Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Apr. 30, 2021 | Jun. 04, 2021 | |
Cover [Abstract] | ||
Entity Registrant Name | STREAMLINE HEALTH SOLUTIONS INC. | |
Entity Central Index Key | 0001008586 | |
Document Type | 10-Q | |
Document Period End Date | Apr. 30, 2021 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --01-31 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 42,446,202 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2022 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Apr. 30, 2021 | Jan. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 16,727,000 | $ 2,409,000 |
Accounts receivable, net of allowance for doubtful accounts of $65,000 and $65,000, respectively | 3,187,000 | 2,929,000 |
Contract receivables | 257,000 | 174,000 |
Assets held in escrow | 800,000 | 800,000 |
Prepaid and other current assets | 531,000 | 416,000 |
Current assets of discontinued operations | 110,000 | 587,000 |
Total current assets | 21,612,000 | 7,315,000 |
Non-current assets: | ||
Property and equipment, net of accumulated depreciation of $151,000 and $452,000 respectively | 83,000 | 104,000 |
Right-of use asset for operating lease | 349,000 | 391,000 |
Capitalized software development costs, net of accumulated amortization of $4,013,000 and $3,507,000, respectively | 5,818,000 | 5,945,000 |
Intangible assets, net of accumulated amortization of $4,888,000 and $4,773,000, respectively | 509,000 | 624,000 |
Goodwill | 10,712,000 | 10,712,000 |
Other | 947,000 | 873,000 |
Long-term assets of discontinued operations | 11,000 | 13,000 |
Total non-current assets | 18,429,000 | 18,662,000 |
Total assets | 40,041,000 | 25,977,000 |
Current liabilities: | ||
Accounts payable | 243,000 | 272,000 |
Accrued expenses | 1,053,000 | 908,000 |
Current portion of term loan, less deferred financing cost | 2,301,000 | 1,534,000 |
Deferred revenue | 4,983,000 | 3,862,000 |
Current portion of operating lease obligation | 199,000 | 198,000 |
Current liabilities of discontinued operations | 358,000 | 595,000 |
Total current liabilities | 9,137,000 | 7,369,000 |
Non-current liabilities: | ||
Term loan payable, less current portion | 767,000 | |
Deferred revenues, less current portion | 170,000 | 130,000 |
Operating lease obligation, less current portion | 176,000 | 222,000 |
Total non-current liabilities | 346,000 | 1,119,000 |
Total liabilities | 9,483,000 | 8,488,000 |
Stockholders' equity: | ||
Common stock, $.01 par value per share, 45,000,000 shares authorized; 42,322,665 and 31,597,975 shares issued and outstanding, respectively | 423,000 | 316,000 |
Additional paid in capital | 111,394,000 | 96,290,000 |
Accumulated deficit | (81,259,000) | (79,117,000) |
Total stockholders' equity | 30,558,000 | 17,489,000 |
Total liabilities and stockholders' equity | $ 40,041,000 | $ 25,977,000 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Apr. 30, 2021 | Jan. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 65,000 | $ 65,000 |
Accumulated amortization, Property and equipment | 151,000 | 452,000 |
Accumulated amortization, capitalized software development costs | 4,013,000 | 3,507,000 |
Accumulated amortization, intangible assets | $ 4,888,000 | $ 4,773,000 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 45,000,000 | 45,000,000 |
Common stock, shares issued | 42,322,665 | 31,597,975 |
Common stock, shares outstanding | 42,322,665 | 31,597,975 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | ||
Apr. 30, 2021 | Apr. 30, 2020 | ||
Revenue: | |||
Total revenue | $ 2,951,000 | $ 2,844,000 | |
Operating expenses: | |||
Cost of software licenses | 137,000 | 77,000 | |
Cost of professional services | 214,000 | 242,000 | |
Cost of audit services | 389,000 | 360,000 | |
Cost of maintenance and support | 87,000 | 186,000 | |
Cost of software as a service | 610,000 | 405,000 | |
Selling, general and administrative expense | 2,551,000 | 2,291,000 | |
Research and development | 977,000 | 684,000 | |
Non-routine costs | 441,000 | ||
Loss on exit from membership agreement | 105,000 | ||
Total operating expenses | 5,406,000 | 4,350,000 | |
Operating loss | (2,455,000) | (1,506,000) | |
Other income (expense): | |||
Interest expense | (13,000) | (14,000) | |
Other | 15,000 | (18,000) | |
Loss from continuing operations before income taxes | (2,453,000) | (1,538,000) | |
Income tax benefit (expense) | (9,000) | 561,000 | |
Loss from continuing operations | (2,462,000) | (977,000) | |
Income from discontinued operations: | |||
Gain on sale of discontinued operations | 6,009,000 | ||
Income from discontinued operations | 320,000 | 137,000 | |
Income tax expense | (1,496,000) | ||
Income from discontinued operations, net of tax | 320,000 | 4,650,000 | |
Net (loss) income | $ (2,142,000) | $ 3,673,000 | |
Basic Earnings Per Share: | |||
Continuing operations | $ (0.07) | $ (0.03) | |
Discontinued operations | 0.01 | 0.16 | |
Net income | $ (0.06) | $ 0.13 | |
Weighted average number of common shares - basic | [1] | 37,497,958 | 29,767,814 |
Diluted Earnings Per Share: | |||
Continuing operations | [1] | $ (0.07) | $ (0.03) |
Discontinued operations | [1] | 0.01 | 0.15 |
Net income | $ (0.06) | $ 0.12 | |
Weighted average number of common shares - diluted | 38,184,765 | 30,037,716 | |
Software Licenses [Member] | |||
Revenue: | |||
Total revenue | $ 135,000 | ||
Professional Services [Member] | |||
Revenue: | |||
Total revenue | 78,000 | 152,000 | |
Audit Services [Member] | |||
Revenue: | |||
Total revenue | 504,000 | 544,000 | |
Maintenance and Support [Member] | |||
Revenue: | |||
Total revenue | 1,057,000 | 1,258,000 | |
Software as a Service [Member] | |||
Revenue: | |||
Total revenue | $ 1,177,000 | $ 890,000 | |
[1] | Excludes the effect of unvested restricted shares of common stock, which are considered non-participating securities. As of April 30, 2021 and 2020, there were 1,387,325 and 1,124,708 unvested restricted shares of common stock outstanding, respectively. |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) | Common Stock [Member] | Additional Paid in Capital [Member] | Accumulated Deficit [Member] | Total |
Balance at Jan. 31, 2020 | $ 305,000 | $ 95,113,000 | $ (79,413,000) | $ 16,005,000 |
Balance, shares at Jan. 31, 2020 | 30,530,643 | |||
Restricted stock issued | $ 4,000 | (4,000) | ||
Restricted stock issued, shares | 440,000 | |||
Restricted stock forfeited | ||||
Restricted stock forfeited, shares | (34,790) | |||
Surrender of shares | (22,000) | (22,000) | ||
Surrender of shares, shares | (21,027) | |||
Share-based compensation | 263,000 | 263,000 | ||
Net income | 3,673,000 | 3,673,000 | ||
Balance at Apr. 30, 2020 | $ 309,000 | 95,350,000 | (75,740,000) | 19,919,000 |
Balance, shares at Apr. 30, 2020 | 30,914,826 | |||
Balance at Jan. 31, 2021 | $ 316,000 | 96,290,000 | (79,117,000) | 17,489,000 |
Balance, shares at Jan. 31, 2021 | 31,597,975 | |||
Restricted stock issued | $ 7,000 | (7,000) | ||
Restricted stock issued, shares | 740,752 | |||
Surrender of shares | $ (1,000) | (160,000) | (161,000) | |
Surrender of shares, shares | (78,562) | |||
Share-based compensation | 565,000 | 565,000 | ||
Issuance of common stock | $ 101,000 | 15,999,000 | 16,100,000 | |
Issuance of common stock, shares | 10,062,500 | |||
Offering Expenses | (1,293,000) | (1,293,000) | ||
Net income | (2,142,000) | (2,142,000) | ||
Balance at Apr. 30, 2021 | $ 423,000 | $ 111,394,000 | $ (81,259,000) | $ 30,558,000 |
Balance, shares at Apr. 30, 2021 | 42,322,665 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Apr. 30, 2021 | Apr. 30, 2020 | |
Statement of Cash Flows [Abstract] | ||
Net Income (Loss) | $ (2,142,000) | $ 3,673,000 |
Income from discontinued operations, net of tax | 320,000 | 4,650,000 |
Loss from continuing operations, net of tax | (2,462,000) | (977,000) |
Adjustments to reconcile net income to net cash used in operating activities: | ||
Depreciation | 21,000 | 14,000 |
Amortization of capitalized software development costs | 506,000 | 289,000 |
Amortization of intangible assets | 115,000 | 123,000 |
Amortization of other deferred costs | 116,000 | 75,000 |
Valuation adjustments | 17,000 | |
Benefit for income taxes | 9,000 | (561,000) |
Loss on exit from membership agreement | 105,000 | |
Share-based compensation expense | 565,000 | 263,000 |
Benefit for accounts receivable allowance | (15,000) | |
Changes in assets and liabilities: | ||
Accounts and contract receivables | (341,000) | 1,279,000 |
Other assets | (275,000) | (49,000) |
Accounts payable | (29,000) | (467,000) |
Accrued expenses and other liabilities | 145,000 | (652,000) |
Deferred revenue | 1,161,000 | (1,347,000) |
Net cash used in operating activities | (478,000) | (1,903,000) |
Net cash from operating activities - discontinued operations | 560,000 | (2,270,000) |
Cash flows from investing activities: | ||
Proceeds from sale of ECM Assets | 11,284,000 | |
Capitalization of software development costs | (378,000) | (479,000) |
Net cash (used in) provided by investing activities | (378,000) | 10,805,000 |
Net cash from investing activities - discontinued operations | ||
Cash flows from financing activities: | ||
Repayment of bank term loan | (4,000,000) | |
Proceeds from issuance of term loan | 2,301,000 | |
Proceeds from issuance of common stock | 16,100,000 | |
Payments for costs directly attributable to the issuance of common stock | (1,293,000) | |
Payments related to settlement of employee share-based awards | (161,000) | |
Payment for deferred financing costs | (31,000) | |
Other | (1,000) | (22,000) |
Net cash provided by (used in) financing activities | 14,614,000 | (1,721,000) |
Net increase in cash and cash equivalents | 14,318,000 | 4,911,000 |
Cash and cash equivalents at beginning of period | 2,409,000 | 1,649,000 |
Cash and cash equivalents at end of period | $ 16,727,000 | $ 6,560,000 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Apr. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | NOTE 1 — BASIS OF PRESENTATION Streamline Health Solutions, Inc. and its subsidiary (“we”, “us”, “our”, “Streamline”, or the “Company”) operates in one segment as a provider The accompanying unaudited condensed consolidated financial statements have been prepared by us pursuant to the rules and regulations applicable to quarterly reports on Form 10-Q of the U.S. Securities and Exchange Commission (the “SEC”). Certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles 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 its wholly-owned subsidiary, Streamline Health, Inc. In the opinion of our management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the condensed consolidated financial statements have been included. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our most recent annual report on Form 10-K, Commission File Number 0-28132. Operating results for the three months ended April 30, 2021 are not necessarily indicative of the results that may be expected for the fiscal year ending January 31, 2022. The Company determined that it has one operating segment and one reporting unit due to the single nature of our products, product development, distribution process, and customer base as a provider of computer software-based solutions and services for healthcare providers. On February 24, 2020, the Company sold a portion of its business (the ECM Assets). The Company signed the definitive agreement with respect to the sale of the ECM Assets in December 2019 and prepared and filed a proxy statement to obtain stockholder approval of the transaction. We applied Accounting Standards Codification (“ASC”) 205-20-1 (“ASC 205-20-1”) to determine the timing to begin reporting the discontinued operations. Based on ASC 205-20-1, the Company determined that it did not have the authority to sell the assets until the date of the stockholder approval which was February 21, 2020. On February 21, 2020, the Company having the authority and ability to consummate the sale of the ECM Assets, met the criteria to present discontinued operations as described in ASC 205-20-1. Accordingly, the Company is reporting the results of operations and cash flows, and related balance sheet items associated with the ECM Assets in discontinued operations in the accompanying condensed consolidated statements of operations, cash flows and balance sheets for the current and comparative prior periods. Refer to Note 8 – Discontinued Operations for details of our discontinued operations. 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. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Apr. 30, 2021 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Our significant accounting policies are presented in “Note 2 – Significant Accounting Policies” in the fiscal year 2020 Annual Report on Form 10-K. Users of financial information for interim periods are encouraged to refer to the footnotes 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”) 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 doubtful accounts, and income taxes. Actual results could differ from those estimates. Reclassification ASC 606-10-25-19(a) provides guidance on the presentation of revenue as it relates to identifying distinct performance obligations in contracts containing multiple deliverables. As the Company has begun to shift to a primarily SaaS solution, the professional services revenue related to implementation of SaaS contracts has grown. With this growth, and expected continued growth, of professional services which are not determined to be a distinct performance obligation for our SaaS contracts, we have reclassified SaaS professional services from professional services revenue and cost of sales on the consolidated statement of operations to Software as a Service revenue and cost of sales. For the three months ended April 30, 2020, the reclassification of revenue was $29,000 and the reclassification of cost of sales was $23,000. 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. 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 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. The carrying amount of our long-term debt approximates fair value since the variable interest rates being paid on the amounts approximate the market interest rate. Long-term debt is classified as Level 2. There were no transfers of assets or liabilities between Levels 1, 2, or 3 during the three months ended April 30, 2021 and 2020. The fair value of the PPP loan was determined based on discounting the loan amount as of January 31, 2021. The fair value using market rates the Company believes would be available for similar types of financial instruments would have resulted in a lower fair value of $2,231,000 as compared to the book value of $2,301,000, a reduction of $70,000. Revenue Recognition We derive revenue from the sale of internally-developed software, either by licensing for local installation or by a SaaS delivery model, through our direct sales force or through third-party resellers. Licensed, locally-installed customers on a perpetual model utilize our 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 customers review their internal coding audit processes. We recognize revenue in accordance with ASC 606, Revenue from Contracts with Customers We recognize revenue (Step 5 below) in accordance with that core principle after applying the following steps: ● Step 1: Identify the contract(s) with a customer ● Step 2: Identify the performance obligations in the contract ● Step 3: Determine the transaction price ● Step 4: Allocate the transaction price to the performance obligations in the contract ● Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation Contracts may contain more than one performance obligation. Performance obligations are the unit of accounting for revenue recognition and represent the distinct goods or services that are promised to the customer. Revenue is recognized net of any taxes collected from customers and subsequently remitted to governmental authorities. If we determine that we have not satisfied a performance obligation, we defer recognition of the revenue until the performance obligation is satisfied. Maintenance and support and SaaS agreements are generally non-cancelable or contain significant penalties for early cancellation, although customers 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 a right of refund terms are required, revenue may not be recognized until the satisfaction of such criteria. The transaction price is allocated based on the standalone selling price of the performance obligations in the contract. Significant judgment is required to determine the standalone selling price (“SSP”) for each performance obligation and whether the amount allocated to each performance obligation depicts the amount that the Company expects to receive in exchange for the related product and/or service. As the selling prices of the Company’s software licenses are highly variable, the Company estimates the SSP of its software licenses using the residual approach when the software license is sold with other services and observable SSPs exist for the other services. The Company estimates the SSP for maintenance, professional services, and audit services based on observable standalone sales. Contract Combination The Company may execute more than one contract or agreement with a single customer. The Company evaluates whether the agreements were negotiated as a package with a single objective, whether the amount of consideration to be paid in one agreement depends on the price and/or performance of another agreement, or whether the goods or services promised in the agreements represent a single performance obligation. The conclusions reached can impact the allocation of the transaction price to each performance obligation and the timing of revenue recognition related to those arrangements. Software Licenses The Company’s software license agreements provide the customer with the right to use functional intellectual property. Implementation, support, and other services are typically considered distinct performance obligations when sold with a software license unless these services are determined to significantly modify the software. Revenue for software licenses is recognized at a point in time, typically, when the software is made available for electronic download. Maintenance and Support Services Our maintenance and support obligations include multiple performance obligations, with the two largest being rights to unspecified product upgrades or enhancements, and technical support. We believe that the multiple performance obligations within our overall maintenance and support services can be viewed as a single performance obligation since both the unspecified upgrades and technical support are comprised of promises to stand ready to fulfill the various underlying activities during the contract term. Maintenance and support agreements entitle customers to technology support, version upgrades, bug fixes and service packs. We recognize maintenance and support revenue ratably over the contract term. Professional Services The Company provides various professional services to customers with software licenses. These include project management, software implementation and software modification services. Revenue from agreements to provide professional services are generally distinct from the other promises in the contract and are recognized as the related services are performed. Consideration payable under these agreements is either fixed fee or on a time-and-materials basis, and is recognized over time as the services are performed. Software as a Service SaaS-based contracts include a right to use the Company’s platform, implementation, support and other services which represent a single promise to provide continuous access to its software solutions. The Company recognizes revenue over the contract term. Audit Services The Company provides technology-enabled coding audit services to help customers review and optimize their internal clinical documentation and coding functions across the applicable segment of the client’s enterprise. Audit services are a separate performance obligation. We recognize revenue as the services are performed. Disaggregation of Revenue The following table provides information about disaggregated revenue by type and nature of revenue stream: Three Months Ended April 30, 2021 Recurring Revenue Non- recurring Revenue Total Software licenses $ — $ 135,000 $ 135,000 Professional services — 78,000 78,000 Audit services — 504,000 504,000 Maintenance and support 1,057,000 — 1,057,000 Software as a service 1,177,000 — 1,177,000 Total revenue: $ 2,234,000 $ 717,000 $ 2,951,000 Contract Receivables and Deferred Revenues The Company receives payments from customers based upon contractual billing schedules. Contract receivables include amounts related to the Company’s contractual right to consideration for completed performance obligations not yet invoiced. Deferred revenues include payments received in advance of performance under the contract. Our contract receivables and deferred revenue are reported on an individual contract basis at the end of each reporting period. Contract receivables are classified as current or noncurrent based on the timing of when we expect to bill the customer. Deferred revenue is classified as current or noncurrent based on the timing of when we expect to recognize revenue. In the three months ended April 30, 2021, we recognized approximately $1,653,000 in revenue from deferred revenues outstanding as of January 31, 2021. Revenue allocated to remaining performance obligations was $16,556,000 as of April 30, 2021, of which the Company expects to recognize approximately 53% over the next 12 months and the remainder thereafter. Deferred costs (costs to fulfill a contract and contract acquisition costs) We defer the direct costs, which include salaries and benefits, for professional services related to SaaS contracts as a cost to fulfill a contract. These deferred costs will be amortized on a straight-line basis over the period of expected benefit which is the contractual term. As of April 30, 2021 and January 31, 2021, we had deferred costs of $144,000 and $168,000, respectively, net of accumulated amortization of $166,000 and $126,000, respectively. Amortization expense of these costs was $39,000 and $33,000 in the three months ended April 30, 2021 and 2020, respectively, and is included in various costs of revenue in the condensed consolidated statements of operations. There were no impairment losses for these capitalized costs for these periods. Contract acquisition costs, which consist of sales commissions paid or payable, is considered incremental and recoverable costs of obtaining a contract with a customer. Sales commissions for initial and renewal contracts are deferred and then amortized on a straight-line basis over the contract term. As a practical expedient, we expense sales commissions as incurred when the amortization period of related deferred commission costs is expected to be one year or less. As of April 30, 2021 and January 31, 2021, deferred commission costs paid and payable, which are included on the consolidated balance sheets within other non-current assets totaled $715,000 and $666,000, respectively, net of accumulated amortization of $342,000 and $285,000, respectively. In the three months ended April 30, 2021 and 2020, $70,000 and $31,000, respectively, in amortization expense associated with deferred sales commissions was included in selling, general and administrative expenses in the condensed consolidated statements of operations. There were no impairment losses for these capitalized costs for these periods. Equity Awards 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 service period. 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 share-based awards of $565,000 and $263,000 in the three months ended April 30, 2021 and 2020, respectively. The fair value of the stock options granted was estimated at the date of grant using a Black-Scholes option pricing model. Option pricing model input assumptions such as expected term, expected volatility and risk-free interest 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, expected term and forfeiture rates). Future grants of equity awards accounted for as share-based compensation could have a material impact on reported expenses depending upon the number, value and vesting period of future awards. The Company issues restricted stock awards in the form of Company common stock. The fair value of these awards is based on the market close price per share on the grant date. The Company expenses the compensation cost of these awards as the restriction period lapses, which is typically a one- to four-year service period. 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 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, the Company considers whether it is more likely than not that some or all of the deferred tax assets will not be realized. 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. Refer to Note 5 - 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. At April 30, 2021, the Company believes it has appropriately accounted for any uncertain tax positions. Net Earnings (Loss) Per Common Share The Company presents basic and diluted earnings per share (“EPS”) data for our common stock. Our unvested restricted stock awards are considered non-participating securities because holders are not entitled to non-forfeitable rights to dividends or dividend equivalents during the vesting term. In accordance with ASC 260, securities are deemed not to be participating in losses if there is no obligation to fund such losses. Diluted EPS for our common stock is computed using the treasury stock method. The following is the calculation of the basic and diluted net earnings (loss) per share of common stock for the three months ended April 30, 2021 and 2020: Three Months Ended April 30, 2021 April 30, 2020 Basic earnings (loss) per share: Continuing operations Loss from continuing operations, net of tax $ (2,462,000 ) $ (977,000 ) Basic net loss per share of common stock from continuing operations $ (0.07 ) $ (0.03 ) Discontinued operations Income available to common stockholders from discontinued operations $ 320,000 $ 4,650,000 Basic net earnings per share of common stock from discontinued operations $ 0.01 $ 0.16 Diluted earnings (loss) per share (1): Continuing operations Income available to common stockholders from continuing operations $ (2,462,000 ) $ (977,000 ) Diluted net loss per share of common stock from continuing operations $ (0.07 ) $ (0.03 ) Discontinued operations Income available to common stockholders from discontinued operations $ 320,000 $ 4,650,000 Diluted net earnings per share of common stock from discontinued operations $ 0.01 $ 0.15 Weighted average shares outstanding - Basic (1) 37,497,958 29,767,814 Effect of dilutive securities - Stock options, Restricted stock 686,807 269,902 Weighted average shares outstanding – Diluted 38,184,765 30,037,716 (1) Excludes the effect of unvested restricted shares of common stock, which are considered non-participating securities. As of April 30, 2021 and 2020, there were 1,387,325 and 1,124,708 unvested restricted shares of common stock outstanding, respectively. Other Operating Costs Non-routine Costs The Company incurred certain non-routine costs of approximately $350,000 associated with a one-time bonus to certain key executives for successful completion of the capital raise, and costs of approximately $91,000 in connection with the ongoing evaluation of potential partnerships and strategic arrangements. Loss on Exit from Membership Agreement As of April 30, 2020, future minimum fees due under the shared office arrangement totaled $105,000. Accordingly, we recorded an expense for the minimum future commitment under the agreement and accrued the cost to the accompanying consolidated balance sheet. Refer to Note 3 – Operating Leases. Non-Cash Items The Company had the following items that were non-cash items related to the condensed consolidated statements of cash flows: April 30, 2021 2020 Escrowed funds from sale of ECM Assets $ — $ 800,000 Right-of Use Assets from operating lease — 540,000 Accounting Pronouncements Recently Adopted In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes Recent Accounting Pronouncements Not Yet Adopted In November 2019, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which improves guidance around accounting for financial losses on accounts receivable. For smaller reporting entities, ASU 2016-13 is effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years. |
Operating Leases
Operating Leases | 3 Months Ended |
Apr. 30, 2021 | |
Leases [Abstract] | |
Operating Leases | NOTE 3 — 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 lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of 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 leases and for 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. The Company has made the accounting policy election for building leases to not separate non-leases components. The Company entered into a new lease for office space in Alpharetta, Georgia, on March 1, 2020. The lease terminates 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. As of April 30, 2021, operating lease right-of use assets totaling $349,000, and the associated lease liability is included in both current and long-term liabilities of $199,000 and $176,000, respectively. The Company used a discount rate of 6.5% to the determine the lease liability. For the three months ended April 30, 2021, the Company had lease operating costs of approximately $48,000. In addition, there was no cash paid for amounts included in the measurement of operating cash flows from operating leases as a result of lease incentives and previous pre-paid rent that had been included as an adjustment to the right-of-use asset at lease inception. Maturities of operating lease liabilities associated with the Company’s operating lease as of April 30, 2021 are as follows for the fiscal years ended January 31: 2021 $ 153,000 2022 210,000 2023 36,000 Total lease payments 399,000 Less present value adjustment (24,000 ) Present value of lease liabilities $ 375,000 Upon signing the new lease in March 2020, the Company abandoned its shared office space in Atlanta and recorded an expense and related liability of $105,000 for the minimum remaining payments required under the agreement with the landlord. The associated expense is recorded in “Loss on exit from membership agreement” in the accompanying statements of operations and is accrued in “accrued expenses” in the accompanying condensed consolidated balance sheets. The membership agreement did not qualify as a lease as the owner had substantive substitution rights. |
Debt
Debt | 3 Months Ended |
Apr. 30, 2021 | |
Debt Disclosure [Abstract] | |
Debt | NOTE 4 — DEBT Term Loan and Revolving Credit Facility with Bridge Bank On December 11, 2019, the Company entered into a new Loan and Security Agreement (the “Loan and Security Agreement”) with Bridge Bank, a division of Western Alliance Bank, consisting of a $4,000,000 term loan and a $2,000,000 revolving credit facility. The proceeds from the term loan were used to repay all outstanding balances under the Company’s then existing term loan with Wells Fargo Bank. In February 2020 the Company repaid the $4,000,000 outstanding term loan with Bridge Bank in full, with proceeds from the sale of the ECM Assets, as required under the Loan and Security Agreement. The revolving credit facility has a maturity date of twenty-four months and advances shall bear interest at a per annum rate equal to the higher of (a) the Prime Rate (as published in The Wall Street Journal) plus 1.25% or (b) 6.25%. The revolving credit facility can be advanced based upon 80% of eligible accounts receivable, as defined in the Loan and Security Agreement. The Loan and Security Agreement, as amended, includes financial covenants, including requirements that the Company maintain a minimum asset coverage ratio and certain other financial covenants, including requirements that the Company shall not deviate by more than fifteen percent its revenue projections over a trailing three-month basis or the Company’s recurring revenue shall not deviate by more than twenty percent over a cumulative year-to-date basis of its revenue projections. In addition, beginning on December 31, 2019, the Company’s Bank EBITDA, measured on a monthly basis over a trailing three-month period then ended, shall not deviate by the greater of thirty percent its projected Bank EBITDA or $150,000. The agreement initially required the Company to maintain a minimum Asset Coverage Ratio. However, the minimum Asset Coverage Ratio requirement was eliminated as a covenant under an amendment to the Loan and Security Agreement dated April 11, 2020. On March 2, 2021, the Company entered into an Amended and Restated Loan and Security Agreement, consisting of a $3,000,000 revolving credit facility (the “Amended Security Agreement”). The Amended Security Agreement has a two-year term and includes customary financial covenants including the requirements that the Company achieve certain EBITDA levels and certain recurring revenue levels. The Company shall not deviate by more than twenty percent its recurring revenue projections over a trailing three-month basis. Additionally, the Company’s Bank EBITDA, measured on a monthly basis over a trailing three-month period then ended, shall not deviate by more than 30% or $300,000. The Amended Security Agreement facility shall bear interest at a per annum rate equal to the higher of (a) the Prime Rate (as published in The Wall Street Journal) plus 1.00%, with a “floor” Prime Rate of 4.0%. The Amended Security agreement is secured by substantially all of our assets. For the period ending April 30, 2021, the Company was in compliance with the revolving credit facility covenants and had no outstanding borrowings under this credit facility. Term Loan related to “The Coronavirus Aid, Relief, and Economic Security Act” The Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act, was signed into law on March 17, 2020. Among other things, the CARES Act provided for a business loan program known as the Paycheck Protection Program (“PPP”). Qualifying companies were able to borrow, through the U.S. Small Business Administration (“SBA”), up to two months of payroll expenses. On April 21, 2020, the Company received approximately $2,301,000 through the SBA under the PPP. These funds were utilized by the Company to fund payroll expenses and avoid further staffing reductions during the slowdown resulting from COVID-19. The PPP loan carries an interest rate of 1.0% per annum. Principal and interest payments are due, beginning on the tenth month from the effective date, sufficient to satisfy the loan on the second anniversary date. However, under certain criteria, the loan may be forgiven. The Company is accruing interest at 1% in the accompanying consolidated financial statements. The future maturities under the loan are $2,301,000 in the twelve-month period from April 30, 2021. Outstanding principal balances on debt consisted of the following at: April 30, 2021 January 31, 2021 Term loan $ 2,301,000 $ 2,301,000 Deferred financing cost — — Total 2,301,000 2,301,000 Less: Current portion 2,301,000 (1,534,000 ) Non-current portion of debt $ — $ 767,000 |
Income Taxes
Income Taxes | 3 Months Ended |
Apr. 30, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 5 — INCOME TAXES Income taxes consist of the following: April 30, 2021 2020 Current tax benefit (expense): Federal $ — $ 480,000 State (9,000 ) 81,000 Total current provision $ (9,000 ) $ 561,000 The Company adopted ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes . At January 31, 2021, the Company had U.S. federal net operating loss carry forwards of $37,554,000. The Company also had state net operating loss carry forwards of $12,519,000 and Federal R&D credit carry forwards of $1,356,000, and Georgia R&D credit carry forwards of $94,000, all of which expire through fiscal 2039. The effective income tax rate on continuing operations of approximately (0.36%) differs from our combined federal and state statutory rate of 24.56% primarily due to the full valuation allowance the Company currently maintains on its net deferred tax asset. The Company has recorded $365,000 and $339,000 in reserves for uncertain tax positions as of April 30, 2021 and January 31, 2021, respectively. The Company and its subsidiary are subject to 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, 2017. All material state and local income tax matters have been concluded for years through January 31, 2016. The Company is no longer subject to IRS examination for periods prior to the tax year ended January 31, 2017; however, carryforward losses that were generated prior to the tax year ended January 31, 2017 may still be adjusted by the IRS if they are used in a future period. |
Equity
Equity | 3 Months Ended |
Apr. 30, 2021 | |
Stockholders' Equity Note [Abstract] | |
Equity | NOTE 6 — EQUITY Capital Raise On February 25, 2021, the Company entered into an underwriting agreement with Craig-Hallum Capital Group LLC, as the sole managing underwriter, relating to the underwritten public offering of an aggregate of 10,062,500 shares of the Company’s common stock, par value $0.01 per share, which included 1,312,500 shares of common stock sold pursuant to the underwriter’s exercise of an option to purchase additional shares of common stock to cover over-allotments (the “Offering”). The price to the public in the Offering was $1.60 per share of common stock. The gross proceeds to the Company from the Offering were approximately $16.1 million, before deducting underwriting discounts, commissions and estimated offering expenses. The Offering closed on March 2, 2021. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Apr. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 7 — COMMITMENTS AND CONTINGENCIES Royalty Liability 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. Additionally, we originally committed that Montefiore would receive at least an additional $3,000,000 of on-going royalty payments related to future sublicensing of CLG by us within the first six and one-half years of the license term. On July 1, 2018, we entered into a joint amendment to the Royalty Agreement and the existing Software License and Support Agreement with Montefiore to modify the payment obligations of the parties under both agreements. According to the modified provisions, our obligation to pay on-going royalties under the Royalty Agreement was replaced with the obligation to (i) provide maintenance services for 24 months and waive associated maintenance fees, and (ii) pay $1,000,000 in cash by October 31, 2020. As a result of the commitment to fulfill a portion of our obligation by providing maintenance services at no cost, the royalty liability was significantly reduced, with a corresponding increase to deferred revenues. On October 1, 2020, the Company agreed with Montefiore that it would pay, in cash, (i) $500,000 upon signing a settlement and release agreement, and (ii) $490,000 on November 1, 2020. The difference between the $990,000 in cash payment and the $1,000,000 payment obligation was due to the settlement of outstanding costs made on behalf of the Company for Montefiore. The Company executed the settlement and release agreement shortly after October 1, 2020 and made the scheduled payments. The Company retains the exclusive licensing rights for the underlying software through the term of the original agreement (2028). Consulting Agreement with 180 Consulting On March 19, 2020 the Company entered into a Master Services Agreement (the “MSA”) with 180 Consulting, LLC (“180 Consulting”), pursuant to which 180 Consulting will provide a variety of consulting services including product management, operational consulting, staff augmentation, internal systems platform integration and software engineering services, among others, through separate executed statements of work (“SOWs”). The Company has entered into ten SOWs under the MSA. Some of the SOWs include the ability to earn stock at a conversion rate to be calculated 20 days after the execution of the related SOW. 180 Consulting earned a cumulative number of shares through April 30, 2021 totaling 316,826. 180 Consulting has registration rights on all issued securities and on May 3, 2021, the Company filed a Registration Statement on Form S-3 (Registration No. 333-255723), for purposes of registering the issued shares for resale. The registration Statement is in review and comment process with the SEC staff and has yet to be declared effective. For the quarter ended April 30, 2021, the Company paid fees to 180 Consulting totaling $456,000. 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 us under the MSA and the SOWs may share workspace and administrative costs with 121G Consulting (as defined and further discussed in Note 9 – Related Party Transactions). |
Discontinued Operations
Discontinued Operations | 3 Months Ended |
Apr. 30, 2021 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | NOTE 8 – DISCONTINUED OPERATIONS On February 24, 2020, the Company consummated the previously announced sale of the Company’s legacy Enterprise Content Management business (the “ECM Assets”) pursuant to that certain Asset Purchase Agreement, dated December 17, 2019, as amended (the “Asset Purchase Agreement”), to Hyland Software, Inc. (the “Purchaser”). Pursuant to the Asset Purchase Agreement, the Purchaser has acquired the ECM Assets and assumed certain liabilities of the Company for a purchase price of $16.0 million, subject to certain adjustments for customer prepayments as set forth in the Asset Purchase Agreement. At closing, the Company realized approximately $5.4 million in net proceeds after (i) repaying the Company’s $4.0 million term loan with Bridge Bank, (ii) adjusting for certain customer prepayments, (iii) recording the escrow funds of $800,000 and (iv) incurring certain transaction cost. The gain on the sale of assets is summarized as follows: Net Proceeds, including escrowed funds $ 12,084,000 Net tangible assets sold: Accounts Receivable (1,130,000 ) Prepaid Expenses (576,000 ) Deferred Revenue 4,010,000 Net tangible assets sold 2,304,000 Capitalized software development costs (1,772,000 ) Goodwill (4,825,000 ) Transaction cost (1,782,000 ) Gain on sale of discontinued operations $ 6,009,000 The transaction costs were primarily broker cost and cost of legal and accounting to affect the transaction. The Company allocated $4,825,000 in goodwill to the sale of the ECM Assets using a valuation of the ECM Assets and the remaining, go-forward business, to bifurcate its existing goodwill as of February 24, 2020. The amount of goodwill to be included in that carrying amount was based on the relative fair values of the business to be disposed of and the portion of the reporting unit that will be retained. Further, in accordance ASC 350-20-35-3A, when only a portion of goodwill is allocated to a business to be disposed of, the remaining portion of the goodwill associated with the reporting unit to be retained was tested for impairment and no impairment was recognized. The Company recorded the following as discontinued operations on the accompanying condensed consolidated balance sheets as of April 30, 2021 and January 31, 2021: As of April 30, 2021 January 31, 2021 Current assets of discontinued operations: Accounts receivable $ 110,000 $ 587,000 Current assets of discontinued operations $ 110,000 $ 587,000 Long-term assets of discontinued operations: Property and equipment, net $ 11,000 $ 13,000 Long-term assets of discontinued operations $ 11,000 $ 13,000 Current liabilities of discontinued operations: Accrued expenses 101,000 8,000 Deferred revenues 257,000 587,000 Current liabilities of discontinued operations $ 358,000 $ 595,000 For the three months ended April 30, 2021 and 2020, the Company recorded the following into discontinued operations in the accompanying consolidated statements of operations: April 30, 2021 April 30, 2020 Revenues: Maintenance and support $ — 412,000 Software as a service — 138,000 Transition service fees 352,000 — Total revenues 352,000 550,000 Expenses: Cost of sales 2,000 285,000 Deferred financing cost — 128,000 Transition service cost 30,000 — Total expenses 32,000 413,000 Income from discontinued operations $ 320,000 $ 137,000 The Company entered into an agreement with the Purchaser of the ECM Assets to maintain the current data center through a transition period. The transition services do not have a finite ending date, however, the goal of both the Purchaser and the Company is to complete the transition of customer data as quickly as possible, with a current goal of ending this portion of the agreement by September 2021. The Company continues to pay the rent and maintain the servers within the data center during the transition services period and these amounts will continue to be presented as discontinued operations in future periods throughout fiscal year 2021. In consideration of these transition services, the Company maintained rights to certain customer contracts that provides a revenue stream. The cost to maintain the data center can be eliminated upon the completion of the transition services as described in the Asset Purchase Agreement. Our on-going cost to maintain the data center includes rent, cost of the servers, certain third-party software arrangements, and depreciation of the servers. The property and equipment on the Company’s balance sheet in discontinued operations is the net book value for the related servers in the data center. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Apr. 30, 2021 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 9 - RELATED PARTY TRANSACTIONS In the second quarter of fiscal year 2019, in connection with the appointment of Wyche T. “Tee” Green, III, Chairman of the Board of the Company and Managing Member of 121G, LLC (“121G”), as interim President and Chief Executive Officer of the Company, we entered into a consulting agreement with 121G Consulting, LLC (“121G Consulting”), to provide an assessment of the Company’s innovation and growth teams and strategies and to develop a set of prioritized recommendations to be consolidated into a strategic plan for the Company’s leadership team. Mr. Green is a “member” of 121G Consulting, and, accordingly, has a financial interest in that entity. In October 2019, Mr. Green was appointed as President and Chief Executive Officer of the Company on a full-time basis. For the quarter ended April 30, 2020, 121G Consulting fees totaled $70,000. No fees were incurred from 121G Consulting for the quarter ended April 30, 2021. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Apr. 30, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 10 — SUBSEQUENT EVENTS We have evaluated subsequent events occurring after April 30, 2021, and based on our evaluation, except as set forth below, we did not identify any events that would have required recognition or disclosure in these condensed consolidated financial statements. On May 3, 2021, the Company filed a Registration Statement on Form S-3 (Registration No. 333-255723), for purposes of registering the shares issued to 180 Consulting for resale. The Registration Statement is in the review and comment process with the SEC staff and has yet to be declared effective. On May 24, 2021, the Company amended its Certificate of Incorporation, as amended, to increase the total number of authorized shares of the Company’s common stock from 45,000,000 shares to 65,000,000 shares (the “Charter Amendment”). The Charter Amendment was previously approved by the board of directors of the Company, subject to stockholder approval, and approved by the Company’s stockholders at the 2021 Annual Meeting of Stockholders of the Company, held on May 20, 2021 (the “Annual Meeting”). At the Annual Meeting, 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 6,223,246 shares to 8,223,246 shares (the “Third Amended 2013 Plan Amendment”). As described in the Company’s preliminary proxy statement on Schedule 14A filed with the SEC on June 8, 2021, because there may be uncertainty regarding the validity or effectiveness of the prior approval of the Charter Amendment, the authorized shares increase effected thereby and the Third Amended 2013 Plan Amendment at the Annual Meeting, |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Apr. 30, 2021 | |
Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“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 doubtful accounts, and income taxes. Actual results could differ from those estimates. |
Reclassification | Reclassification ASC 606-10-25-19(a) provides guidance on the presentation of revenue as it relates to identifying distinct performance obligations in contracts containing multiple deliverables. As the Company has begun to shift to a primarily SaaS solution, the professional services revenue related to implementation of SaaS contracts has grown. With this growth, and expected continued growth, of professional services which are not determined to be a distinct performance obligation for our SaaS contracts, we have reclassified SaaS professional services from professional services revenue and cost of sales on the consolidated statement of operations to Software as a Service revenue and cost of sales. For the three months ended April 30, 2020, the reclassification of revenue was $29,000 and the reclassification of cost of sales was $23,000. |
Fair Value of Financial Instruments | 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. 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 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. The carrying amount of our long-term debt approximates fair value since the variable interest rates being paid on the amounts approximate the market interest rate. Long-term debt is classified as Level 2. There were no transfers of assets or liabilities between Levels 1, 2, or 3 during the three months ended April 30, 2021 and 2020. The fair value of the PPP loan was determined based on discounting the loan amount as of January 31, 2021. The fair value using market rates the Company believes would be available for similar types of financial instruments would have resulted in a lower fair value of $2,231,000 as compared to the book value of $2,301,000, a reduction of $70,000. |
Revenue Recognition | Revenue Recognition We derive revenue from the sale of internally-developed software, either by licensing for local installation or by a SaaS delivery model, through our direct sales force or through third-party resellers. Licensed, locally-installed customers on a perpetual model utilize our 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 customers review their internal coding audit processes. We recognize revenue in accordance with ASC 606, Revenue from Contracts with Customers We recognize revenue (Step 5 below) in accordance with that core principle after applying the following steps: ● Step 1: Identify the contract(s) with a customer ● Step 2: Identify the performance obligations in the contract ● Step 3: Determine the transaction price ● Step 4: Allocate the transaction price to the performance obligations in the contract ● Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation Contracts may contain more than one performance obligation. Performance obligations are the unit of accounting for revenue recognition and represent the distinct goods or services that are promised to the customer. Revenue is recognized net of any taxes collected from customers and subsequently remitted to governmental authorities. If we determine that we have not satisfied a performance obligation, we defer recognition of the revenue until the performance obligation is satisfied. Maintenance and support and SaaS agreements are generally non-cancelable or contain significant penalties for early cancellation, although customers 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 a right of refund terms are required, revenue may not be recognized until the satisfaction of such criteria. The transaction price is allocated based on the standalone selling price of the performance obligations in the contract. Significant judgment is required to determine the standalone selling price (“SSP”) for each performance obligation and whether the amount allocated to each performance obligation depicts the amount that the Company expects to receive in exchange for the related product and/or service. As the selling prices of the Company’s software licenses are highly variable, the Company estimates the SSP of its software licenses using the residual approach when the software license is sold with other services and observable SSPs exist for the other services. The Company estimates the SSP for maintenance, professional services, and audit services based on observable standalone sales. Contract Combination The Company may execute more than one contract or agreement with a single customer. The Company evaluates whether the agreements were negotiated as a package with a single objective, whether the amount of consideration to be paid in one agreement depends on the price and/or performance of another agreement, or whether the goods or services promised in the agreements represent a single performance obligation. The conclusions reached can impact the allocation of the transaction price to each performance obligation and the timing of revenue recognition related to those arrangements. Software Licenses The Company’s software license agreements provide the customer with the right to use functional intellectual property. Implementation, support, and other services are typically considered distinct performance obligations when sold with a software license unless these services are determined to significantly modify the software. Revenue for software licenses is recognized at a point in time, typically, when the software is made available for electronic download. Maintenance and Support Services Our maintenance and support obligations include multiple performance obligations, with the two largest being rights to unspecified product upgrades or enhancements, and technical support. We believe that the multiple performance obligations within our overall maintenance and support services can be viewed as a single performance obligation since both the unspecified upgrades and technical support are comprised of promises to stand ready to fulfill the various underlying activities during the contract term. Maintenance and support agreements entitle customers to technology support, version upgrades, bug fixes and service packs. We recognize maintenance and support revenue ratably over the contract term. Professional Services The Company provides various professional services to customers with software licenses. These include project management, software implementation and software modification services. Revenue from agreements to provide professional services are generally distinct from the other promises in the contract and are recognized as the related services are performed. Consideration payable under these agreements is either fixed fee or on a time-and-materials basis, and is recognized over time as the services are performed. Software as a Service SaaS-based contracts include a right to use the Company’s platform, implementation, support and other services which represent a single promise to provide continuous access to its software solutions. The Company recognizes revenue over the contract term. Audit Services The Company provides technology-enabled coding audit services to help customers review and optimize their internal clinical documentation and coding functions across the applicable segment of the client’s enterprise. Audit services are a separate performance obligation. We recognize revenue as the services are performed. Disaggregation of Revenue The following table provides information about disaggregated revenue by type and nature of revenue stream: Three Months Ended April 30, 2021 Recurring Revenue Non- recurring Revenue Total Software licenses $ — $ 135,000 $ 135,000 Professional services — 78,000 78,000 Audit services — 504,000 504,000 Maintenance and support 1,057,000 — 1,057,000 Software as a service 1,177,000 — 1,177,000 Total revenue: $ 2,234,000 $ 717,000 $ 2,951,000 Contract Receivables and Deferred Revenues The Company receives payments from customers based upon contractual billing schedules. Contract receivables include amounts related to the Company’s contractual right to consideration for completed performance obligations not yet invoiced. Deferred revenues include payments received in advance of performance under the contract. Our contract receivables and deferred revenue are reported on an individual contract basis at the end of each reporting period. Contract receivables are classified as current or noncurrent based on the timing of when we expect to bill the customer. Deferred revenue is classified as current or noncurrent based on the timing of when we expect to recognize revenue. In the three months ended April 30, 2021, we recognized approximately $1,653,000 in revenue from deferred revenues outstanding as of January 31, 2021. Revenue allocated to remaining performance obligations was $16,556,000 as of April 30, 2021, of which the Company expects to recognize approximately 53% over the next 12 months and the remainder thereafter. Deferred costs (costs to fulfill a contract and contract acquisition costs) We defer the direct costs, which include salaries and benefits, for professional services related to SaaS contracts as a cost to fulfill a contract. These deferred costs will be amortized on a straight-line basis over the period of expected benefit which is the contractual term. As of April 30, 2021 and January 31, 2021, we had deferred costs of $144,000 and $168,000, respectively, net of accumulated amortization of $166,000 and $126,000, respectively. Amortization expense of these costs was $39,000 and $33,000 in the three months ended April 30, 2021 and 2020, respectively, and is included in various costs of revenue in the condensed consolidated statements of operations. There were no impairment losses for these capitalized costs for these periods. Contract acquisition costs, which consist of sales commissions paid or payable, is considered incremental and recoverable costs of obtaining a contract with a customer. Sales commissions for initial and renewal contracts are deferred and then amortized on a straight-line basis over the contract term. As a practical expedient, we expense sales commissions as incurred when the amortization period of related deferred commission costs is expected to be one year or less. As of April 30, 2021 and January 31, 2021, deferred commission costs paid and payable, which are included on the consolidated balance sheets within other non-current assets totaled $715,000 and $666,000, respectively, net of accumulated amortization of $342,000 and $285,000, respectively. In the three months ended April 30, 2021 and 2020, $70,000 and $31,000, respectively, in amortization expense associated with deferred sales commissions was included in selling, general and administrative expenses in the condensed consolidated statements of operations. There were no impairment losses for these capitalized costs for these periods. |
Equity Awards | Equity Awards 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 service period. 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 share-based awards of $565,000 and $263,000 in the three months ended April 30, 2021 and 2020, respectively. The fair value of the stock options granted was estimated at the date of grant using a Black-Scholes option pricing model. Option pricing model input assumptions such as expected term, expected volatility and risk-free interest 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, expected term and forfeiture rates). Future grants of equity awards accounted for as share-based compensation could have a material impact on reported expenses depending upon the number, value and vesting period of future awards. The Company issues restricted stock awards in the form of Company common stock. The fair value of these awards is based on the market close price per share on the grant date. The Company expenses the compensation cost of these awards as the restriction period lapses, which is typically a one- to four-year service period. |
Income Taxes | 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 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, the Company considers whether it is more likely than not that some or all of the deferred tax assets will not be realized. 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. Refer to Note 5 - 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. At April 30, 2021, the Company believes it has appropriately accounted for any uncertain tax positions. |
Net Earnings (Loss) Per Common Share | Net Earnings (Loss) Per Common Share The Company presents basic and diluted earnings per share (“EPS”) data for our common stock. Our unvested restricted stock awards are considered non-participating securities because holders are not entitled to non-forfeitable rights to dividends or dividend equivalents during the vesting term. In accordance with ASC 260, securities are deemed not to be participating in losses if there is no obligation to fund such losses. Diluted EPS for our common stock is computed using the treasury stock method. The following is the calculation of the basic and diluted net earnings (loss) per share of common stock for the three months ended April 30, 2021 and 2020: Three Months Ended April 30, 2021 April 30, 2020 Basic earnings (loss) per share: Continuing operations Loss from continuing operations, net of tax $ (2,462,000 ) $ (977,000 ) Basic net loss per share of common stock from continuing operations $ (0.07 ) $ (0.03 ) Discontinued operations Income available to common stockholders from discontinued operations $ 320,000 $ 4,650,000 Basic net earnings per share of common stock from discontinued operations $ 0.01 $ 0.16 Diluted earnings (loss) per share (1): Continuing operations Income available to common stockholders from continuing operations $ (2,462,000 ) $ (977,000 ) Diluted net loss per share of common stock from continuing operations $ (0.07 ) $ (0.03 ) Discontinued operations Income available to common stockholders from discontinued operations $ 320,000 $ 4,650,000 Diluted net earnings per share of common stock from discontinued operations $ 0.01 $ 0.15 Weighted average shares outstanding - Basic (1) 37,497,958 29,767,814 Effect of dilutive securities - Stock options, Restricted stock 686,807 269,902 Weighted average shares outstanding – Diluted 38,184,765 30,037,716 (1) Excludes the effect of unvested restricted shares of common stock, which are considered non-participating securities. As of April 30, 2021 and 2020, there were 1,387,325 and 1,124,708 unvested restricted shares of common stock outstanding, respectively. |
Other Operating Costs | Other Operating Costs Non-routine Costs The Company incurred certain non-routine costs of approximately $350,000 associated with a one-time bonus to certain key executives for successful completion of the capital raise, and costs of approximately $91,000 in connection with the ongoing evaluation of potential partnerships and strategic arrangements. Loss on Exit from Membership Agreement As of April 30, 2020, future minimum fees due under the shared office arrangement totaled $105,000. Accordingly, we recorded an expense for the minimum future commitment under the agreement and accrued the cost to the accompanying consolidated balance sheet. Refer to Note 3 – Operating Leases. |
Non-Cash Items | Non-Cash Items The Company had the following items that were non-cash items related to the condensed consolidated statements of cash flows: April 30, 2021 2020 Escrowed funds from sale of ECM Assets $ — $ 800,000 Right-of Use Assets from operating lease — 540,000 |
Accounting Pronouncements Recently Adopted | Accounting Pronouncements Recently Adopted In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes |
Recent Accounting Pronouncements Not Yet Adopted | Recent Accounting Pronouncements Not Yet Adopted In November 2019, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which improves guidance around accounting for financial losses on accounts receivable. For smaller reporting entities, ASU 2016-13 is effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Apr. 30, 2021 | |
Accounting Policies [Abstract] | |
Schedule of Disaggregation of Revenue | The following table provides information about disaggregated revenue by type and nature of revenue stream: Three Months Ended April 30, 2021 Recurring Revenue Non- recurring Revenue Total Software licenses $ — $ 135,000 $ 135,000 Professional services — 78,000 78,000 Audit services — 504,000 504,000 Maintenance and support 1,057,000 — 1,057,000 Software as a service 1,177,000 — 1,177,000 Total revenue: $ 2,234,000 $ 717,000 $ 2,951,000 |
Schedule of Basic and Diluted Net Loss Per Share of Common Stock | The following is the calculation of the basic and diluted net earnings (loss) per share of common stock for the three months ended April 30, 2021 and 2020: Three Months Ended April 30, 2021 April 30, 2020 Basic earnings (loss) per share: Continuing operations Loss from continuing operations, net of tax $ (2,462,000 ) $ (977,000 ) Basic net loss per share of common stock from continuing operations $ (0.07 ) $ (0.03 ) Discontinued operations Income available to common stockholders from discontinued operations $ 320,000 $ 4,650,000 Basic net earnings per share of common stock from discontinued operations $ 0.01 $ 0.16 Diluted earnings (loss) per share (1): Continuing operations Income available to common stockholders from continuing operations $ (2,462,000 ) $ (977,000 ) Diluted net loss per share of common stock from continuing operations $ (0.07 ) $ (0.03 ) Discontinued operations Income available to common stockholders from discontinued operations $ 320,000 $ 4,650,000 Diluted net earnings per share of common stock from discontinued operations $ 0.01 $ 0.15 Weighted average shares outstanding - Basic (1) 37,497,958 29,767,814 Effect of dilutive securities - Stock options, Restricted stock 686,807 269,902 Weighted average shares outstanding – Diluted 38,184,765 30,037,716 (1) Excludes the effect of unvested restricted shares of common stock, which are considered non-participating securities. As of April 30, 2021 and 2020, there were 1,387,325 and 1,124,708 unvested restricted shares of common stock outstanding, respectively. |
Schedule of Non-Cash Items Related to Condensed Consolidated Statements of Cash Flow | The Company had the following items that were non-cash items related to the condensed consolidated statements of cash flows: April 30, 2021 2020 Escrowed funds from sale of ECM Assets $ — $ 800,000 Right-of Use Assets from operating lease — 540,000 |
Operating Leases (Tables)
Operating Leases (Tables) | 3 Months Ended |
Apr. 30, 2021 | |
Leases [Abstract] | |
Schedule of Maturities of Operating Lease Liabilities | Maturities of operating lease liabilities associated with the Company’s operating lease as of April 30, 2021 are as follows for the fiscal years ended January 31: 2021 $ 153,000 2022 210,000 2023 36,000 Total lease payments 399,000 Less present value adjustment (24,000 ) Present value of lease liabilities $ 375,000 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Apr. 30, 2021 | |
Debt Disclosure [Abstract] | |
Schedule of Outstanding Debt, Other Than PPP Loan | Outstanding principal balances on debt consisted of the following at: April 30, 2021 January 31, 2021 Term loan $ 2,301,000 $ 2,301,000 Deferred financing cost — — Total 2,301,000 2,301,000 Less: Current portion 2,301,000 (1,534,000 ) Non-current portion of debt $ — $ 767,000 |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Apr. 30, 2021 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax (Expense) Benefit | Income taxes consist of the following: April 30, 2021 2020 Current tax benefit (expense): Federal $ — $ 480,000 State (9,000 ) 81,000 Total current provision $ (9,000 ) $ 561,000 |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 3 Months Ended |
Apr. 30, 2021 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of Gain on Sale of Assets | The gain on the sale of assets is summarized as follows: Net Proceeds, including escrowed funds $ 12,084,000 Net tangible assets sold: Accounts Receivable (1,130,000 ) Prepaid Expenses (576,000 ) Deferred Revenue 4,010,000 Net tangible assets sold 2,304,000 Capitalized software development costs (1,772,000 ) Goodwill (4,825,000 ) Transaction cost (1,782,000 ) Gain on sale of discontinued operations $ 6,009,000 |
Schedule of Discontinued Operations of Consolidated Balance Sheets and Statements of Operations | The Company recorded the following as discontinued operations on the accompanying condensed consolidated balance sheets as of April 30, 2021 and January 31, 2021: As of April 30, 2021 January 31, 2021 Current assets of discontinued operations: Accounts receivable $ 110,000 $ 587,000 Current assets of discontinued operations $ 110,000 $ 587,000 Long-term assets of discontinued operations: Property and equipment, net $ 11,000 $ 13,000 Long-term assets of discontinued operations $ 11,000 $ 13,000 Current liabilities of discontinued operations: Accrued expenses 101,000 8,000 Deferred revenues 257,000 587,000 Current liabilities of discontinued operations $ 358,000 $ 595,000 For the three months ended April 30, 2021 and 2020, the Company recorded the following into discontinued operations in the accompanying consolidated statements of operations: April 30, 2021 April 30, 2020 Revenues: Maintenance and support $ — 412,000 Software as a service — 138,000 Transition service fees 352,000 — Total revenues 352,000 550,000 Expenses: Cost of sales 2,000 285,000 Deferred financing cost — 128,000 Transition service cost 30,000 — Total expenses 32,000 413,000 Income from discontinued operations $ 320,000 $ 137,000 |
Basis of Presentation (Details
Basis of Presentation (Details Narrative) | 3 Months Ended |
Apr. 30, 2021Segments | |
Accounting Policies [Abstract] | |
Number of operating segments | 1 |
Number of reporting segment | 1 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | ||
Apr. 30, 2021 | Apr. 30, 2020 | Jan. 31, 2021 | |
Total revenue | $ 2,951,000 | $ 2,844,000 | |
Term loan fair value | 2,231,000 | ||
Term loan | 2,301,000 | $ 2,301,000 | |
Term loan reduction amount | 70,000 | ||
Recognized revenue from deferred revenue | 1,653,000 | ||
Revenue of remaining performance obligations | $ 16,556,000 | ||
Revenue of remaining performance obligations, percent | 53.00% | ||
Revenue of remaining performance obligations description | The Company expects to recognize approximately 53% over the next 12 months and the remainder thereafter. | ||
Deferred costs, net | $ 144,000 | 168,000 | |
Deferred costs, accumulated amortization | 166,000 | 126,000 | |
Deferred costs, amortization expense | 39,000 | 33,000 | |
Amortization expense with deferred sales commissions | 342,000 | 285,000 | |
Compensation expense | 565,000 | 263,000 | |
Legal and accounting cost | 350,000 | ||
Completion of the capital raise, and costs | 91,000 | ||
Loss on exit of membership agreement | 105,000 | ||
Selling, General and Administrative Expenses [Member] | |||
Amortization expense with deferred sales commissions | 70,000 | 31,000 | |
Other Non-current Assets [Member] | |||
Deferred commissions costs paid and payable | $ 715,000 | $ 666,000 | |
SaaS Solution [Member] | |||
Total revenue | 29,000 | ||
Cost of revenue | $ 23,000 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Disaggregation of Revenue (Details) - USD ($) | 3 Months Ended | |
Apr. 30, 2021 | Apr. 30, 2020 | |
Total revenue | $ 2,951,000 | $ 2,844,000 |
Software Licenses [Member] | ||
Total revenue | 135,000 | |
Professional Services [Member] | ||
Total revenue | 78,000 | 152,000 |
Audit Services [Member] | ||
Total revenue | 504,000 | 544,000 |
Maintenance and Support [Member] | ||
Total revenue | 1,057,000 | $ 1,258,000 |
Software as a Service [Member] | ||
Total revenue | 1,177,000 | |
Recurring Revenue [Member] | ||
Total revenue | 2,234,000 | |
Recurring Revenue [Member] | Software Licenses [Member] | ||
Total revenue | ||
Recurring Revenue [Member] | Professional Services [Member] | ||
Total revenue | ||
Recurring Revenue [Member] | Audit Services [Member] | ||
Total revenue | ||
Recurring Revenue [Member] | Maintenance and Support [Member] | ||
Total revenue | 1,057,000 | |
Recurring Revenue [Member] | Software as a Service [Member] | ||
Total revenue | 1,177,000 | |
Non-recurring Revenue [Member] | ||
Total revenue | 717,000 | |
Non-recurring Revenue [Member] | Software Licenses [Member] | ||
Total revenue | 135,000 | |
Non-recurring Revenue [Member] | Professional Services [Member] | ||
Total revenue | 78,000 | |
Non-recurring Revenue [Member] | Audit Services [Member] | ||
Total revenue | 504,000 | |
Non-recurring Revenue [Member] | Maintenance and Support [Member] | ||
Total revenue | ||
Non-recurring Revenue [Member] | Software as a Service [Member] | ||
Total revenue |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Schedule of Basic and Diluted Net Loss Per Share of Common Stock (Details) - USD ($) | 3 Months Ended | ||
Apr. 30, 2021 | Apr. 30, 2020 | ||
Accounting Policies [Abstract] | |||
Loss from continuing operations, net of tax | $ (2,462,000) | $ (977,000) | |
Basic net loss per share of common stock from continuing operations | $ (0.07) | $ (0.03) | |
Income available to common stockholders from discontinued operations | $ 320,000 | $ 4,650,000 | |
Basic net earnings per share of common stock from discontinued operations | $ 0.01 | $ 0.16 | |
Income available to common stockholders from continuing operations | [1] | $ (2,462,000) | $ (977,000) |
Diluted net loss per share of common stock from continuing operations | [1] | $ (0.07) | $ (0.03) |
Income available to common stockholders from discontinued operations | [1] | $ 320,000 | $ 4,650,000 |
Diluted net earnings per share of common stock from discontinued operations | [1] | $ 0.01 | $ 0.15 |
Weighted average shares outstanding - Basic | [1] | 37,497,958 | 29,767,814 |
Effect of dilutive securities - Stock options, Restricted stock | 686,807 | 269,902 | |
Weighted average shares outstanding - Diluted | 38,184,765 | 30,037,716 | |
[1] | Excludes the effect of unvested restricted shares of common stock, which are considered non-participating securities. As of April 30, 2021 and 2020, there were 1,387,325 and 1,124,708 unvested restricted shares of common stock outstanding, respectively. |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Schedule of Basic and Diluted Net Loss Per Share of Common Stock (Details) (Parenthetical) - shares | 3 Months Ended | |
Apr. 30, 2021 | Apr. 30, 2020 | |
Accounting Policies [Abstract] | ||
Unvested restricted shares of common stock | 1,387,325 | 1,124,708 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Schedule of Non-Cash Items Related to Condensed Consolidated Statements of Cash Flow (Details) - USD ($) | 3 Months Ended | |
Apr. 30, 2021 | Apr. 30, 2020 | |
Accounting Policies [Abstract] | ||
Escrowed funds from sale of ECM Assets | $ 800,000 | |
Right-of Use Assets from operating lease | $ 540,000 |
Operating Leases (Details Narra
Operating Leases (Details Narrative) - USD ($) | 3 Months Ended | ||
Apr. 30, 2021 | Jan. 31, 2021 | Mar. 31, 2020 | |
Lease expired date | Mar. 31, 2023 | ||
Operating lease, right-of use asset | $ 349,000 | $ 391,000 | |
Operating cost | 48,000 | ||
Operating leases paid | |||
Office Space [Member] | |||
Total minimum rentals due amount | $ 105,000 | ||
Right of Use Asset [Member] | |||
Operating lease, right-of use asset | 349,000 | ||
Current portion of operating lease obligation | 199,000 | ||
Non-current portion of operating lease obligation | $ 176,000 | ||
Lease discount rate | 6.50% | ||
At inception [Member] | |||
Operating lease, right-of use asset | $ 540,000 |
Operating Leases - Schedule of
Operating Leases - Schedule of Maturities of Operating Lease Liabilities (Details) | Apr. 30, 2021USD ($) |
Leases [Abstract] | |
2021 | $ 153,000 |
2022 | 210,000 |
2023 | 36,000 |
Total lease payments | 399,000 |
Less present value adjustment | (24,000) |
Present value of lease liabilities | $ 375,000 |
Debt (Details Narrative)
Debt (Details Narrative) - USD ($) | Mar. 02, 2021 | Dec. 11, 2019 | Apr. 30, 2021 | Jan. 31, 2021 | Apr. 21, 2020 | Feb. 29, 2020 |
Term loan | $ 2,301,000 | $ 2,301,000 | ||||
Future maturities under loan for first year | $ 2,301,000 | |||||
Loan and Security Agreement [Member] | ||||||
Term loan | $ 4,000,000 | $ 4,000,000 | ||||
Revolving line of credit | $ 2,000,000 | |||||
Line of credit facility description | The revolving credit facility has a maturity date of twenty-four months and advances shall bear interest at a per annum rate equal to the higher of (a) the Prime Rate (as published in The Wall Street Journal) plus 1.25% or (b) 6.25%. The revolving credit facility can be advanced based upon 80% of eligible accounts receivable, as defined in the Loan and Security Agreement. | |||||
Coverage ratio description | The Loan and Security Agreement, as amended, includes financial covenants, including requirements that the Company maintain a minimum asset coverage ratio and certain other financial covenants, including requirements that the Company shall not deviate by more than fifteen percent its revenue projections over a trailing three-month basis or the Company's recurring revenue shall not deviate by more than twenty percent over a cumulative year-to-date basis of its revenue projections. In addition, beginning on December 31, 2019, the Company's Bank EBITDA, measured on a monthly basis over a trailing three-month period then ended, shall not deviate by the greater of thirty percent its projected Bank EBITDA or $150,000. | |||||
Amended and Restated Loan and Security Agreement [Member] | Revolving Credit Facility [Member] | ||||||
Revolving line of credit | $ 3,000,000 | |||||
Line of credit facility description | Additionally, the Company's Bank EBITDA, measured on a monthly basis over a trailing three-month period then ended, shall not deviate by more than 30% or $300,000. The Amended Security Agreement facility shall bear interest at a per annum rate equal to the higher of (a) the Prime Rate (as published in The Wall Street Journal) plus 1.00%, with a "floor" Prime Rate of 4.0%. | |||||
Paycheck Protection Program [Member] | ||||||
Term loan | $ 2,301,000 | |||||
Debt interest rate | 1.00% |
Debt - Schedule of Outstanding
Debt - Schedule of Outstanding Debt, Other Than PPP Loan (Details) - USD ($) | Apr. 30, 2021 | Jan. 31, 2021 |
Debt Disclosure [Abstract] | ||
Term loan | $ 2,301,000 | $ 2,301,000 |
Deferred financing cost | ||
Total | 2,301,000 | 2,301,000 |
Less: Current portion | 2,301,000 | 1,534,000 |
Non-current portion of debt | $ 767,000 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 3 Months Ended | |
Apr. 30, 2021 | Jan. 31, 2021 | |
Operating loss carry forwards | $ 37,554,000 | |
Expire date description | Expire through fiscal 2039 | |
Effective income tax rate on continuing operations | (0.36%) | |
Federal statutory income tax rates | 24.56% | |
Uncertain tax positions | $ 365,000 | 339,000 |
State [Member] | ||
Operating loss carry forwards | 12,519,000 | |
Federal R&D [Member] | ||
Operating loss carry forwards | 1,356,000 | |
Georgia R&D [Member] | ||
Operating loss carry forwards | $ 94,000 |
Income Taxes - Schedule of Comp
Income Taxes - Schedule of Components of Income Tax (Expense) Benefit (Details) - USD ($) | 3 Months Ended | |
Apr. 30, 2021 | Apr. 30, 2020 | |
Income Tax Disclosure [Abstract] | ||
Current tax benefit (expense): Federal | $ 480,000 | |
Current tax benefit (expense): State | (9,000) | 81,000 |
Total current provision | $ (9,000) | $ 561,000 |
Equity (Details Narrative)
Equity (Details Narrative) - USD ($) | Feb. 25, 2021 | Apr. 30, 2021 | Apr. 30, 2020 | Jan. 31, 2021 |
Common stock, par value | $ 0.01 | $ 0.01 | ||
Proceeds from issuance of common stock | $ 16,100,000 | |||
Underwriting Agreement [Member] | Craig-Hallum Capital Group LLC [Member] | ||||
Proceeds from issuance of common stock | $ 16,100,000 | |||
Underwriting Agreement [Member] | Craig-Hallum Capital Group LLC [Member] | Over-Allotment Option [Member] | ||||
Number of shares issued | 10,062,500 | |||
Common stock, par value | $ 0.01 | |||
Number of shares of common stock sold | 1,312,500 | |||
Price per share | $ 1.60 |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) - USD ($) | Nov. 02, 2020 | Oct. 02, 2020 | Jul. 01, 2018 | Oct. 25, 2013 | Apr. 30, 2021 | Oct. 31, 2020 |
Software License and Royalty Agreement [Member] | ||||||
Term of licensing agreement | 15 years | |||||
One-time initial base royalty fee | $ 3,000,000 | |||||
Minimum commitment for additional royalty payments | $ 3,000,000 | |||||
Royalty Agreement [Member] | ||||||
Period of time over which additional royalty payments are to be made | 6 years 6 months | |||||
Term of maintenance and service | 24 months | |||||
Cash payment due per royalty agreement | $ 1,000,000 | |||||
Settlement and Release Agreement [Member] | ||||||
Payments for cash | $ 490,000 | $ 500,000 | $ 990,000 | |||
Payments obligations | $ 1,000,000 | |||||
Master Services Agreement [Member] | 180 Consulting, LLC [Member] | ||||||
Number of shares issued for services | 316,826 | |||||
Consulting fees | $ 456,000 |
Discontinued Operations (Detail
Discontinued Operations (Details Narrative) - USD ($) | Feb. 24, 2020 | Apr. 30, 2021 | Jan. 31, 2021 |
Escrow funds | $ 800,000 | $ 800,000 | |
Goodwill | $ 4,825,000 | $ 10,712,000 | $ 10,712,000 |
Asset Purchase Agreement [Member] | Enterprise Content Management Business [Member] | |||
Purchase price | 16,000,000 | ||
Proceeds from debt | 5,400,000 | ||
Repayment for debt | 4,000,000 | ||
Escrow funds | 800,000 | ||
Goodwill | $ 4,825,000 |
Discontinued Operations - Sched
Discontinued Operations - Schedule of Gain on Sale of Assets (Details) - USD ($) | Feb. 24, 2020 | Apr. 30, 2021 | Apr. 30, 2020 | Jan. 31, 2021 |
Discontinued Operations and Disposal Groups [Abstract] | ||||
Net Proceeds, including escrowed funds | $ 12,084,000 | $ 11,284,000 | ||
Accounts Receivable | (1,130,000) | |||
Prepaid Expenses | (576,000) | |||
Deferred Revenue | 4,010,000 | |||
Net tangible assets sold | 2,304,000 | |||
Capitalized software development costs | (1,772,000) | (5,818,000) | $ (5,945,000) | |
Goodwill | (4,825,000) | $ (10,712,000) | $ (10,712,000) | |
Transaction cost | (1,782,000) | |||
Gain on sale of discontinued operations | $ 6,009,000 |
Discontinued Operations - Sch_2
Discontinued Operations - Schedule of Discontinued Operations of Consolidated Balance Sheets and Statements of Operations (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Apr. 30, 2021 | Apr. 30, 2020 | Jan. 31, 2020 | Jan. 31, 2021 | |
Current assets of discontinued operations: Accounts receivable | $ 110,000 | $ 587,000 | ||
Current assets of discontinued operations | 110,000 | 587,000 | ||
Long-term assets of discontinued operations: Property and equipment, net | 11,000 | 13,000 | ||
Long-term assets of discontinued operations | 11,000 | 13,000 | ||
Current liabilities of discontinued operations: Accrued expenses | 101,000 | 8,000 | ||
Current liabilities of discontinued operations: Deferred revenues | 257,000 | 587,000 | ||
Current liabilities of discontinued operations | 358,000 | $ 595,000 | ||
Total revenues | 352,000 | $ 550,000 | ||
Expenses: Cost of sales | 2,000 | 285,000 | ||
Expenses: Deferred financing cost | 128,000 | |||
Expenses: Transition service cost | 30,000 | |||
Total expenses | 32,000 | 413,000 | ||
Income from discontinued operations | 320,000 | 137,000 | ||
Maintenance and Support [Member] | ||||
Total revenues | $ 412,000 | |||
Software as a Service [Member] | ||||
Total revenues | $ 138,000 | |||
Transition Service Fees [Member] | ||||
Total revenues | $ 352,000 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 3 Months Ended | |
Apr. 30, 2021 | Apr. 30, 2020 | |
121G Consulting, LLC [Member] | ||
Consulting fees | $ 70,000 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - shares | May 24, 2021 | May 23, 2021 | Apr. 30, 2021 | Jan. 31, 2021 |
Common stock, shares authorized | 45,000,000 | 45,000,000 | ||
Subsequent Event [Member] | ||||
Common stock, shares authorized | 65,000,000 | 45,000,000 | ||
Subsequent Event [Member] | 2013 Incentive Compensation Plan [Member] | Stock Options [Member] | ||||
Number of additional shares authorized to issue | 2,000,000 | |||
Number of shares authorized to issue | 8,223,246 | 6,223,246 |