan Agreement bear interest at a per annum rate equal to the Prime Rate (as published in The Wall Street Journal) plus 1.5%, with a Prime “floor” rate of 3.25%. The Second Modification amended the covenants of the Second Amended and Restated Loan Agreement. Refer to Note 5 – Debt for information regarding the applicable period set forth therein. Our lender uses a measurement that is similar to Adjusted EBITDA, a non-GAAP financial measure described above. The required minimum EBITDA level for the four-quarter period endedSecond Modification. At October 31, ~~2017~~2023, there was ~~$(1,000,000).~~

$500,000 outstanding on the revolving line of credit.

The Second Amended and Restated Loan Agreement includes customary financial covenants, including the requirements that the Company achieve certain EBITDA levels and fixed coverage ratios and maintain certain cash balances and certain recurring revenue levels. The Second Amended and Restated Loan Agreement also includes customary negative covenants, subject to exceptions, which limit transfers, capital expenditures, indebtedness, certain liens, investments, acquisitions, dispositions of assets, restricted payments, and the business activities of the Company, as well as customary representations and warranties, affirmative covenants and events of default, including cross defaults and a change of control default. As of October 31, 2023, the Company was in compliance with all debt covenants under the ~~applicable loan covenants at October 31, 2017. Based upon~~Second Amended and Restated Loan Agreement. The Company is forecasted to miss certain future covenants. See Note 1 – Basis of Presentation for detail regarding the ~~borrowing base formula set forth in the Credit Agreement, as of October 31, 2017, the Company had access to the full amount of the $5,000,000 revolving line of credit.~~

The Credit Agreement expressly permits transactions between affiliates that are parties to the Credit Agreement, which includes the Company and its primary operating subsidiary, including loans made between such affiliate loan parties. However, the Credit Agreement prohibits the Company and its subsidiary from declaring or paying any dividend or making any other payment or distribution, directly or indirectly, on account of equity interests issued by the Company if such equity interests: (a) mature or are mandatorily redeemable pursuant to a sinking fund obligation or otherwise (exceptCompany’s assessment as a result of a change of control or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or asset sale event shall be subject to the prior repayment in full of the loans and all other obligations that are accrued and payable upon the termination of the Credit Agreement), (b) are redeemable at the option of the holder thereof, in whole or in part, (c) provide for the scheduled payments of dividends in cash, or (d) are or become convertible into or exchangeable for indebtedness or any other equity interests that would constitute disqualified equity interests pursuant to clauses (a) through (c) hereof, in each case, prior to the date that is 180 days after the maturity date of the Credit Agreement.Going Concern.

Significant cash obligations

~~Index to Financial Statements~~

(in thousands) October 31, 2017 January 31, 2017
Term loans (1) $ 4,630
$ 5,539
Capital leases (1) —
91
Royalty liability (2) 2,456
2,351

~~_______________~~

(in thousands)	October 31, 2023		January 31, 2023
Term loan (1)	$	9,292	$	9,714
Acquisition earnout liability (2)		1,833		3,738
Restructuring severance (3)		731		—
Line of credit (4)		500		—

(1)
~~(1)~~	~~See~~Term loan balance is reported net of deferred financing costs of $78,000 and $105,000 as of October 31, 2023 and January 31, 2023, respectively, and financing cost payable of $120,000 and $69,000 as of October 31, 2023 and January 31, 2022, respectively. Refer to Note 5 ~~to the condensed consolidated financial statements~~– Debt for additional information.

	The term loan payable as of October 31, 2023 and January 31, 2023 was bank term debt under the Second Amended and Restated Loan Agreement.
~~(2)~~	~~See~~
(2)	The fair value of the acquisition earnout liability is based upon a probability-weighted discounted cash flow as of October 31, 2023 and January 31, 2023, respectively. The second year earnout is expected to be paid during the quarterly period ending January 31, 2024, subject to a dispute and resolution process. Refer to Note 3 — Business Combination.

(3)	Refer to the ~~condensed consolidated financial statements~~“Restructuring” section of Note 2 – Summary of Significant Accounting Policies. The outstanding severance payable balance was related to the recent restructuring.

(4)	Refer to Note 5 – Debt for additional information. The outstanding balance of the line of credit as of October 31, 2023 was related to the Second Amended and Restated Loan Agreement.

Operating cash flow activities

(in thousands) Nine Months Ended
October 31, 2017 October 31, 2016
Net loss $ (3,137 ) $ (4,142 )
Non-cash adjustments to net loss 4,564
5,775
Cash impact of changes in assets and liabilities (2,755 ) (2,876 )
Operating cash flow $ (1,328 ) $ (1,243 )

	Nine months Ended
(in thousands)	October 31, 2023			October 31, 2022
Net loss from continuing operations	$	(17,327	)	$	(9,197	)
Non-cash adjustments to net loss		13,657			4,317
Cash impact of changes in assets and liabilities		1,509			159
Net cash used in operating activities	$	(2,161	)	$	(4,721	)

The ~~increase in~~ net cash used byin operating activities is due to lower collections in the nine-month period ended October 31, 2017 over the prior comparable period, primarily attributable to a larger perpetual license sale of our abstracting solution in the second quarter of fiscal 2016.

Our typical clients are well-established hospitals, medical facilities and major health information system companies that resell our solutions, which generally have had good credit and payment histories for the industry. However, some healthcare organizations have recently experienced significant operating losses as a result of limits on third-party reimbursements from insurance companies and governmental entities. Agreements with clients often involve significant amounts and contract terms typically require clients to make progress payments. Adverse economic events, as well as uncertainty in the credit markets, may adversely affect the liquidity for some of our clients.

~~Investing cash flow activities~~

(in thousands) Nine Months Ended
October 31, 2017 October 31, 2016
Purchases of property and equipment $ (25 ) $ (501 )
Capitalized software development costs (1,337 ) (1,421 )
Payments for acquisitions —
(1,400 )
Investing cash flow $ (1,362 ) $ (3,322 )

~~Cash used for investing activities was higher in~~improved during the nine months ended October 31, ~~2016~~2023 compared towith the ~~current~~prior year ~~period, primarily~~comparable period. This improvement was a higher cash impact of changes in operating assets and liabilities, driven by a decrease in accounts and contract receivables as a result of the ~~acquisition~~timing of ~~Opportune IT~~cash payments received, and a decrease in ~~September 2016.~~both deferred revenue and accrued expense for the period ended October 31, 2023. Both the net loss from continuing operations and the non-cash adjustments to net loss for the nine months ended October 31, 2023 include impairment of long-lived assets of $963,000 and impairment of goodwill of $9,813,000.

Investing cash flow activities

	Nine months Ended
(in thousands)	October 31, 2023			October 31, 2022
Purchases of property and equipment	$	(47	)	$	(10	)
Capitalized software development costs		(1,562	)		(1,435	)
Net cash used in investing activities	$	(1,609	)	$	(1,445	)

The cash used in investing activities for the nine months ended October 31, 2023 and October 31, 2022, includes capitalized software development costs. Capitalization of costs is expected to begin to decrease for the remainder of fiscal year 2023 as a result of the recently announced strategic restructuring. See discussion and analysis in “Research and development costs” above.

Financing cash flow activities

(in thousands) Nine Months Ended
October 31, 2017 October 31, 2016
Principal repayments on term loan $ (962 ) $ (2,244 )
Principal payments on capital lease obligations (91 ) (536 )
Return of shares of common stock in connection with the vesting or exercise of equity incentive awards (42 ) (12 )
Proceeds from the exercise of stock options and stock purchase plans 24
15
Financing cash flow $ (1,071 ) $ (2,777 )

	Nine months Ended
(in thousands)	October 31, 2023			October 31, 2022
Repayment of term loan payable	$	(500	)	$	(125	)
Proceeds from line of credit		500			—
Proceeds from issuance of common stock		—			8,316
Payments for costs directly attributable to the issuance of common stock		—			(52	)
Payments related to settlement of employee share-based awards	$	(271	)	$	(165	)
Other	$	—		$	6
Net cash (used in) provided by financing activities	$	(271	)	$	7,980

The ~~decrease in~~ cash used in financing activities in the nine months ended October 31, ~~2017 over~~2023, and October 31, 2022, includes principal payments on the ~~prior year period~~term loan related to the Second Amended and Restated Loan Agreement and payments related to settlement of employee share-based awards. The Company received proceeds from the line of credit related to the Second Amended and Restated Loan Agreement for the nine months ended October 31, 2023. The cash provided by financing activities in the nine months ended October 31, 2022 was ~~primarily the~~a result of ~~higher prepayments towards our term loan in fiscal 2016, as well as~~ the ~~termination~~2022 Offering of ~~two capital leases, one during~~ the ~~third quarter of fiscal 2016 and another in the third quarter of fiscal 2017.~~

~~Index to Financial Statements~~

Company’s common stock, which closed on October 26, 2022.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a “smaller reporting company,” as defined by Item 10 of Regulation S-K, we are not required to provide this information.

Item 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

~~The Company maintains disclosure controls~~

Our President and procedures that are designed to ensure that there is reasonable assurance that the information required to be disclosed in the Company’s reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer (who serves as our principal executive officer) and our Interim Chief Financial Officer (who serves as ~~appropriate, to allow timely decisions regarding required disclosure based on~~our principal financial officer) have evaluated the definition of “disclosure controls and procedures” in Exchange Act Rules 13a-15(e) and 15d-15(e). In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. In addition, projections of any evaluation of effectiveness of our disclosure controls and procedures ~~to future periods are subject to the risk~~(as defined in Exchange Act Rule 13a-15(e) as of October 31, 2023. Based on that ~~controls or procedures may become inadequate because of changes in conditions, or that the degree of compliance with the controls or procedures may deteriorate.~~

~~As of the end of the period covered by this report, an~~ evaluation, ~~was performed under the supervision~~our President and ~~with the participation of the Company’s senior management, including the~~ Chief Executive Officer ~~(principal executive officer)~~ and Chief Financial Officer (principal financial officer), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures to provide reasonable assurance of achieving the desired objectives of the disclosure controls and procedures. Based on such evaluation, our ~~Chief Executive Officer and~~Interim Chief Financial Officer have concluded that ~~as of the end of the period covered by this report,~~ our disclosure controls and procedures were ~~effective.~~

effective as of October 31, 2023.

Changes in Internal Control over Financial Reporting

There were no ~~material~~ changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the ~~most recently completed fiscal~~ quarter ended October 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

~~Index to Financial Statements~~

PART II. OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

We are, from time to time, a party to various legal proceedings and claims, which arise in the ordinary course of business. We are not aware of any legal matters that could have a material adverse effect on ~~the Company’s~~our consolidated results of operations, financial position, or cash flows.

Item 1A. RISK FACTORS

An investment in our common stock or other securities involves a number of risks. You should carefully consider each of the risks described ~~below before deciding to invest~~ in our ~~common stock or other securities.~~Annual Report on Form 10-K for the fiscal year ended January 31, 2023 which Annual Report includes a detailed discussion of the Company’s risk factors. If any of the ~~following~~ risks ~~develops~~develop into actual events, our business, financial condition, or results of operations could be negatively affected, the market price of our common stock or other securities could decline, and you may lose all or part of your investment.

~~Risks Relating to Our Business~~

~~Our sales~~

Except as described below, there have been ~~concentrated in a small number of clients.~~

Our revenues have been concentrated in a relatively small number of large clients, and we have historically derived a substantial percentage of our total revenues from a few clients. For the fiscal years ended January 31, 2017 and 2016, our five largest clients accounted for 30% and 28% of our total revenues, respectively. If one or more clients terminate all or any portion of a master agreement, delay installations or if we fail to procure additional agreements, there could be ano material ~~adverse effect on our business, financial condition and results of operations.~~

~~A significant increase in new SaaS contracts could reduce near term profitability and require a significant cash outlay, which could adversely affect near term cash flow and financial flexibility.~~

If new or existing clients purchase significant amounts of our SaaS services, we may have to expend a significant amount of initial setup costs and time before those new clients are able to begin using such services, and we cannot begin to recognize revenues from those SaaS agreements until the commencement of such services. Accordingly, we anticipate that our near term cash flow, revenue and profitability may be adversely affected by significant incremental setup costs from new SaaS clients that would not be offset by revenue until new SaaS clients go into production. While we anticipate long-term growth in profitability through increases in recurring SaaS subscription fees and significantly improved profit visibility, any inability to adequately finance setup costs for new SaaS solutions could result in the failure to put new SaaS solutions into production, and could have a material adverse effect on our liquidity, financial position and results of operations. In addition, this near term cash flow demand could adversely impact our financial flexibility and cause us to forego otherwise attractive business opportunities or investments.

Our coding audit services and associated software and technologies represent a new market for the Company, and we may not see the anticipated market interest or growth due to being a new player in the industry.

The Company is currently investing in new software-based technologies relating to high automation and machine-based analytics regarding a client’s coding audit process. These technologies have previously been used solely for internal purposes and have not been commercialized. The return on this investment requires that the product developments are completed in a timely and cost-effective manner, there is general interest in the marketplace (for both existing and future clients) for this technology, the demand for the product generates sufficient revenue in light of the development costs and that the Company is able to execute and successful product launch for these technologies. If the Company is unable to meet these requirements when launching these technologies, or if there is a delay in the launch process, the Company may not see an increase in revenue to offset the current development costs or otherwise translate to added growth and revenue for the Company.

~~Clients may exercise termination rights within their contracts, which may cause uncertainty in anticipated and future revenue streams.~~

The Company generally does not allow for termination of a client’s agreement except at the end of the agreed upon term or for cause. However, certain of the Company’s client contracts provide that the client may terminate the contract without cause prior to the end of the term of the agreement by providing written notice, sometimes with relatively short notice periods. Furthermore, there can be no assurance that a client will not cancel all or any portion of an agreement, even without an express early termination right. And, the Company may face additional costs or hardships collecting on amounts owed if a client terminates an agreement without such a right. Whether resulting from termination for cause or the limited termination for

~~Index to Financial Statements~~

convenience rights discussed above, the existence of contractual relationships with these clients is not an assurance that we will continue to provide services for our clients through the entire term of their respective agreements. If clients representing a significant portion of our revenue terminated their agreements unexpectedly, we may not, in the short-term, be able to replace the revenue and income from such contracts and this would have a material adverse effect on the Company’s business, financial condition, results of operations and cash flows. In addition, client contract terminations could harm our reputation within the industry, especially any termination for cause, which could negatively impact our ability to obtain new clients.

~~Changes in healthcare regulations impacting coding, payers and other aspects of the healthcare regulatory cycle could have substantial impact on our financial performance, growth and operating costs.~~

Our sales and profitability depend, in part, on the extent to which coverage of and reimbursement for medical care provided is available from governmental health programs, private health insurers, managed care plans and other third-party payors. Unanticipated regulatory changes could materially impact the need for and/or value of our solutions. For example, if governmental or other third-party payors materially reduce reimbursement rates or fail to reimburse our clients adequately, our clients may suffer adverse financial consequences. Changes in regulations affecting the healthcare industry, such as any increased regulation by governmental agencies of the purchase and sale of medical products, or restrictions on permissible discounts and other financial arrangements, could also directly impact the capabilities our solutions and services provide and the pricing arrangements we are required to offer to be competitive in the market. Similarly, the U.S. Congress may adopt legislation that may change, override, conflict with or preempt the currently existing regulations and which could restrict the ability of clients to obtain, use or disseminate patient health information and/or impact the value of the functionality our products and services provide.

These situations would, in turn, reduce the demand for our solutions or services and/or the ability for a client to purchase our solutions or services. This could have a material impact on our financial performance. In addition, the speed with which the Company can respond to and address any such changes when compared with the response of other companies in the same market (especially companies who may accurately anticipate the evolving healthcare industry structure and identify unmet needs) are important competitive factors. If the Company is not able to address the modifications in a timely manner compared with our competition, that may further reduce demand for our solutions and services.

~~The potential impact on us of new or changes in existing federal, state and local regulations governing healthcare information could be substantial.~~

Healthcare regulations issued to date have not had a material adverse effect on our business. However, we cannot predict the potential impact of new or revised regulations that have not yet been released or made final, or any other regulations that might be adopted. The U.S. Congress may adopt legislation that may change, override, conflict with or preempt the currently existing regulations and which could restrict the ability of clients to obtain, use or disseminate patient health information. Although the features and architecture of our existing solutions can be modified, it may be difficult to address the changing regulation of healthcare information.

The healthcare industry is highly regulated. Any material changes in the political, economic or regulatory healthcare environment that affect the group purchasing business or the purchasing practices and operations of healthcare organizations, or that lead to consolidation in the healthcare industry, could require us to modify our services or reduce the funds available to providers to purchase our solutions and services.

Our business, financial condition and results of operations depend upon conditions affecting the healthcare industry generally and hospitals and health systems particularly. Our ability to grow will depend upon the economic environment of the healthcare industry, as well as our ability to increase the number of solutions that we sell to our clients. The healthcare industry is highly regulated and is subject to changing political, economic and regulatory influences. Factors such as changes in reimbursement policies for healthcare expenses, consolidation in the healthcare industry, regulation, litigation and general economic conditions affect the purchasing practices, operation and, ultimately, the operating funds of healthcare organizations. In particular, changes in regulations affecting the healthcare industry, such as any increased regulation by governmental agencies of the purchase and sale of medical products, or restrictions on permissible discounts and other financial arrangements, could require us to make unplanned modifications to our solutions and services, or result in delays or cancellations of orders or reduce funds and demand for our solutions and services.

Our clients derive a substantial portion of their revenue from third-party private and governmental payors, including through Medicare, Medicaid and other government-sponsored programs. Our sales and profitability depend, in part, on the extent to which coverage of and reimbursement for medical care provided is available from governmental health programs, private health insurers, managed care plans and other third-party payors. If governmental or other third-party payors materially

~~Index to Financial Statements~~

reduce reimbursement rates or fail to reimburse our clients adequately, our clients may suffer adverse financial consequences, which in turn, may reduce the demand for and ability to purchase our solutions or services.

~~We face significant competition, including from companies with significantly greater resources.~~

We currently compete with many other companies for the licensing of similar software solutions and related services. Several companies historically have dominated the clinical information systems software market and several of these companies have either acquired, developed or are developing their own content management, analytics and coding/clinical documentation improvement solutions, as well as the resultant workflow technologies. The industry is undergoing consolidation and realignment as companies position themselves to compete more effectively. Many of these companies are larger than us and have significantly more resources to invest in their business. In addition, information and document management companies serving other industries may enter the market. Suppliers and companies with whom we may establish strategic alliances also may compete with us. Such companies and vendors may either individually, or by forming alliances excluding us, place bids for large agreements in competition with us. A decision on the part of any of these competitors to focus additional resources in any one of our three solutions stacks (content management, analytics and coding/clinical documentation improvement), workflow technologies and other markets addressed by us could have a material adverse effect on us.

~~The healthcare industry is evolving rapidly, which may make it more difficult for us to be competitive in the future.~~

The U.S. healthcare system is under intense pressure to improve in many areas, including modernization, universal access and controlling skyrocketing costs of care. We believe that the principal competitive factors in our market are client recommendations and references, company reputation, system reliability, system features and functionality (including ease of use), technological advancements, client service and support, breadth and quality of the systems, the potential for enhancements and future compatible solutions, the effectiveness of marketing and sales efforts, price and the size and perceived financial stability of the vendor. In addition, we believe that the speed with which companies in our market can anticipate the evolving healthcare industry structure and identify unmet needs is an important competitive factor. If we are unable to keep pace with changing conditions and new developments, we will not be able to compete successfully in the future against existing or potential competitors.

~~Rapid technology changes and short product life cycles could harm our business.~~

The market for our solutions and services is characterized by rapidly changing technologies, regulatory requirements, evolving industry standards and new product introductions and enhancements that may render existing solutions obsolete or less competitive. As a result, our position in the healthcare information technology market could change rapidly due to unforeseen changes in the features and functions of competing products, as well as the pricing models for such products. Our future success will depend, in part, upon our ability to enhance our existing solutions and services and to develop and introduce new solutions and services to meet changing requirements. Moreover, competitors may develop competitive products that could adversely affect our operating results. We need to maintain an ongoing research and development program to continue to develop new solutions and apply new technologies to our existing solutions but may not have sufficient funds with which to undertake such required research and development. If we are not able to foresee changes or to react in a timely manner to such developments, we may experience a material, adverse impact on our business, operating results and financial condition.

~~Our intellectual property rights are valuable, and any inability to protect them could reduce the value of our solutions and services.~~

Our intellectual property, which represents an important asset to us, has some protection against infringement through copyright and trademark law. We generally have little patent protection on our software. We rely upon license agreements, employment agreements, confidentiality agreements, nondisclosure agreements and similar agreements to maintain the confidentiality of our proprietary information and trade secrets. Notwithstanding these precautions, others may copy, reverse engineer or independently design technology similar to our solutions. If we fail to protect adequately our intellectual property through trademarks and copyrights, license agreements, employment agreements, confidentiality agreements, nondisclosure agreements or similar agreements, our intellectual property rights may be misappropriated by others, invalidated or challenged, and our competitors could duplicate our technology or may otherwise limit any competitive technology advantage we may have. It may be necessary to litigate to enforce or defend our proprietary technology or to determine the validity of the intellectual property rights of others. Any litigation, successful or unsuccessful, may result in substantial cost and require significant attention by management and technical personnel.

Due to the rapid pace of technological change, we believe our future success is likely to depend upon continued innovation, technical expertise, marketing skills and client support and services rather than on legal protection of our

~~Index to Financial Statements~~

~~intellectual property rights. However, we have aggressively asserted our intellectual property rights when necessary and intend to do so in the future.~~

~~We could be subjected to claims of intellectual property infringement that could be expensive to defend.~~

While we do not believe that our solutions and services infringe upon the intellectual property rights of third parties, the potential for intellectual property infringement claims continually increases as the number of software patents and copyrighted and trademarked materials continues to rapidly expand. Any claim for intellectual property right infringement, even if not meritorious, could be expensive to defend. If we were held liable for infringing third-party intellectual property rights, we could incur substantial damage awards, and potentially be required to cease using the technology, produce non-infringing technology or obtain a license to use such technology. Such potential liabilities or increased costs could be material to us.

Over the last several years, we have completed a number of acquisitions and may undertake additional acquisitions in the future. Any failure to adequately integrate past and future acquisitions into our business could have a material adverse effect on us.

~~Over the last several years, we have completed several acquisitions of businesses through asset and stock purchases. We expect that we will make additional acquisitions in the future.~~

~~Acquisitions involve a number of risks, including, but not limited to:~~

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.~~

If we fail to successfully integrate acquired businesses or fail to implement our business strategies with respect to acquisitions, we may not be able to achieve projected results or support the amount of consideration paid for such acquired businesses, which could have an adverse effect on our business and financial condition.

Finally, if we finance acquisitions by issuing equity or convertible or other debt securities, our existing stockholders may be diluted, or we could face constraints related to the terms of and repayment obligations related to the incurrence of indebtedness. This could adversely affect the market price of our securities.

~~Third-party products are essential to our software.~~

Our software incorporates software licensed from various vendors into our proprietary software. In addition, third-party, stand-alone software is required to operate some of our proprietary software modules. The loss of the ability to use these third-party products, or ability to obtain substitute third-party software at comparable prices, could have a material adverse effect on our ability to license our software.

~~Our solutions may not be error-free and could result in claims of breach of contract and liabilities.~~

~~Index to Financial Statements~~

Our solutions are very complex and may not be error-free, especially when first released. Although we perform extensive testing, failure of any solution to operate in accordance with its specifications and documentation could constitute a breach of the license agreement and require us to correct the deficiency. If such deficiency is not corrected within the agreed-upon contractual limitations on liability and cannot be corrected in a timely manner, it could constitute a material breach of a contract allowing the termination thereof and possibly subjecting us to liability. Also, we sometimes indemnify our clients against third-party infringement claims. If such claims are made, even if they are without merit, they could be expensive to defend. Our license and SaaS agreements generally limit our liability arising from these types of claims, but such limits may not be enforceable in some jurisdictions or under some circumstances. A significant uninsured or under-insured judgment against us could have a material adverse impact on us.

~~We could be liable to third parties from the use of our solutions.~~

Our solutions provide access to patient information used by physicians and other medical personnel in providing medical care. The medical care provided by physicians and other medical personnel are subject to numerous medical malpractice and other claims. We attempt to limit any potential liability of ours to clients by limiting the warranties on our solutions in our agreements with our clients (i.e., healthcare providers). However, such agreements do not protect us from third-party claims by patients who may seek damages from any or all persons or entities connected to the process of delivering patient care. We maintain insurance, which provides limited protection from such claims, if such claims result in liability to us. Although no such claims have been brought against us to date regarding injuries related to the use of our solutions, such claims may be made in the future. A significant uninsured or under-insured judgment against us could have a material adverse impact on us.

~~Our SaaS and support services could experience interruptions.~~

We provide SaaS for many clients, including the storage of critical patient, financial and administrative data. In addition, we provide support services to clients through our client support organization. We have redundancies, such as backup generators, redundant telecommunications lines and backup facilities built into our operations to prevent disruptions. However, complete failure of all generators, impairment of all telecommunications lines or severe casualty damage to the primary building or equipment inside the primary building housing our hosting center or client support facilities could cause a temporary disruption in operations and adversely affect clients who depend on the application hosting services. Any interruption in operations at our data center or client support facility could cause us to lose existing clients, impede our ability to obtain new clients, result in revenue loss, cause potential liability to our clients and increase our operating costs.

~~Our SaaS solutions are provided over an internet connection. Any breach of security or confidentiality of protected health information could expose us to significant expense and harm our reputation.~~

We provide remote SaaS solutions for clients, including the storage of critical patient, financial and administrative data. We have security measures in place to prevent or detect misappropriation of protected health information. We must maintain facility and systems security measures to preserve the confidentiality of data belonging to clients, as well as their patients, that resides on computer equipment in our data center, which we handle via application hosting services, or that is otherwise in our possession. Notwithstanding efforts undertaken to protect data, it can be vulnerable to infiltration as well as unintentional lapse. If confidential information is compromised, we could face claims for contract breach, penalties and other liabilities for violation of applicable laws or regulations, significant costs for remediation and re-engineering to prevent future occurrences and serious harm to our reputation.

~~The loss of key personnel could adversely affect our business.~~

Our success depends, to a significant degree, on our management, sales force and technical personnel. We must recruit, motivate and retain highly skilled managers, sales, consulting and technical personnel, including solution programmers, database specialists, consultants and system architects who have the requisite expertise in the technical environments in which our solutions operate. Competition for such technical expertise is intense. Our failure to attract and retain qualified personnel could have a material adverse effect on us.

~~Our future success depends upon our ability to grow, and if we are unable to manage our growth effectively, we may incur unexpected expenses and be unable to meet our clients’ requirements.~~

We will need to expand our operations if we successfully achieve greater demand for our products and services. We cannot be certain that our systems, procedures, controls and human resources will be adequate to support expansion of our operations. Our future operating results will depend on the ability of our officers and employees to manage changing business conditions and to implement and improve our technical, administrative, financial control and reporting systems. We may not be able to expand and upgrade our systems and infrastructure to accommodate these increases. Difficulties in managing any future

~~Index to Financial Statements~~

growth, including as a result of integrating any prior or future acquisition with our existing businesses, could cause us to incur unexpected expenses or render us unable to meet our clients’ requirements, and consequently have a significant negative impact on our business, financial condition and operating results.

~~We may not have access to sufficient or cost-efficient capital to support our growth, execute our business plans and remain competitive in our markets.~~

As our operations grow and as we implement our business strategies, we expect to use both internal and external sources of capital. In addition to cash flow from normal operations, we may need additional capital in the form of debt or equity to operate and support our growth, execute our business plans and remain competitive in our markets. We may have no or limited availability to such external capital, in which case our future prospects may be materially impaired. Furthermore, we may not be able to access external sources of capital on reasonable or favorable terms. Our business operations could be subject to both financial and operational covenants that may limit the activities we may undertake, even if we believe they would benefit our company.

Potential disruptions in the credit markets may adversely affect our business, including the availability and cost of short-term funds for liquidity requirements and our ability to meet long-term commitments, which could adversely affect our results of operations, cash flows and financial condition.

If internally generated funds are not available from operations, we may be required to rely on the banking and credit markets to meet our financial commitments and short-term liquidity needs. Our access to funds under our revolving credit facility or pursuant to arrangements with other financial institutions is dependent on the financial institution's ability to meet funding commitments. Financial institutions may not be able to meet their funding commitments if they experience shortages of capital and liquidity or if they experience high volumes of borrowing requests from other borrowers within a short period of time.

We must maintain compliance with the terms of our existing credit facilities or receive a waiver for any non-compliance. The failure to maintain compliance could have a material adverse effect on our ability to finance our ongoing operations and we may not be able to find an alternative lending source if a default occurs.

In November 2014, we entered into a Credit Agreement (the “Credit Agreement”) with Wells Fargo Bank, N.A., as administrative agent, and other lender parties thereto. Pursuant to the Credit Agreement, the lenders agreed to provide a $10,000,000 senior term loan and a $5,000,000 revolving line of credit to our primary operating subsidiary. The Credit Agreement includes customary financial covenants, including the requirements that the Company maintain certain minimum liquidity and achieve certain minimum EBITDA levels.

In order to draw upon its revolving line of credit, pursuant to the terms of the third amendment to the Credit Agreement entered into as of June 19, 2017, the Company is required to maintain minimum liquidity of at least (i) $5,000,000 through January 31, 2018, (ii) $4,000,000 from February 1, 2018 through and including January 31, 2019, and (iii) $3,000,000 from February 1, 2019 through and including the maturity date of the credit facility. The Company was in compliance with the applicable loan covenants at October 31, 2017.

If we do not maintain compliance with all of the continuing covenants and other terms and conditions of the credit facility or secure a waiver for any non-compliance, we could be required to repay outstanding borrowings on an accelerated basis, which could subject us to decreased liquidity and other negative impacts on our business, results of operations and financial condition. Furthermore, if we needed to do so, it may be difficult for us to find an alternative lending source. In addition, because our assets are pledged as a security under our credit facilities, if we are not able to cure any default or repay outstanding borrowings, our assets are subject to the risk ~~of foreclosure by our lenders. Without a sufficient credit facility, we would be adversely affected by a lack of access to liquidity needed to operate our business. Any disruption~~factors disclosed in ~~access to credit could force us to take measures to conserve cash, such as deferring important research and development expenses, which measures could have a material adverse effect on us.~~

Our outstanding preferred stock and warrants have significant redemption and repayment rights that could have a material adverse effect on our liquidity and available financing for our ongoing operations.

In August 2012, we completed a private offering of preferred stock, warrants and convertible notes to a group of investors for gross proceeds of $12 million. In November 2012, the convertible notes converted into shares of preferred stock. Subject to the terms of the Subordination and Intercreditor Agreement, the preferred stock is redeemable at the option of the holders thereof anytime after August 31, 2016 if not previously converted into shares of common stock. We may not achieve the thresholds required to trigger automatic conversion of the preferred stock and, alternatively, holders may not voluntarily elect to

~~Index to Financial Statements~~

~~convert the preferred stock into common stock. The election of the holders~~Item 1A of our preferred stock to redeem the preferred stock could subject us to decreased liquidity and other negative impacts on our business, results of operations, and financial condition. Under the terms of the Subordination and Intercreditor Agreement among the preferred stockholders, the Company and Wells Fargo, our obligation to redeem the preferred stock is subordinated to our obligations under the senior term loan and the preferred stock may not be redeemed without the consent of Wells Fargo. For additional information regarding the terms, rights and preferences of the preferred stock and warrants, see Note 14 to our consolidated financial statements included in the Annual Report on Form 10-K for the fiscal year ended January 31, ~~2017~~2023.

We may not be able to generate sufficient cash flows or raise additional debt and equity capital to fund our ~~other SEC filings.~~

~~Current economic conditions~~ongoing operations. We will need to raise additional funding, which may not be available on acceptable terms, if at all. If we are unable to raise additional capital in ~~the U.S.~~amounts and ~~globally may have significant effects~~ on terms sufficient to fund our ~~clients~~ongoing operations, our lack of additional capital and ~~suppliers that could result in material adverse effects on our business, operating results and stock price.~~

Current economic conditions in the U.S. and globally and the concern that the worldwide economy may enter into a prolonged stagnant period could materially adversely affect our clients' access to capital or willingness to spend capital on our solutions and services or their levels of cash liquidity with which to pay for solutions that they will order or have already ordered from us. Continued challenging economic conditions also would likely negatively impact our business, which could result in: (1) reduced demand for our solutions and services; (2) increased price competition for our solutions and services; (3) increased risk of collectability of cash from our clients; (4) increased risk in potential reserves for doubtful accounts and write-offs of accounts receivable; (5) reduced revenues; and (6) higher operating costs as a percentage of revenues.

All of the foregoing potential consequences of the current economic conditions are difficult to forecast and mitigate. As a consequence, our operating results for a particular period are difficult to predict, and, therefore, prior results are not necessarily indicative of future results. Any of the foregoing effects could have a material adverse effect on our business, results of operations could limit our ability to continue operations.

Our ability to continue as a going concern is dependent upon generating sufficient cash flow from operations and obtaining additional debt and equity financing. If our ability to generate cash flow from operations is curtailed or delayed, our financial condition and results of operations could ~~adversely affect~~be materially impacted. We have been dependent on sales of our equity securities and debt financing to meet our ongoing cash requirements. There can be no assurances that we would be able to obtain debt or equity financing when needed, on terms acceptable to the ~~market~~Company, or at all, and our failure to raise additional capital in amounts and on terms sufficient to fund our operations could limit our ability to continue operations.

If we do not meet the continued listing standards of The Nasdaq Capital Market, our common stock could be delisted from trading, which could limit investors’ ability to make transactions in our common stock and subject us to additional trading restrictions.

Our common stock is currently listed on The Nasdaq Capital Market which imposes continued listing requirements with respect to listed shares. On October 24, 2023, we received a letter from the Listing Qualifications Department of Nasdaq, indicating that our common stock was subject to potential delisting from The Nasdaq Capital Market because, for a period of thirty (30) consecutive business days, the bid price of our common stock ~~and other securities.~~

had closed below the minimum $1.00 per share requirement for continued listing on The ~~variability of our quarterly operating results can be significant.~~

~~Our operating results have fluctuated from quarter-to-quarter~~Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Requirement”). Nasdaq stated in ~~the past, and we may experience continued fluctuations~~its letter that in the future. Future revenues and operating results may vary significantly from quarter-to-quarter as a result of a number of factors, many of which are outside of our control. These factors include: the relatively large size of client agreements; unpredictability in the number and timing of system sales and sales of application hosting services; length of the sales cycle; delays in installations; changes in clients’ financial conditions or budgets; increased competition; the development and introduction of new products and services; the loss of significant clients or remarketing partners; changes in government regulations, particularly as they relate to the healthcare industry; the size and growth of the overall healthcare information technology markets; any liability and other claims that may be asserted against us; our ability to attract and retain qualified personnel; national and local general economic and market conditions; and other factors discussed in this report and our other filingsaccordance with the ~~SEC.~~

~~The preparation~~Nasdaq Listing Rules, we have been provided an initial period of ~~our financial statements requires the use of estimates that may vary from actual results.~~

~~The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management~~one hundred eighty (180) calendar days, or until April 22, 2024, to make significant estimates that affect the financial statements. One of our most critical estimates is the capitalization of software development costs. Due to the inherent nature of these estimates, we may be required to significantly increase or decrease such estimates upon determination of the actual results. Any required adjustments could have a material adverse effect on us and our results of operations.

~~Failure to improve and maintain the quality of internal control over financial reporting and disclosure controls and procedures or other lapses in~~regain compliance ~~could materially and adversely affect our ability to provide timely and accurate financial information about us or subject us to potential liability.~~

~~In connection~~ with the preparation of the consolidated financial statements for each of our fiscal years, our management conducts a review of our internal control over financial reporting. We are also required to maintain effective disclosure controls and procedures. Any failure to maintain adequate controls or to adequately implement required new or improved controls could harm operating results, or cause failure to meet reporting obligations in a timely and accurate manner.

~~Our operations are subject to foreign currency exchange rate risk.~~

In connection with our expansion into foreign markets, which primarily consists of Canada, we sometimes receive payment in currencies other than the U.S. dollar. Accordingly, changes in exchange rates, and in particular a strengthening of the U.S. dollar,Bid Price Requirement. The letter states that Nasdaq will ~~negatively affect our net sales and gross margins from our non-U.S. dollar denominated revenue, as~~

~~Index to Financial Statements~~

~~expressed in U.S. dollars. There is also a risk~~provide written notification that we ~~will~~ have ~~to adjust~~achieved compliance with the ~~pricing of solutions denominated in foreign currencies when there has been significant volatility in foreign currency exchange rates.~~

~~Risks Relating to an Investment in Our Securities~~

~~The market~~Bid Price Requirement if at any time before April 22, 2024, the bid price of our common stock closes at $1.00 per share or more for a minimum of ten (10) consecutive business days.

If we fail to regain compliance by April 22, 2024, we may be eligible for an additional one hundred eighty (180) calendar day compliance period to demonstrate compliance with the Bid Price Requirement. To qualify for the additional one hundred eighty (180) day period, we will be required to meet the continued listing requirement for market value of publicly held shares set forth in Nasdaq Listing Rule 5550(a) and all other listing standards for The Nasdaq Capital Market set forth in Nasdaq Listing Rule 5505, with the exception of the Bid Price Requirement, and will need to provide written notice to Nasdaq to cure the deficiency during the second compliance period by effecting a reverse stock split, if necessary. If we do not qualify for the second compliance period or we fail to regain compliance during the second one hundred eighty (180)-day period, then Nasdaq will notify us of its determination to delist our common stock, at which we would have an opportunity to appeal the delisting determination to a Hearings Panel.

In the event that our common stock is ~~likely to be highly volatile as the stock~~delisted from The Nasdaq Capital Market and is not eligible for quotation or listing on another market ~~in general can be highly volatile.~~

~~The public~~or exchange, trading of our common stock ~~is based on many factors that~~ could ~~cause fluctuation~~be conducted only in the over-the-counter market or on an electronic bulletin board established for unlisted securities such as the Pink Sheets or the OTC Bulletin Board. In such event, it could become more difficult to dispose of, or obtain accurate price ofquotations for, our common ~~stock. These factors may include, but are not limited to:~~

~~General economic~~stock, and ~~market conditions;~~

~~Actual or anticipated variations~~there would likely also be a reduction in ~~annual or quarterly operating results;~~

~~Lack of or negative research~~our coverage by securities ~~analysts;~~

~~Conditions or trends in~~analysts and 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.~~

~~Most of these factors are beyond our control. These factors may~~news media, which could cause the ~~market~~ price of our common stock to decline ~~regardless of our operating performance or financial condition.~~

~~If equity research analysts do~~further. Also, it may be difficult for us to raise additional capital if we are not ~~publish research reports about our business or if they issue unfavorable commentary or downgrade our common stock,~~listed on a major exchange.

Such a delisting would also likely have a negative effect on the price of our common stock ~~could decline.~~

~~The trading market for~~and would impair your ability to sell or purchase our common stock when you wish to do so. In the event of a delisting, we may ~~rely in part on the research and reports~~take actions to restore our compliance with The Nasdaq Capital Market listing requirements, but we can provide no assurance that ~~equity research analysts publish about~~any such action taken by us would allow our ~~business and us. We do not control the opinions of these analysts. The price of our~~common stock could decline if one or more equity analysts downgrade our stock or if those analysts issue other unfavorable commentary or cease publishing reports about our business or us. Furthermore, if no equity research analysts conduct research or publish reports about our business and us,to become listed again, stabilize the market price or improve the liquidity of our common stock, ~~could decline.~~

~~All of our debt obligations, our existing preferred stock and any preferred stock that we may issue in the future will have priority over~~prevent our common stock from dropping below the Bid Price Requirement or prevent future non-compliance with ~~respect~~The Nasdaq Capital Market listing requirements.

If our goodwill or other intangible assets become impaired, our results of operations and capitalization could be negatively impacted.

We have significant intangible assets, including goodwill and other long-lived assets, which are susceptible to ~~payment~~valuation adjustments as a result of changes in various factors or conditions. Whenever events or changes in circumstances indicate that the carrying value may not be recoverable, we will be required to assess the potential impairment of goodwill and other intangible assets. Factors that could trigger an impairment of such assets include, but are not limited to, (i) changes in our organization or management reporting structure that could result in additional reporting units, which may require alternative methods of estimating fair values or greater disaggregation or aggregation in our analysis by reporting unit; (ii) under performance relative to historical or projected future operating results; (iii) changes in the ~~event~~strategy for our overall business; (iv) negative industry or economic trends; (v) decline in our stock price for a sustained period; and (vi) our market capitalization declining to below net book value.

For the fiscal quarter ended October 31, 2023, the Company recorded (i) a goodwill impairment charge of $9,813,000 as a result of the impairment analysis in connection with the significant decline in the Company’s share price that was in response to the Company announcing acceleration of a ~~bankruptcy, liquidation, dissolution~~strategic restructure plus a significant SaaS client notice to terminate as of December 31, 2023 and (ii) an impairment on finite-lived assets of $963,000 due to the Company’s conclusion that its Customer Relationships (Consulting) asset was considered abandoned and therefore fully impaired under ASC 360 as of October 31, 2023. Future adverse changes in these or ~~winding up.~~

~~In any bankruptcy, liquidation, dissolution or winding up~~other unforeseeable factors could result in additional impairment charges that would negatively impact our results of operations and financial position in the reporting period identified.

Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, AND ISSUER PURCHASES OF EQUITY SECURITIES

During the three months ended October 31, 2023, the Company ~~our~~issued to 180 Consulting an aggregate of 131,054 shares of common stock ~~would rank~~as compensation for services previously rendered during the three months ended July 31, 2023. Such shares were issued pursuant to the Master Services Agreement, effective March 19, 2020, by and between the Company and 180 Consulting and related statements of work. The shares were issued in ~~right of payment or distribution below all debt claims against us and all of our outstanding shares of preferred stock, if any. As~~ a ~~result, holders of our shares of common stock will not be entitled to receive any payment or other distribution of assets~~private placement in reliance on the event of a bankruptcy or upon a liquidation or dissolution until after all of our obligations to our debt holders and holders of preferred stock have been satisfied. Accordingly, holders of our common stock may lose their entire investment in the event of a bankruptcy, liquidation, dissolution or winding up of our company. Similarly, holders of our preferred stock would rank junior to our debt holders and creditors in the event of a bankruptcy, liquidation, dissolution or winding upexemption from registration available under Section 4(a)(2) of the ~~Company.~~

~~There may be future sales or other dilution of our equity, which may adversely affect~~Securities Act, including Regulation D promulgated thereunder and the ~~market price of our common stock.~~

~~We are generally~~certificate representing such shares has a legend imprinted on it stating that the shares have not ~~restricted from issuing in public or private offerings additional shares of common stock or preferred stock (except for certain restrictions~~been registered under the ~~terms of our outstanding preferred stock),~~Securities Act and ~~other securities that are convertible into~~cannot be transferred until properly registered under the Securities Act or ~~exchangeable for, or that represent a right~~pursuant to ~~receive, common stock or preferred stock or any substantially~~an exemption from such registration.

~~Index to Financial Statements~~

similar securities. Such offerings represent the potential for a significant increase in the number of outstanding shares of our common stock. The market price of our common stock could decline as a result of sales of common stock, preferred stock or similar securities in the market made after an offering or the perception that such sales could occur.

In addition to our currently outstanding preferred stock, the issuance of an additional series of preferred stock could adversely affect holders of shares of our common stock, which may negatively impact your investment.

Our Board of Directors is authorized to issue classes or series of preferred stock without any action on the part of the stockholders. The Board of Directors also has the power, without stockholder approval, to set the terms of any such classes or series of preferred stock that may be issued, including rights and preferences over the shares of common stock with respect to dividends or upon our dissolution, winding-up or liquidation, and other terms. If we issue preferred stock in the future that has a preference over the shares of our common stock with respect to the payment of dividends or upon our dissolution, winding up or liquidation, or if we issue preferred stock with voting rights that dilute the voting power of the shares of our common stock, the rights of the holders of shares of our common stock or the market price of our common stock could be adversely affected.

As of October 31, 2017, we had 2,949,995 shares of preferred stock outstanding. For additional information regarding the terms, rights and preferences of such stock, see Note 14 to our consolidated financial statements included in the Annual Report on Form 10-K for the fiscal year ended January 31, 2017 and our other SEC filings.

We do not currently intend to pay dividends on our common stock and, consequently, your ability to achieve a return on your investment will depend solely on appreciation in the price of our common stock.

We have never declared or paid any cash dividends on our common stock and do not currently intend to do so for the foreseeable future. We currently intend to invest our future earnings, if any, to fund our growth. Therefore, you are not likely to receive any dividends on your common stock for the foreseeable future and the success of an investment in shares of our common stock will depend upon any future appreciation in its value. The trading price of our common stock could decline and you could lose all or part of your investment.

~~Sales of shares of our common stock or securities convertible into our common stock in the public market may cause the market price of our common stock to fall.~~

The issuance of shares of our common stock or securities convertible into our common stock in an offering from time to time could have the effect of depressing the market price for shares of our common stock. In addition, because our common stock is thinly traded, resales of shares of our common stock by our largest stockholders or insiders could have the effect of depressing market prices for our common stock.

~~Note Regarding Risk Factors~~

The risk factors presented above are all of the ones that we currently consider material. However, they are not the only ones facing our company. Additional risks not presently known to us, or which we currently consider immaterial, may also adversely affect us. There may be risks that a particular investor views differently from us, and our analysis might be wrong. If any of the risks that we face actually occur, our business, financial condition and operating results could be materially adversely affected and could differ materially from any possible results suggested by any forward-looking statements that we have made or might make. In such case, the market price of our common stock or other securities could decline and you could lose all or part of your investment. ~~We expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.~~

~~Index to Financial Statements~~

~~Item 2. ISSUER PURCHASES OF EQUITY SECURITIES~~

The following table sets forth information with respect to our repurchases of common stock during the three months ended October 31, ~~2017:~~

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)
August 1 - August 31 3,977
$ 1.20
—
—
September 1 - September 30 —
—
—
—
October 1 - October 31 —
—
—
—
Total 3,977
$ 1.20
—
—

~~_______________~~

(1) Because the withholding of shares to pay taxes due upon vesting of restricted stock is permitted outside the scope of a board-authorized repurchase plan, these amounts exclude shares of stock returned to us by employees in satisfaction of withholding tax requirements on2023:

Total

Maximum

Number of

Number

of Shares

Purchased

that May

Total

as Part of

Yet Be

Number of

Publicly

Purchased

Average

Announced

under the

Purchased

Price Paid

Plans or

(1)

per Share

Programs

Aug 1 - Aug 31

—

Sep 1 - Sep 30

4,923

0.95

—

Oct 1 - Oct 31

33,112

0.43

—

Total

38,035

0.50

—

(1)	Amount represents shares surrendered by employees to satisfy tax withholding obligations resulting from restricted stock that vested ~~stock grants. There were 3,977 such shares returned to us~~ during the three months ended October 31, 2023.

Item 5. OTHER INFORMATION

During the three months ended October 31, ~~2017.~~2023, none of our directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934, as amended) adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K of the Securities Act of 1933).

Item 6. EXHIBITS

See Index to Exhibits.

INDEX TO EXHIBITS

Exhibit No.		Description of Exhibit
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 Quarterly Report on Form 10-Q, filed September 15, 2014).
3.2		Certificate of Amendment of Certificate of Incorporation of Streamline Health Solutions, Inc. (Incorporated by reference from Exhibit 3.1 of the Current Report on Form 8-K, filed May 24, 2021).
3.3		Certificate of Amendment of Certificate of Incorporation of Streamline Health Solutions, Inc. (Incorporated by reference from Exhibit 3.1 of the Current Report on Form 8-K, filed June 8, 2022).
3.4		Bylaws of Streamline Health Solutions, Inc., as amended and restated through March 28, 2014 (Incorporated by reference from Exhibit 3.1 of the Current Report on Form 8-K, filed April 3, 2014).
10.1		Amendment No. 3 to Streamline Health Solutions, Inc. Third Amended and Restated 2013 Stock Incentive Plan, dated June 15, 2023 (Incorporated by reference from Appendix B to the Company’s Definitive Proxy Statement, dated May 11, 2023, for the Company’s 2023 Annual Meeting of Stockholders).
10.2		Employment Agreement, dated December 4, 2023, by and between Company and Bryant James Reeves
31.1*		Certification by President and 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 President and 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.INS*		INLINE XBRL INSTANCE DOCUMENT
101.SCH*		INLINE XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT
101.CAL*		INLINE XBRL TAXONOMY EXTENSION CALCULATION LINKBASE
101.DEF*		INLINE XBRL TAXONOMY EXTENSION DEFINITION LINKBASE
101.LAB*		INLINE XBRL TAXONOMY EXTENSION LABELS LINKBASE
101.PRE*		INLINE XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE
104*		COVER PAGE INTERACTIVE DATA FILE (FORMATTED AS INLINE XBRL AND CONTAINED IN EXHIBIT 101)

*	Filed herewith.

Our SEC file number reference for documents filed with the SEC pursuant to the Securities Exchange Act of 1934, as amended, is 000-28132.

~~Index to Financial Statements~~

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



		STREAMLINE HEALTH SOLUTIONS, INC.

DATE: December ~~12, 2017~~14, 2023	By:	/S~~/ David W. Sides~~ s/ Benjamin L. Stilwill
		~~David W. Sides~~ Benjamin L. Stilwill President and Chief Executive Officer

DATE: December ~~12, 2017~~14, 2023	By:	/S~~/ Nicholas A. Meeks~~ s/ Bryant J. Reeves III
		~~Nicholas A. Meeks~~ Bryant J. Reeves III
		Interim Chief Financial Officer

~~Index to Financial Statements~~

~~INDEX TO EXHIBITS~~



~~Exhibit No.~~	~~Description of Exhibit~~
~~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 October 31, 2017 filed with the SEC on December 12, 2017, formatted in XBRL includes: (i) Condensed Consolidated Balance Sheets at October 31, 2017 and January 31, 2017, (ii) Condensed Consolidated Statements of Operations for three- and nine-month periods ended October 31, 2017 and 2016, (iii) Condensed Consolidated Statements of Cash Flows for the nine-month periods ended October 31, 2017 and 2016, and (iv) Notes to the Condensed Consolidated Financial Statements.

~~_______________~~


*	~~Filed herewith.~~

~~Our SEC file number reference for documents filed with the SEC pursuant to the Securities Exchange Act of 1934, as amended, is 000-28132.~~

Delaware		31-1455414

~~Delaware~~		~~31-1455414~~
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.01 par value per share
	STRM		Nasdaq Capital Market

		Page
Part I.	FINANCIAL INFORMATION	3
~~TABLE OF CONTENTS~~Item 1.	CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	3
		~~Page~~
~~Part I.~~	~~FINANCIAL INFORMATION~~
~~Item 1.~~	~~Financial Statements~~	2
	Condensed Consolidated Balance Sheets at October 31, ~~2017~~2023 (unaudited) and January 31, ~~2017~~2023	2 3
	Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended October 31, ~~2017~~2023 and ~~2016~~2022	4 5
	Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended October 31, 2023 and 2022	6
	Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended October 31, ~~2017~~2023 and ~~2016~~2022	5 7
	Notes to Unaudited Condensed Consolidated Financial Statements	6 8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16 20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26 31
Item 4.	Controls and Procedures	26 31
Part II.	OTHER INFORMATION	32
Item 1.1A.	~~Legal Proceedings~~Risk Factors	27 32
~~Item 1A.~~	~~Risk Factors~~	27
Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	36 32
Item 6.	Exhibits	36 34
	Signatures	35



	As of
	October 31, 2017			January 31, 2017
ASSETS
Current assets:
Cash and cash equivalents	$	1,892,182		$	5,654,093
Accounts receivable, net of allowance for doubtful accounts of $301,773 and $198,449, respectively	2,532,941			4,489,789
Contract receivables	283,973			466,423
Prepaid hardware and third-party software for future delivery	5,858			5,858
Prepaid client maintenance contracts	587,960			595,633
Other prepaid assets	837,649			732,496
Other current assets	392,449			439
Total current assets	6,533,012			11,944,731
Non-current assets:
Property and equipment:
Computer equipment	2,971,361			3,110,274
Computer software	725,700			827,642
Office furniture, fixtures and equipment	683,443			683,443
Leasehold improvements	729,348			729,348
	5,109,852			5,350,707
Accumulated depreciation and amortization	(3,762,821		)	(3,447,198		)
Property and equipment, net	1,347,031			1,903,509
Capitalized software development costs, net of accumulated amortization of $18,119,290 and $16,544,797, respectively	4,346,694			4,584,245
Intangible assets, net of accumulated amortization of $6,729,799 and $5,807,338, respectively	6,074,137			6,996,599
Goodwill	15,537,281			15,537,281
Other	677,319			672,133
Total non-current assets	27,982,462			29,693,767
	$	34,515,474		$	41,638,498


☒
x	QUARTERLY 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



	Three Months Ended October 31						Nine Months Ended October 31
	2017			2016			2017			2016
Revenues:
Systems sales	$	348,526		$	314,218		$	1,055,941		$	2,190,256
Professional services	801,771			630,961			1,793,618			1,869,656
Audit services	280,025			234,347			919,485			234,347
Maintenance and support	3,250,229			3,749,596			9,883,563			11,237,637
Software as a service	1,718,748			1,706,366			4,586,532			5,144,876
Total revenues	6,399,299			6,635,488			18,239,139			20,676,772
Operating expenses:
Cost of systems sales	434,138			663,148			1,596,988			2,080,263
Cost of professional services	555,815			723,358			1,814,236			1,891,146
Cost of audit services	404,280			595,575			1,236,358			595,575
Cost of maintenance and support	667,307			790,291			2,241,969			2,483,462
Cost of software as a service	289,503			450,695			914,711			1,390,308
Selling, general and administrative	2,819,549			3,212,350			8,983,248			10,153,140
Research and development	932,251			1,969,415			3,985,161			5,800,169
Total operating expenses	6,102,843			8,404,832			20,772,671			24,394,063
Operating income (loss)	296,456			(1,769,344		)	(2,533,532		)	(3,717,291		)
Other expense:
Interest expense	(113,078		)	(98,871		)	(360,723		)	(380,897		)
Miscellaneous expense	(177,282		)	(60,555		)	(235,007		)	(39,089		)
Earnings (loss) before income taxes	6,096			(1,928,770		)	(3,129,262		)	(4,137,277		)
Income tax expense	(2,607		)	(1,702		)	(7,822		)	(5,104		)
Net earnings (loss)	$	3,489		$	(1,930,472	)	$	(3,137,084	)	$	(4,142,381	)
Less: deemed dividends on Series A Preferred Shares	—			(72,710		)	—			(875,935		)
Net earnings (loss) attributable to common stockholders	$	3,489		$	(2,003,182	)	$	(3,137,084	)	$	(5,018,316	)
Basic net earnings (loss) per common share	$	—		$	(0.10	)	$	(0.16	)	$	(0.26	)
Number of shares used in basic per common share computation	19,985,822			19,645,521			19,838,691			19,477,538
Diluted net earnings (loss) per common share	$	—		$	(0.10	)	$	(0.16	)	$	(0.26	)
Number of shares used in diluted per common share computation	23,068,423			19,645,521			19,838,691			19,477,538



	Total Fair Value		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
At October 31, 2017
Warrants liability (1)	$	151,000	$	—	$	—	$	151,000
Royalty liability (2)	2,456,000		—		—		2,456,000

At January 31, 2017
Warrants liability (1)	$	46,000	$	—	$	—	$	46,000
Royalty liability (2)	2,351,000		—		—		2,351,000



	Three Months Ended
	October 31, 2017		October 31, 2016
Net earnings (loss)	$	3,489	$	(1,930,472	)
Less: deemed dividends on Series A Preferred Stock	—		(72,710		)
Net earnings (loss) attributable to common stockholders	$	3,489	$	(2,003,182	)
Weighted average shares outstanding used in basic per common share computations	19,985,822		19,645,521
Restricted stock and Series A Convertible Preferred Stock	3,082,601		—
Number of shares used in diluted per common share computation	23,068,423		19,645,521
Basic net earnings (loss) per share of common stock	$	0.00	$	(0.10	)
Diluted net earnings (loss) per share of common stock	$	0.00	$	(0.10	)



	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 (three months remaining)	$	256,000	$	3,000	$	259,000
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	$	3,730,000	$	38,000	$	3,768,000



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



	October 31, 2017			January 31, 2017
Senior term loan	$	4,630,000		$	5,539,000
Capital lease	—			91,000
Total	4,630,000			5,630,000
Less: Current portion	(597,000		)	(747,000		)
Non-current portion of debt	$	4,033,000		$	4,883,000



	Senior Term Loan (1)
2017	$	149,000
2018	597,000
2019	4,030,000
Total repayments	$	4,776,000



	October 31, 2017		October 31, 2016
Company proprietary software	$	10,892,000	$	15,551,000
Third-party hardware and software	—		200,000
Professional services	2,824,000		4,973,000
Audit services	1,454,000		1,849,000
Maintenance and support	18,256,000		19,413,000
Software as a service	14,242,000		12,929,000
Total	$	47,668,000	$	54,915,000



	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)
August 1 - August 31	3,977	$	1.20	—	—
September 1 - September 30	—	—		—	—
October 1 - October 31	—	—		—	—
Total	3,977	$	1.20	—	—

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