Cover
Cover - shares | 9 Months Ended | |
Oct. 31, 2022 | Dec. 12, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Oct. 31, 2022 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2022 | |
Current Fiscal Year End Date | --01-31 | |
Entity File Number | 000-28132 | |
Entity Registrant Name | STREAMLINE HEALTH SOLUTIONS, INC. | |
Entity Central Index Key | 0001008586 | |
Entity Tax Identification Number | 31-1455414 | |
Entity Incorporation, State or Country Code | DE | |
Entity Address, Address Line One | 2400 Old Milton Pkwy. | |
Entity Address, Address Line Two | Box 1353 | |
Entity Address, City or Town | Alpharetta | |
Entity Address, State or Province | GA | |
Entity Address, Postal Zip Code | 30009 | |
City Area Code | (888) | |
Local Phone Number | 997-8732 | |
Title of 12(b) Security | Common Stock, $0.01 par value per share | |
Trading Symbol | STRM | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 57,416,372 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Oct. 31, 2022 | Jan. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 11,699,000 | $ 9,885,000 |
Accounts receivable, net | 3,322,000 | 3,823,000 |
Contract receivables | 831,000 | 843,000 |
Prepaid and other current assets | 946,000 | 568,000 |
Total current assets | 16,798,000 | 15,119,000 |
Non-current assets: | ||
Property and equipment, net | 93,000 | 123,000 |
Right of use asset for operating lease | 80,000 | 218,000 |
Capitalized software development costs, net | 5,697,000 | 5,555,000 |
Intangible assets, net | 15,244,000 | 16,763,000 |
Goodwill | 23,089,000 | 23,089,000 |
Other | 1,216,000 | 948,000 |
Total non-current assets | 45,419,000 | 46,696,000 |
Total assets | 62,217,000 | 61,815,000 |
Current liabilities: | ||
Accounts payable | 405,000 | 778,000 |
Accrued expenses | 3,289,000 | 1,803,000 |
Current portion of term loan | 625,000 | 250,000 |
Deferred revenues | 5,531,000 | 5,794,000 |
Current portion of lease obligation | 87,000 | 204,000 |
Acquisition earnout liability | 8,645,000 | 4,672,000 |
Total current liabilities | 18,582,000 | 13,501,000 |
Non-current liabilities: | ||
Term loan, net of current portion and deferred financing costs | 9,214,000 | 9,654,000 |
Deferred revenues, less current portion | 148,000 | 136,000 |
Lease obligations, less current portion | 33,000 | |
Acquisition earnout liability, less current portion | 4,161,000 | |
Other non-current liabilities | 109,000 | 286,000 |
Total non-current liabilities | 9,471,000 | 14,270,000 |
Total liabilities | 28,053,000 | 27,771,000 |
Commitments and contingencies (Note 8) | ||
Stockholders’ equity: | ||
Common Stock, $0.01 par value, 85,000,000 shares authorized; 55,130,334 and 47,840,950 shares issued and outstanding, respectively | 551,000 | 478,000 |
Additional paid in capital | 128,469,000 | 119,225,000 |
Accumulated deficit | (94,856,000) | (85,659,000) |
Total stockholders’ equity | 34,164,000 | 34,044,000 |
Total liabilities and stockholders’ equity | $ 62,217,000 | $ 61,815,000 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Oct. 31, 2022 | Jan. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Common Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 |
Common Stock, Shares Authorized | 85,000,000 | 85,000,000 |
Common Stock, Shares, Issued | 55,130,334 | 47,840,950 |
Common Stock, Shares, Outstanding | 55,130,334 | 47,840,950 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Oct. 31, 2022 | Oct. 31, 2021 | Oct. 31, 2022 | Oct. 31, 2021 | ||
Revenue: | |||||
Total Revenue | $ 6,217,000 | $ 5,514,000 | $ 18,144,000 | $ 11,333,000 | |
Operating expenses: | |||||
Selling, general and administrative expense | 4,053,000 | 3,439,000 | 12,488,000 | 8,507,000 | |
Research and development | 1,754,000 | 1,339,000 | 4,527,000 | 3,280,000 | |
Acquisition-related costs | 2,000 | 1,933,000 | 141,000 | 2,710,000 | |
Total operating expenses | 9,379,000 | 9,334,000 | 27,139,000 | 19,993,000 | |
Operating loss | (3,162,000) | (3,820,000) | (8,995,000) | (8,660,000) | |
Other income (expense): | |||||
Interest expense | (198,000) | (85,000) | (519,000) | (107,000) | |
Loss on Extinguishment of Debt | (43,000) | (43,000) | |||
Acquisition earnout valuation adjustments | 163,000 | (417,000) | 188,000 | (417,000) | |
Other | 68,000 | (10,000) | 151,000 | (4,000) | |
Forgiveness of PPP loan and accrued interest | 2,327,000 | ||||
Loss from continuing operations before income taxes | (3,129,000) | (4,375,000) | (9,175,000) | (6,904,000) | |
Income tax expense | (9,000) | (4,000) | (22,000) | (9,000) | |
Loss from continuing operations | (3,138,000) | (4,379,000) | (9,197,000) | (6,913,000) | |
Income from discontinued operations: | |||||
Income from discontinued operations, net of tax | 69,000 | 401,000 | |||
Net loss | $ (3,138,000) | $ (4,310,000) | $ (9,197,000) | $ (6,512,000) | |
Basic Earnings Per Share: | |||||
Continuing operations | $ (0.07) | $ (0.10) | $ (0.19) | $ (0.17) | |
Discontinued operations | 0 | 0 | 0 | 0.01 | |
Net loss | $ (0.07) | $ (0.10) | $ (0.19) | $ (0.16) | |
Weighted average number of common shares - basic | [1] | 47,730,009 | 45,709,952 | 47,329,923 | 41,498,873 |
Diluted Earnings Per Share: | |||||
Continuing operations | $ (0.07) | $ (0.10) | $ (0.19) | $ (0.17) | |
Discontinued operations | 0 | 0 | 0 | 0.01 | |
Net loss | $ (0.07) | $ (0.10) | $ (0.19) | $ (0.16) | |
Weighted average number of common shares - diluted | 48,143,819 | 46,063,803 | 47,613,577 | 41,995,266 | |
Software Licenses [Member] | |||||
Revenue: | |||||
Total Revenue | $ 150,000 | $ 123,000 | $ 285,000 | ||
Operating expenses: | |||||
Cost of software as a service | 85,000 | 133,000 | 278,000 | 412,000 | |
Professional Services [Member] | |||||
Revenue: | |||||
Total Revenue | 1,270,000 | 944,000 | 3,552,000 | 1,052,000 | |
Operating expenses: | |||||
Cost of software as a service | 1,128,000 | 936,000 | 3,288,000 | 1,411,000 | |
Audit Services [Member] | |||||
Revenue: | |||||
Total Revenue | 618,000 | 513,000 | 1,964,000 | 1,460,000 | |
Operating expenses: | |||||
Cost of software as a service | 531,000 | 409,000 | 1,426,000 | 1,174,000 | |
Maintenance And Support [Member] | |||||
Revenue: | |||||
Total Revenue | 1,120,000 | 1,082,000 | 3,348,000 | 3,226,000 | |
Operating expenses: | |||||
Cost of software as a service | 84,000 | 57,000 | 220,000 | 223,000 | |
Software Service [Member] | |||||
Revenue: | |||||
Total Revenue | 3,209,000 | 2,825,000 | 9,157,000 | 5,310,000 | |
Operating expenses: | |||||
Cost of software as a service | $ 1,742,000 | $ 1,088,000 | $ 4,771,000 | $ 2,276,000 | |
[1]Includes the effect of vested and excludes the effect of unvested restricted shares of common stock, which are considered non-participating securities. As of October 31, 2022 and 2021, there were 1,501,031 1,030,600 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Total |
Beginning balance, value at Jan. 31, 2021 | $ 316,000 | $ 96,290,000 | $ (79,117,000) | $ 17,489,000 |
Beginning 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 | ||
Net loss | (2,142,000) | (2,142,000) | ||
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) | ||
Ending balance, value at Apr. 30, 2021 | $ 423,000 | 111,394,000 | (81,259,000) | 30,558,000 |
Ending balance, shares at Apr. 30, 2021 | 42,322,665 | |||
Beginning balance, value at Jan. 31, 2021 | $ 316,000 | 96,290,000 | (79,117,000) | 17,489,000 |
Beginning balance, shares at Jan. 31, 2021 | 31,597,975 | |||
Net loss | (6,512,000) | |||
Ending balance, value at Oct. 31, 2021 | $ 476,000 | 118,754,000 | (85,629,000) | 33,601,000 |
Ending balance, shares at Oct. 31, 2021 | 47,639,650 | |||
Beginning balance, value at Apr. 30, 2021 | $ 423,000 | 111,394,000 | (81,259,000) | 30,558,000 |
Beginning balance, shares at Apr. 30, 2021 | 42,322,665 | |||
Restricted stock issued | $ 1,000 | (1,000) | ||
Restricted stock issued, shares | 112,500 | |||
Restricted stock forfeited | ||||
Restricted stock forfeited, shares | (10,000) | |||
Surrender of shares | (130,000) | (130,000) | ||
Surrender of shares, shares | (69,289) | |||
Share-based compensation | 557,000 | 557,000 | ||
Net loss | (60,000) | (60,000) | ||
Offering Expenses | (25,000) | (25,000) | ||
Ending balance, value at Jul. 31, 2021 | $ 424,000 | 111,795,000 | (81,319,000) | 30,900,000 |
Ending balance, shares at Jul. 31, 2021 | 42,355,876 | |||
Restricted stock issued | $ 3,000 | (3,000) | ||
Restricted stock issued, shares | 348,415 | |||
Restricted stock forfeited | ||||
Restricted stock forfeited, shares | (40,100) | |||
Surrender of shares | $ (1,000) | (88,000) | (89,000) | |
Surrender of shares, shares | (49,813) | |||
Share-based compensation | 537,000 | 537,000 | ||
Net loss | (4,310,000) | (4,310,000) | ||
Exercise of Stock Options | 4,000 | 4,000 | ||
Exercise of Stock Options, shares | 3,300 | |||
Issuance of Common Stock | $ 50,000 | 6,504,000 | 6,554,000 | |
Issuance of Common Stock, shares | 5,021,972 | |||
Offering Expenses | 5,000 | 5,000 | ||
Ending balance, value at Oct. 31, 2021 | $ 476,000 | 118,754,000 | (85,629,000) | 33,601,000 |
Ending balance, shares at Oct. 31, 2021 | 47,639,650 | |||
Beginning balance, value at Jan. 31, 2022 | $ 478,000 | 119,225,000 | (86,659,000) | 34,044,000 |
Beginning balance, shares at Jan. 31, 2022 | 47,840,950 | |||
Restricted stock issued | $ 4,000 | (4,000) | ||
Restricted stock issued, shares | 408,031 | |||
Restricted stock forfeited | ||||
Restricted stock forfeited, shares | (63,900) | |||
Surrender of shares | $ (1,000) | (140,000) | (141,000) | |
Surrender of shares, shares | (95,701) | |||
Share-based compensation | 326,000 | 326,000 | ||
Net loss | (2,787,000) | (2,787,000) | ||
Ending balance, value at Apr. 30, 2022 | $ 481,000 | 119,407,000 | (88,446,000) | 31,442,000 |
Ending balance, shares at Apr. 30, 2022 | 48,089,380 | |||
Beginning balance, value at Jan. 31, 2022 | $ 478,000 | 119,225,000 | (86,659,000) | 34,044,000 |
Beginning balance, shares at Jan. 31, 2022 | 47,840,950 | |||
Net loss | (9,197,000) | |||
Ending balance, value at Oct. 31, 2022 | $ 551,000 | 128,469,000 | (94,856,000) | 34,164,000 |
Ending balance, shares at Oct. 31, 2022 | 55,130,334 | |||
Beginning balance, value at Apr. 30, 2022 | $ 481,000 | 119,407,000 | (88,446,000) | 31,442,000 |
Beginning balance, shares at Apr. 30, 2022 | 48,089,380 | |||
Restricted stock issued | $ 7,000 | (7,000) | ||
Restricted stock issued, shares | 726,801 | |||
Restricted stock forfeited | ||||
Restricted stock forfeited, shares | (20,000) | |||
Share-based compensation | 331,000 | 331,000 | ||
Net loss | (3,272,000) | (3,272,000) | ||
Exercise of Stock Options | 6,000 | 6,000 | ||
Exercise of Stock Options, shares | 5,000 | |||
Ending balance, value at Jul. 31, 2022 | $ 488,000 | 119,737,000 | (91,718,000) | 28,507,000 |
Ending balance, shares at Jul. 31, 2022 | 48,801,181 | |||
Restricted stock issued | $ 1,000 | (1,000) | ||
Restricted stock issued, shares | 118,836 | |||
Restricted stock forfeited | $ (1,000) | 1,000 | ||
Restricted stock forfeited, shares | (75,200) | |||
Surrender of shares | (24,000) | (24,000) | ||
Surrender of shares, shares | (14,472) | |||
Share-based compensation | 555,000 | 555,000 | ||
Net loss | (3,138,000) | (3,138,000) | ||
Issuance of Common Stock | $ 63,000 | 8,253,000 | 8,316,000 | |
Issuance of Common Stock, shares | 6,299,989 | |||
Offering Expenses | (52,000) | (52,000) | ||
Ending balance, value at Oct. 31, 2022 | $ 551,000 | $ 128,469,000 | $ (94,856,000) | $ 34,164,000 |
Ending balance, shares at Oct. 31, 2022 | 55,130,334 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Oct. 31, 2022 | Oct. 31, 2021 | |
Statement of Cash Flows [Abstract] | ||
Net loss | $ (9,197,000) | $ (6,512,000) |
LESS: Income from discontinued operations, net of tax | 401,000 | |
Loss from continuing operations | (9,197,000) | (6,913,000) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 40,000 | 53,000 |
Amortization of capitalized software development costs | 1,293,000 | 1,430,000 |
Amortization of intangible assets | 1,519,000 | 721,000 |
Amortization of other deferred costs | 360,000 | 369,000 |
Change in fair value of acquisition earnout liability | (188,000) | 417,000 |
Loss on early extinguishment of debt | 43,000 | |
Amortization of deferred financing costs | 60,000 | |
Share-based compensation expense | 1,212,000 | 1,659,000 |
Provision for accounts receivable allowance | 21,000 | 14,000 |
Forgiveness of PPP loan and accrued interest | (2,327,000) | |
Changes in assets and liabilities: | ||
Accounts and contract receivables | 492,000 | 666,000 |
Other assets | (868,000) | (551,000) |
Accounts payable | (373,000) | (72,000) |
Accrued expenses and other liabilities | 1,159,000 | 774,000 |
Deferred revenue | (251,000) | (305,000) |
Net cash used in operating activities | (4,721,000) | (4,022,000) |
Net cash provided by operating activities – discontinued operations | 406,000 | |
Cash flows from investing activities: | ||
Investment in Avelead, Net of Cash | (12,354,000) | |
Proceeds from sale of ECM Assets | 800,000 | |
Purchases of property and equipment | (10,000) | (18,000) |
Capitalization of software development costs | (1,435,000) | (1,048,000) |
Net cash used in investing activities | (1,445,000) | (12,620,000) |
Cash flows from financing activities: | ||
Repayment of bank term loan | (125,000) | |
Proceeds from issuance of term loan | 10,000,000 | |
Proceeds from issuance of common stock | 8,316,000 | 16,100,000 |
Payments for costs directly attributable to the issuance of common stock | (52,000) | (1,313,000) |
Payments related to settlement of employee share-based awards | (165,000) | (380,000) |
Payment for deferred financing costs | (168,000) | |
Other | 6,000 | (3,000) |
Net cash provided by financing activities | 7,980,000 | 24,236,000 |
Net increase in cash and cash equivalents | 1,814,000 | 8,000,000 |
Cash and cash equivalents at beginning of period | 9,885,000 | 2,409,000 |
Cash and cash equivalents at end of period | $ 11,699,000 | $ 10,409,000 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Oct. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | NOTE 1 — BASIS OF PRESENTATION Streamline Health Solutions, Inc. and each of its wholly-owned subsidiaries, Streamline Health, LLC, Avelead Consulting, LLC, Streamline Consulting Solutions, LLC and Streamline Pay & Benefits, LLC, (collectively, unless the context requires otherwise, “we,” “us,” “our,” “Streamline,” or the “Company”), operate in one segment as a provider of healthcare information technology solutions and associated services. The Company provides these capabilities through the licensing of its Coding & CDI, eValuator coding analysis platform, RevID, and other workflow software applications and the use of such applications by software as a service (“SaaS”). The Company also provides audit and coding services to help customers optimize their internal clinical documentation and coding functions, as well as implementation and consulting services to complement its software solutions. The Company’s software and services enable hospitals and integrated healthcare delivery systems in the United States and Canada to capture, store, manage, route, retrieve and process patient clinical, financial and other healthcare provider information related to the patient revenue cycle. The accompanying unaudited condensed consolidated financial statements 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 (“GAAP”) have been condensed or omitted pursuant to those rules and regulations, although we believe that the disclosures made are adequate to make the information not misleading. The condensed consolidated financial statements include the accounts of Streamline Health Solutions, Inc. and each of its wholly-owned subsidiaries. In the opinion of the Company’s 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 the Company’s most recent annual report on Form 10-K. Operating results for the nine months ended October 31, 2022 are not necessarily indicative of the results that may be expected for the fiscal year ending January 31, 2023. Two or more operating segments may be aggregated into a single operating segment if they are considered to be similar. Operating segments are considered to be similar if they can be expected to have essentially the same economic characteristics and future prospects. Using the aggregation guidance, the Company determined that it has one operating segment due to the similar economic characteristics of the Company’s products, product development, distribution, regulatory environment and customer base as a provider of computer software-based solutions and services for acute-care healthcare providers. The Company has two reporting units for evaluation of intangible assets. These two reporting units are the legacy Streamline products and Avelead Consulting, LLC. Refer to “Note 3 – Business Combination and Divestiture”. 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 | 9 Months Ended |
Oct. 31, 2022 | |
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 2021 Annual Report on Form 10-K. Users of financial information for interim periods are encouraged to refer to the notes to the consolidated financial statements contained in the Annual Report on Form 10-K when reviewing interim financial results. Use of Estimates The preparation of financial statements in conformity with 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, contingent consideration, and income taxes. Actual results could differ from those estimates. 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. There were no transfers of assets or liabilities between Levels 1, 2, or 3 during the nine months ended October 31, 2022 and 2021. The table below provides information on the fair value of our liabilities: SCHEDULE OF FAIR VALUE ASSETS AND LIABILITIES MEASURED ON RECURRING BASIS Total Fair Quoted Prices in Active Markets Significant Other Observable Inputs Significant Value (Level 1) (Level 2) (Level 3) At January 31, 2022 Acquisition earnout liability (1) $ 8,833,000 $ – $ – $ 8,833,000 At October 31, 2022 Acquisition earnout liability (1) $ 8,645,000 $ – $ – $ 8,645,000 (1) The fair value of the acquisition earnout liability is based upon a probability-weighted discounted cash flow that was completed at the date of acquisition and updated as of October 31, 2022. The change in the fair value of the acquisition earnout liability decreased $ 163,000 188,000 The fair value of the Company’s term loan under its Second Amended and Restated Loan and Security Agreement was determined through an analysis of the interest rate spread from the date of closing the loan (August 2021) to the date of the most recent balance sheets, October 31, 2022 and January 31, 2022. The term loan bears interest at a per annum rate equal to the Prime Rate (as published in The Wall Street Journal) plus 1.5%, with a Prime “floor” rate of 3.25%. The prime rate is variable and, thus accommodates changes in the market interest rate. However, the interest rate spread (the 1.5% added to the Prime Rate) is fixed. We estimated the impact of the changes in the interest rate spread by analogizing the effect of the change in the Corporate bond rates, reduced for any changes in the market interest rate. 0.5% 9,674,000 9,798,000 201,000 202,000 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 the Company’s direct sales force or through third-party resellers. Licensed, locally-installed customers on a perpetual model utilize the Company’s support and maintenance services for a separate fee, whereas term-based locally installed license fees and SaaS fees include support and maintenance. We also derive revenue from professional services that support the implementation, configuration, training and optimization of the applications, as well as audit services and consulting services. We recognize revenue in accordance with Accounting Standards Codification (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 generally 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 exist, revenue may not be recognized until the satisfaction of such criteria. The determined 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, the amount allocated to each performance obligation and whether it depicts the amount that the Company expects to receive in exchange for the related product and/or service. The Company recognizes revenue for implementation for certain of its eValuator SaaS solution over the contract term, as it has been determined that those implementation services are not a distinct performance obligation. Services for other SaaS and Software solutions such as CDI, RevID and Compare, have been determined as a distinct performance obligation. For these agreements, the Company estimates 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, software as a service 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. The Company has utilized the portfolio approach as the practical expedient. We have applied the revenue model to a portfolio of contracts with similar characteristics where we expected that the financial statements would not differ materially from applying it to the individual contracts within that portfolio. Software Licenses The Company’s software license arrangements 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 is recognized at a point in time. Typically, this is upon shipment of components or electronic download of software. Maintenance and Support Services Our maintenance and support obligations include multiple discrete performance obligations, with the two largest being unspecified product upgrades or enhancements, and technical support, which can be offered at various points during a contract period. We believe that the multiple discrete performance obligations within our overall maintenance and support obligations can be viewed as a single performance obligation since both the unspecified upgrades and technical support are activities to fulfill the maintenance performance obligation and are rendered concurrently. Maintenance and support agreements entitle customers to technology support, version upgrades, bug fixes and service packs. We recognize maintenance and support revenue over the contract term. Software-Based Solution Professional Services The Company provides various professional services to customers with software licenses. These include project management, software implementation and software modification services. Revenues from arrangements 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 arrangements 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 of the Company’s platform and support which represent a single promise to provide continuous access to its software solutions. Implementation services for the Company’s eValuator product are included as part of the single promise for its respective contracts. The Company recognizes revenue for implementation of the eValuator product over the contract term as it is determined that the implementation on eValuator is not a distinct performance obligation. Implementation services for other SaaS products are deemed to be separate performance obligations. 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: SCHEDULE OF DISAGGREGATION OF REVENUE 1 2 3 4 Three Months Ended Nine Months Ended October 31, 2022 October 31, 2021 October 31, 2022 October 31, 2021 Recurring revenue $ 4,329,000 $ 3,907,000 $ 12,505,000 $ 8,536,000 Non-recurring revenue 1,888,000 1,607,000 5,639,000 2,797,000 Total revenue: $ 6,217,000 $ 5,514,000 $ 18,144,000 $ 11,333,000 The Company includes revenue categories of (i) maintenance and support and (ii) software as a service as recurring revenue. The Company includes revenue categories of (i) software licenses, (ii) professional services, and (iii) audit services as non-recurring revenue. Business Combinations Acquisitions have been accounted for as business combinations, using the acquisition method and, accordingly, the results of operations of the acquired businesses have been included in the condensed consolidated financial statements since their dates of acquisition. The assets and liabilities assumed of these businesses were recorded in the financial statements at their respective estimated fair values as of the acquisition date. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. While the Company uses its best estimates and assumptions as a part of the purchase price allocation process to accurately value the assets acquired, including intangible assets, and the liabilities assumed at the acquisition date, the Company’s estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the fair values of the assets acquired and the liabilities assumed, with a corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or the liabilities assumed, whichever comes first, any subsequent adjustments are reflected in our consolidated statements of operations. 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 revenue includes payments received in advance of performance under the contract. The Company’s 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 nine months ended October 31, 2022, the Company recognized approximately $ 4,918,000 20,917,000 the Company expects to recognize approximately 63% over the next 12 months and the remainder thereafter. Deferred costs (costs to fulfill a contract and contract acquisition costs) The Company defers 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 October 31, 2022 and January 31, 2022, the Company had deferred costs of $ 103,000 125,000 155,000 93,000 22,000 62,000 90,000 for the nine months ended 31, 2022 and 2021, 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, the Company expenses sales commissions as incurred when the amortization period of related deferred commission costs is expected to be one year or less. As of October 31, 2022 and January 31, 2022, deferred commission costs paid and payable, which are included on the consolidated balance sheets within other non-current assets totaled $ 1,092,000 806,000 707,000 408,000 110,000 88,000 and for the nine months ended October 31, 2022 and 2021 298,000 248,000 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, and forfeitures are recognized as incurred. For awards to non-employees, the Company recognizes compensation expense in the same manner as if the entity had paid cash for the goods or services. The Company incurred total compensation expense related to share-based awards of $ 555,000 537,000 1,212,000 1,659,000 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. 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 6 – Income Taxes for further details. The Company provides for uncertain tax positions and the related interest and penalties based upon management’s assessment of whether certain tax positions are more likely than not to be sustained upon examination by tax authorities. At October 31, 2022, the Company believes it has appropriately accounted for any uncertain tax positions. Net Loss Per Common Share The Company presents basic and diluted earnings per share (“EPS”) data for the Company’s common stock. The Company’s 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. Diluted EPS for the Company’s 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 and nine SCHEDULE OF BASIC AND DILUTED NET LOSS PER SHARE OF COMMON STOCK 1 2 3 4 Three Months Ended Nine Months Ended October 31, 2022 October 31, 2021 October 31, 2022 October 31, 2021 Basic earnings (loss) per share: Continuing operations Loss from continuing operations, net of tax $ (3,138,000 ) $ (4,379,000 ) $ (9,197,000 ) $ (6,913,000 ) Basic net loss per share of common stock from continuing operations $ (0.07 ) $ (0.10 ) (0.19 ) (0.17 ) Discontinued operations Income available to common stockholders from discontinued operations $ — $ 69,000 — 401,000 Basic net earnings per share of common stock from discontinued operations $ — $ — $ — $ 0.01 Diluted earnings (loss) per share: Continuing operations Loss available to common stockholders from continuing operations $ (3,138,000 ) $ (4,379,000 ) (9,197,000 ) (6,913,000 ) Diluted net loss per share of common stock from continuing operations $ (0.07 ) $ (0.10 ) (0.19 ) (0.17 ) Discontinued operations Income available to common stockholders from discontinued operations $ — $ 69,000 — 401,000 Diluted net earnings per share of common stock from discontinued operations $ — $ — $ — $ 0.01 Net loss $ (3,138,000 ) $ (4,310,000 ) $ (9,197,000 ) $ (6,512,000 ) Weighted average shares outstanding - Basic (1) 47,730,009 45,709,952 47,329,923 41,498,873 Effect of dilutive securities - Stock options and Restricted stock (2) 413,810 353,851 283,654 496,393 Weighted average shares outstanding – Diluted 48,143,819 46,063,803 47,613,577 41,995,266 Basic net loss per share of common stock $ (0.07 ) $ (0.10 ) $ (0.19 ) $ (0.16 ) Diluted net loss per share of common stock $ (0.07 ) $ (0.10 ) $ (0.19 ) $ (0.16 ) (1) Includes the effect of vested and excludes the effect of unvested restricted shares of common stock, which are considered non-participating securities. As of October 31, 2022 and 2021, there were 1,501,031 1,030,600 (2) Diluted net loss per share excludes the effect of shares that are anti-dilutive. For the three and nine months ended October 31, 2022, diluted earnings per share excludes 628,958 1,501,031 1,146,963 1,030,600 Other Operating Costs Acquisition-related Costs SCHEDULE OF ACQUISITION RELATED COSTS 1 2 3 4 Three Months ended Nine Months ended October 31, 2022 October 31, 2021 October 31, 2022 October 31, 2021 Separation agreement expense $ — $ 706,000 $ — $ 706,000 Broker fees — 508,000 — 553,000 Professional fees 2,000 358,000 141,000 740,000 Executive bonuses — 355,000 — 705,000 Loss on exit from operating lease — 22,000 — 22,000 Other — (16,000 ) — (16,000 ) Total acquisition-related costs $ 2,000 $ 1,933,000 $ 141,000 $ 2,710,000 For the three and nine months ended October 31, 2022 the Company incurred certain acquisition-related costs related to the acquisition of Avelead totaling $ 2,000 141,000 1,933,000 2,710,000 355,000 705,000 Non-Cash Items For the three and nine months ended October 31, 2021, the Company recorded the forgiveness of the PPP loan and accrued interest, totaling $ 2,327,000 Accounting Pronouncements Recently Adopted In July 2021, the FASB issued ASU 2021-05, Lessors - Certain Leases with Variable Lease Payments Leases Recent Accounting Pronouncements Not Yet Adopted In November 2019, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments |
BUSINESS COMBINATION AND DIVEST
BUSINESS COMBINATION AND DIVESTITURE | 9 Months Ended |
Oct. 31, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
BUSINESS COMBINATION AND DIVESTITURE | NOTE 3 — BUSINESS COMBINATION AND DIVESTITURE Avelead Acquisition The Company acquired all of the equity interests of Avelead Consulting, LLC (“Avelead”) as part of the Company’s strategic expansion into the acute-care health care revenue cycle management industry on August 16, 2021 (the “Transaction”). The acquisition was completed on August 16, 2021. The aggregate consideration for the purchase of Avelead was approximately $ 29.7 0.1 6.5 10.7 5,021,972 6.5 Additionally, the Company contracted two types of contingent consideration; the first is referred to herein as “SaaS Contingent Consideration” and the second is referred to herein as “Renewal Contingent Consideration.” The SaaS Contingent Consideration and Renewal Contingent Consideration had an aggregate value of approximately $10.7 million as of the date of closing. The Company acquired all of the equity interests of Avelead, effective August 16, 2021, pursuant to a Unit Purchase Agreement (hereafter referred to as the “UPA”). The UPA stated that the purchase price for Avelead at closing included a cash payment of $ 11.9 285,000 285,000 6.5 The Company acquired Avelead on a cash-free and debt-free basis. The Transaction was structured as a purchase of units (equity), however, Avelead was taxed as a partnership. Accordingly, the Company realized a step-up in the tax basis of the assets acquired and the goodwill is tax deductible. The gross deferred tax assets and liabilities will be consolidated, and the gross deferred tax assets have a full valuation allowance. The contingent consideration is comprised of “SaaS Contingent Consideration” and “Renewal Contingent Consideration” which are described in more detail as follows: See Note 11 – Subsequent Events for a description of the company’s cash payment and restricted common stock issued in conjunction with the first year earnout . ● The SaaS Contingent Consideration is calculated based upon Avelead’s recurring SaaS revenue recognized during the first and second year following the acquisition. The Company will pay the SaaS Contingent Consideration as follows: (i) 50% 50% ● The first year of SaaS Contingent Consideration is calculated as 75% of Avelead’s recognized SaaS revenue from September 1, 2021 to August 31, 2022. The first-year payment is subject to a deduction of $665,000 spread equally between the cash and common stock portion of the earnout consideration. The first year earnout will be paid on or about October 15, 2022, subject to a dispute and resolution period. Assuming that Avelead is within 80% of its forecasted SaaS revenue in the first year earnout 1 ● The second year of SaaS Contingent Consideration is calculated as 40% of Avelead’s recognized SaaS revenue from September 1, 2022 to August 31, 2023. The second year earnout will be paid on or about October 15, 2023, subject to a dispute and resolution period. Assuming that Avelead is within 80% of its forecasted SaaS revenue in the second year earnout 1 ● The Renewal Contingent Consideration is tied directly to a successful renewal of a specific customer of Avelead. To meet the definition of a renewal, Avelead must achieve a minimum threshold of contracted revenue in an updated, annual, renewed contract with the specified customer. The renewal occurs on or about June 1, 2022 and June 1, 2023. The Company will remit the Renewal Contingent Consideration on or about each of October 15, 2022 and 2023, respectively. The Renewal Contingent Consideration is payable in shares of Company restricted common stock valued as of the date of Closing. Accordingly, upon achieving the Renewal Contingent Consideration, the Company will issue 627,747 shares of restricted common stock on or about each of October 15, 2022 and October 15, 2023, subject to a dispute and resolution period. The Renewal Contingent Consideration is either earned or not earned based upon the renewal of the specified customer at the minimum amount of contracted revenue. There is no pro-ration of the underlying Renewal Contingent Consideration. 1 If Avelead does not achieve 80% of its forecasted revenue, the price per share will revert back to the Company’s market price based upon a 30-day average. The components of the total consideration as of the acquisition date are as follows: SCHEDULE OF COMPONENTS OF TOTAL CONSIDERATION (in thousands) Components of total consideration, net of cash acquired: Cash $ 11,900 Cash, seller expenses 285 Cash, estimated net working capital adjustment 285 Restricted Common Stock 6,554 Acquisition earnout liabilities 10,684 (a) Total consideration $ 29,708 (a) Acquisition earnout liabilities represents the net present value and risk adjusted probability of the required future payments underlying the Company’s SaaS Contingent Consideration and Renewal Contingent Consideration as described above. Due to the dates that the Company is required to measure, report and agree on the calculations, $ 8,645,000 The acquisition earnout liability is re-measured at fair value on a recurring basis and the change to the liability is recorded as a valuation adjustment recorded through “other expenses or income” in the accompanying condensed consolidated statements of operations. The change in the fair value recorded for the nine months ended October 31, 2022 was ($188,000) See Note 11 – Subsequent Events, for information regarding the cash payment and restricted common stock issued in conjunction with the first year earnout. The allocation of the total consideration to net tangible and intangible assets as of the date of the closing of Avelead was as follows: SCHEDULE OF ALLOCATION OF THE TOTAL CONSIDERATION (in thousands) Net tangible assets (liabilities): Accounts receivable $ 1,246 Unbilled revenue 200 Prepaid expenses 178 Fixed assets 37 Accounts payable (490 ) Accrued expenses (397 ) Deferred revenues (863 ) Net tangible assets (liabilities) (89 ) Goodwill 12,377 Customer Relationships (SaaS) 8,370 Customer Relationships (Consulting) 1,330 Internally Developed Software 6,380 Trademarks and Tradenames 1,340 Net assets acquired and liabilities assumed $ 29,708 The intangible assets recorded as a result of the Avelead acquisition, and their related estimated useful lives are as follows: SCHEDULE OF INTANGIBLE ASSETS ESTIMATED USEFUL LIVES Estimated Useful Lives Goodwill Indefinite Customer Relationships (SaaS) 10 Customer Relationships (Consulting) 8 Internally Developed Software 9 Trademarks and Tradenames 15 The Company’s pro forma revenues and loss from continuing operations for the three and nine months ended October 31, 2021, assuming Avelead was acquired on February 1, 2021, are as follows. The unaudited pro forma information is not necessarily indicative of the results of operations that the Company would have reported had the acquisition occurred at the beginning of these periods nor is it indicative of future results. The unaudited pro forma financial information does not reflect the impact of future events that may occur after the acquisition, including, but not limited to, anticipated costs savings from synergies or other operational improvements. SCHEDULE OF PRO FORMA REVENUE AND NET EARNINGS Three Months ended October 31, 2021 Nine Months ended October 31, 2021 Actual Pro Forma Actual Pro Forma Revenues $ 5,514 $ 6,064 $ 11,333 $ 16,585 Loss from continuing operations $ (4,379 ) $ (4,763 ) $ (6,913 ) $ (8,665 ) Included in the accompanying unaudited pro forma statement of operations for the three months ended October 31, 2021 are $ 2,595,000 (1,359,000) 7,297,000 (2,727,000) 2,788,000 (553,000) 7,827,000 (1,847,000) The Company entered into one employment agreement and one separation agreement with the two Sellers. Included in the transaction costs related to the Avelead acquisition is the cost of a two-year separation agreement with one Seller, fully expensed at the closing of the transaction. See Note 2 – Summary of Significant Accounting Policies. The employment agreement is a two-year employment agreement that entitles the Seller to a six-month separation pay in the case of termination without cause. The expense for the employment agreement is recognized ratably over the service period customary with other employment agreements within selling, general, and administrative expense. The Company granted options to purchase 583,333 1.53 500,000 3 83,333 83,333 500,000 395,000 Additionally, the Company granted 100,000 ECM Assets Divestiture On February 24, 2020, the Company sold a portion of its business (the “ECM Assets”). 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 9 – Discontinued Operations for details of the Company’s discontinued operations. |
OPERATING LEASES
OPERATING LEASES | 9 Months Ended |
Oct. 31, 2022 | |
Operating Leases | |
OPERATING LEASES | NOTE 4 — OPERATING LEASES We determine whether an arrangement is a lease at inception. Right-of-use assets represent our right to use an underlying asset for the 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 and existing leases in determining the present value of future lease payments. Operating lease expense is recognized on a straight-line basis over the lease term. Alpharetta Office Lease On October 1, 2021, the Company entered into an agreement with a third-party to sublease its office space in Alpharetta, Georgia, (the “Sublease Agreement”). The sublease term is for 18 292,000 49,000 145,000 The Company entered into a 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 80,000 87,000 6.5% 48,000 145,000 Maturities of operating lease liabilities associated with the Company’s operating lease as of October 31, 2022 are as follows for payments due based upon the Company’s fiscal year: SCHEDULE OF MATURITIES OF OPERATING LEASE LIABILITIES 2022 $ 53,000 2023 36,000 Total lease payments 89,000 Less present value adjustment (2,000 ) Present value of lease liabilities $ 87,000 Suwanee Office Lease Upon acquiring Avelead on August 16, 2021 (refer to Note 3 – Business Combination and Divestiture), the Company assumed an operating lease agreement for the corporate office space of Avelead. The lessor is an entity controlled by one of the Sellers that is employed by the Company. The 36-month term lease commenced March 1, 2019 and expired on February 28, 2022 71,984 18,000 55,000 |
DEBT
DEBT | 9 Months Ended |
Oct. 31, 2022 | |
Debt Disclosure [Abstract] | |
DEBT | NOTE 5 — DEBT Term Loan Agreement On August 26, 2021, the Company and its subsidiaries entered into the Second Amended and Restated Loan and Security Agreement with Bridge Bank, a division of Western Alliance Bank (the “Second Amended and Restated Loan and Security Agreement”). Pursuant to the Second Amended and Restated Loan and Security Agreement, Bridge Bank agreed to provide the Company and its subsidiaries with a new term loan facility in the maximum principal amount of $ 10,000,000 1.5% 3.25% 3,000,000 The Second Amended and Restated Loan and Security Agreement has a five-year term, and the maximum principal amount was advanced in a single-cash advance on or about the closing date. Interest accrued under the Second Amended Loan and Security Agreement is due monthly, and the Company shall make monthly interest-only payments through the one-year anniversary of the closing date. From the first anniversary of the closing date through the maturity date, the Company shall make monthly payments of principal and interest that increase over the term of the agreement. The Second Amended and Restated Loan and Security Agreement requires principal repayments on the anniversary date of the closing of the debt agreement of $ 500,000 1,000,000 2,000,000 3,000,000 The Company recorded $ 130,000 200,000 200,000 The Second Amended and Restated Loan and Security Agreement includes customary financial covenants as follows: a. Minimum Cash. Borrowers shall, at all times, maintain unrestricted cash of Borrowers at Bank in an amount not less than (i) on the Closing Date and for the first eleven (11) months immediately following the Closing Date, Five Million Dollars ($5,000,000) and (ii) at all times thereafter, Three Million Dollars ($3,000,000). b. Maximum Debt to ARR Ratio. SCHEDULE OF MAXIMUM DEBT TO ARR RATIO Quarter Ending Maximum Debt to ARR Ratio October 31, 2021 0.80 1.00 January 31, 2022 0.75 1.00 April 30, 2022 0.65 1.00 July 31, 2022 0.55 1.00 October 31, 2022 0.50 1.00 January 31, 2023 0.45 1.00 c. Maximum Debt to Adjusted EBITDA Ratio. SCHEDULE OF MAXIMUM DEBT TO ADJUSTED EBITDA RATIO Quarter Ending Maximum Debt to Adjusted EBITDA Ratio April 30, 2023 11.30 1.00 July 31, 2023 4.15 1.00 October 31, 2023 2.50 1.00 January 31, 2024 and on the last day of each quarter thereafter 2.00 1.00 d. Fixed Charge Coverage Ratio 1.20 1.00 The Second Amended and Restated Loan and Security Agreement also includes customary negative covenants, subject to exceptions, which limit transfers, capital expenditures, indebtedness, certain liens, investments, acquisitions, dispositions of assets, restricted payments and the business activities of the Company, as well as customary representations and warranties, affirmative covenants and events of default, including cross defaults and a change of control default. The line of credit also is subject to customary prepayment requirements. For the period ended October 31, 2022, the Company has a debt to ARR ratio of 0.55 to 1 and, therefore, was not in compliance with the maximum debt to ARR ratio covenant under the Second Amended and Restated Loan and Security Agreement. Subsequent to the period ended October 31, 2022, the Company entered into a Second Modification Debt Agreement whereby the existing debt to ARR ratio, among other covenants, was modified. As a result, the Company was in compliance with all modified debt covenants at October 31, 2022. See Note 11 – Subsequent Events for a description of the Second Modification Debt Agreement. On November 29, 2022, the Company entered into a Second Modification Debt Agreement with Bridge Bank to add a $ 2,000,000 Term Loan and Revolving Credit Facility with Bridge Bank On March 2, 2021, the Company entered into an Amended and Restated Loan and Security Agreement, which replaced and superseded the Loan and Security Agreement, consisting of a $ 3,000,000 revolving credit facility (the “Amended Loan and Security Agreement”). This revolving credit facility was replaced with the Second Amended and Restated Security Agreement (above) that was put in place on August 26, 2021. Accordingly, the Company wrote-off $ 43,000 of deferred financing costs from this loan as a loss on extinguishment of debt in the accompanying condensed consolidated statement of operations. Outstanding principal balances on debt related to the new term loan agreement that the Company entered into on August 16, 2021 with Bridge Bank consisted of the following at: SCHEDULE OF OUTSTANDING DEBT, OTHER THAN PPP LOAN October 31, 2022 January 31, 2022 Term loan $ 9,875,000 $ 10,000,000 Financing cost payable 57,000 21,000 Deferred financing cost (93,000 ) (117,000 ) Total 9,839,000 9,904,000 Less: Current portion (625,000 ) (250,000 ) Non-current portion of debt $ 9,214,000 $ 9,654,000 |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Oct. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 6 — INCOME TAXES Income taxes consist of the following: SCHEDULE OF INCOME TAXES October 31, 2022 October 31, 2021 Three months ended October 31, 2022 October 31, 2021 Current tax expense: Federal $ (6,000 ) $ — State (3,000 ) (4,000 ) Total current tax provision $ (9,000 ) $ (4,000 ) 1 2 Nine months ended October 31, 2022 October 31, 2021 Current tax expense: Federal $ (11,000 ) $ — State (11,000 ) (9,000 ) Total current tax provision $ (22,000 ) $ (9,000 ) At January 31, 2022, the Company had U.S. federal net operating loss carry forwards of $ 46,250,000 21,318,000 1,575,000 94,000 The effective income tax rate on continuing operations of approximately ( 0.24)% 25.15% The Company has recorded $ 318,000 315,000 The Company and its subsidiaries 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, 2018. All material state and local income tax matters have been concluded for years through January 31, 2017. The Company is no longer subject to IRS examination for periods prior to the tax year ended January 31, 2018; however, carryforward losses that were generated prior to the tax year ended January 31, 2018 may still be adjusted by the IRS if they are used in a future period. |
EQUITY
EQUITY | 9 Months Ended |
Oct. 31, 2022 | |
Equity [Abstract] | |
EQUITY | NOTE 7 — EQUITY Capital Raise On October 24, 2022, the Company entered into purchase agreements with certain investors pursuant to which the Company agreed to issue and sell in a registered direct offering (the “2022 Offering”) an aggregate of 6,299,989 0.01 1.32 8,316,000 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 0.01 1,312,500 1.60 16,100,000 Registration of Shares Issued to 180 Consulting On May 3, 2021, the Company filed a Registration Statement on Form S-3 (Registration No. 333-255723), which was subsequently amended on June 23, 2021, for purposes of registering for resale 248,424 On June 22, 2022, the Company filed a Registration Statement on Form S-3 (Registration No. 333-265773) for purposes of registering for resale 272,653 Authorized Shares Increase On May 24, 2021, the Company amended its Certificate of Incorporation to increase the total number of authorized shares of the Company’s common stock from 45,000,000 65,000,000 At the 2021 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 6,223,246 8,223,246 As described in the Company’s definitive proxy statement on Schedule 14A filed with the SEC on July 6, 2021, because there may have been 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 2021 Annual Meeting, the board of directors of the Company asked the Company’s stockholders to ratify the approval, filing and effectiveness of the Charter Amendment and the approval and effectiveness of the Third Amended 2013 Plan Amendment at a special meeting of the stockholders held on July 29, 2021 (the “Special Meeting”) in order to eliminate such uncertainty . At the Special Meeting, the Company’s stockholders ratified the approval, filing and effectiveness of the Charter Amendment and the approval and effectiveness of the Third Amended 2013 Plan Amendment. At the Annual Meeting of Stockholders held on June 7, 2022, the Company’s stockholders approved an amendment to the Streamline Health Solutions, Inc. Third Amended and Restated 2013 Stock Incentive Plan to increase the number of shares of the Company’s common stock authorized for issuance thereunder by 2,000,000 8,223,246 10,223,246 65,000,000 85,000,000 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Oct. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 8 — COMMITMENTS AND CONTINGENCIES Consulting Agreement with 180 Consulting On March 19, 2020, the Company entered into a Master Services Agreement (the “MSA”) with 180 Consulting, pursuant to which 180 Consulting has provided and will continue to provide a variety of consulting services in support of eValuator products including product management, operational consulting, staff augmentation, internal systems platform integration and software engineering services, among others, through separate executed statements of work (“SOWs”). On September 20, 2021, the Company entered into a separate MSA in support of Avelead products. The Company has entered into separate SOWs under the MSA. Some of the SOWs include the ability of 180 Consulting to earn stock at a conversion rate to be calculated 20 days after the execution of the related SOW. The MSA includes a termination clause upon a 90-day written notice. While no related party has a direct or indirect material interest in this MSA or the related SOWs, individuals providing services to us under the MSA and the SOWs may share workspace and administrative costs with 121G Consulting (as defined and further discussed in Note 14 – Related Party Transactions in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2022). 180 Consulting earned a cumulative number of shares through October 31, 2022 totaling 814,267 183,284 293,190 751,000 1,781,000 376,000 1,092,000 53,836 |
DISCONTINUED OPERATIONS
DISCONTINUED OPERATIONS | 9 Months Ended |
Oct. 31, 2022 | |
Discontinued Operations and Disposal Groups [Abstract] | |
DISCONTINUED OPERATIONS | NOTE 9 – DISCONTINUED OPERATIONS On February 24, 2020, the Company consummated the sale of the Company’s legacy Enterprise Content Management business (the “ECM Assets”). For the three and nine months ended October 31, 2021, the Company recorded the following into discontinued operations in the accompanying condensed consolidated statements of operations: SCHEDULE OF DISCONTINUED OPERATIONS OF CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended October 31, 2021 Nine Months Ended October 31, 2021 Revenues: Transition service fees $ 102,000 $ 498,000 Total revenues 102,000 498,000 Expenses: Cost of Sales 1,000 5,000 Transition service cost 32,000 92,000 Total expenses 33,000 97,000 Income from discontinued operations $ 69,000 $ 401,000 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 did not have a finite ending date at the signing of the agreement. However, the transition services were completed in the third quarter of fiscal 2021. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Oct. 31, 2022 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 10 - RELATED PARTY TRANSACTIONS Refer to Note 3 – Business Combination and Divestiture. The Company acquired Avelead on August 16, 2021. In addition, the Company assumed a consulting agreement with AscendTek, LLC (“AscendTek”), a software development and system design company. AscendTek is owned by one of the Sellers of Avelead. The Company entered into a separation agreement with this Seller of Avelead on closing of the Avelead acquisition. For the three and nine months ended October 31, 2022, the Company incurred approximately $ 0 32,000 For the three and nine months ended October 31, 2022, the Company recorded rent expense of $ 18,000 55,000 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Oct. 31, 2022 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 11 — SUBSEQUENT EVENTS We have evaluated subsequent events occurring after October 31, 2022, 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. Debt Modification On November 29, 2022, the Company executed a Second Modification to the Second Amended and Restated Loan Agreement (the “Second Modification Debt Agreement”). The Second Modification Debt Agreement includes an expansion of the Company’s total borrowing to include a $ 2 1.5% 3.25% 20,000 50,000 250,000 ● Minimum Cash Borrowers shall, at all times, maintain unrestricted cash of Borrowers at Bank in an amount not less than Two Million Dollars ($2,000,000). ● Maximum Debt to ARR Ratio SCHEDULE OF MAXIMUM DEBT MODIFICATION TO ARR RATIOS Quarter Ending Maximum Debt to ARR Ratio October 31, 2022 0.80 1.00 January 31, 2023 0.70 1.00 April 30, 2023 0.65 1.00 July 31, 2023 0.60 1.00 October 31, 2023 0.55 1.00 January 30, 2024 0.50 1.00 ● Maximum Debt to Adjusted EBITDA Ratio SCHEDULE OF MAXIMUM DEBT MODIFICATION TO ADJUSTED EBITDA RATIO Quarter Ending Maximum Debt to Adjusted EBITDA Ratio April 30, 2024 3.50 1.00 July 31, 2024 and on the last day of each quarter thereafter 2.00 1.00 ● Fixed Charge Coverage Ratio 1.20 1.00 With the changes to the covenants through the Second Modification Debt Agreement, the Company was in compliance with all debt covenants as of October 31, 2022. First Year Earnout Payment for Avelead On November 22, 2022, the Company made the first year earnout payment and issued shares of common stock, par value $ 0.01 2,012,000 and issued 1,243,291 0.01 per share, for the SaaS Contingent Consideration and 627,746 0.01 for the Renewal Contingent Consideration. The estimated aggregate value of the first year earnout payment is $ 4,000,000 for the SaaS Contingent Consideration and $ 1,000,000 for the Renewal Contingent Consideration. The Company has a second earnout under the Unit Purchase Agreement that will be payable on or about October 2023. These liabilities are reflected at the fair value of the future commitment on the Company’s balance sheet, as Acquisition Earnout Liability. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Oct. 31, 2022 | |
Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with 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, contingent consideration, and income taxes. Actual results could differ from those estimates. |
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. There were no transfers of assets or liabilities between Levels 1, 2, or 3 during the nine months ended October 31, 2022 and 2021. The table below provides information on the fair value of our liabilities: SCHEDULE OF FAIR VALUE ASSETS AND LIABILITIES MEASURED ON RECURRING BASIS Total Fair Quoted Prices in Active Markets Significant Other Observable Inputs Significant Value (Level 1) (Level 2) (Level 3) At January 31, 2022 Acquisition earnout liability (1) $ 8,833,000 $ – $ – $ 8,833,000 At October 31, 2022 Acquisition earnout liability (1) $ 8,645,000 $ – $ – $ 8,645,000 (1) The fair value of the acquisition earnout liability is based upon a probability-weighted discounted cash flow that was completed at the date of acquisition and updated as of October 31, 2022. The change in the fair value of the acquisition earnout liability decreased $ 163,000 188,000 The fair value of the Company’s term loan under its Second Amended and Restated Loan and Security Agreement was determined through an analysis of the interest rate spread from the date of closing the loan (August 2021) to the date of the most recent balance sheets, October 31, 2022 and January 31, 2022. The term loan bears interest at a per annum rate equal to the Prime Rate (as published in The Wall Street Journal) plus 1.5%, with a Prime “floor” rate of 3.25%. The prime rate is variable and, thus accommodates changes in the market interest rate. However, the interest rate spread (the 1.5% added to the Prime Rate) is fixed. We estimated the impact of the changes in the interest rate spread by analogizing the effect of the change in the Corporate bond rates, reduced for any changes in the market interest rate. 0.5% 9,674,000 9,798,000 201,000 202,000 |
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 the Company’s direct sales force or through third-party resellers. Licensed, locally-installed customers on a perpetual model utilize the Company’s support and maintenance services for a separate fee, whereas term-based locally installed license fees and SaaS fees include support and maintenance. We also derive revenue from professional services that support the implementation, configuration, training and optimization of the applications, as well as audit services and consulting services. We recognize revenue in accordance with Accounting Standards Codification (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 generally 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 exist, revenue may not be recognized until the satisfaction of such criteria. The determined 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, the amount allocated to each performance obligation and whether it depicts the amount that the Company expects to receive in exchange for the related product and/or service. The Company recognizes revenue for implementation for certain of its eValuator SaaS solution over the contract term, as it has been determined that those implementation services are not a distinct performance obligation. Services for other SaaS and Software solutions such as CDI, RevID and Compare, have been determined as a distinct performance obligation. For these agreements, the Company estimates 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, software as a service 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. The Company has utilized the portfolio approach as the practical expedient. We have applied the revenue model to a portfolio of contracts with similar characteristics where we expected that the financial statements would not differ materially from applying it to the individual contracts within that portfolio. Software Licenses The Company’s software license arrangements 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 is recognized at a point in time. Typically, this is upon shipment of components or electronic download of software. Maintenance and Support Services Our maintenance and support obligations include multiple discrete performance obligations, with the two largest being unspecified product upgrades or enhancements, and technical support, which can be offered at various points during a contract period. We believe that the multiple discrete performance obligations within our overall maintenance and support obligations can be viewed as a single performance obligation since both the unspecified upgrades and technical support are activities to fulfill the maintenance performance obligation and are rendered concurrently. Maintenance and support agreements entitle customers to technology support, version upgrades, bug fixes and service packs. We recognize maintenance and support revenue over the contract term. Software-Based Solution Professional Services The Company provides various professional services to customers with software licenses. These include project management, software implementation and software modification services. Revenues from arrangements 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 arrangements 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 of the Company’s platform and support which represent a single promise to provide continuous access to its software solutions. Implementation services for the Company’s eValuator product are included as part of the single promise for its respective contracts. The Company recognizes revenue for implementation of the eValuator product over the contract term as it is determined that the implementation on eValuator is not a distinct performance obligation. Implementation services for other SaaS products are deemed to be separate performance obligations. 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: SCHEDULE OF DISAGGREGATION OF REVENUE 1 2 3 4 Three Months Ended Nine Months Ended October 31, 2022 October 31, 2021 October 31, 2022 October 31, 2021 Recurring revenue $ 4,329,000 $ 3,907,000 $ 12,505,000 $ 8,536,000 Non-recurring revenue 1,888,000 1,607,000 5,639,000 2,797,000 Total revenue: $ 6,217,000 $ 5,514,000 $ 18,144,000 $ 11,333,000 The Company includes revenue categories of (i) maintenance and support and (ii) software as a service as recurring revenue. The Company includes revenue categories of (i) software licenses, (ii) professional services, and (iii) audit services as non-recurring revenue. Business Combinations Acquisitions have been accounted for as business combinations, using the acquisition method and, accordingly, the results of operations of the acquired businesses have been included in the condensed consolidated financial statements since their dates of acquisition. The assets and liabilities assumed of these businesses were recorded in the financial statements at their respective estimated fair values as of the acquisition date. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. While the Company uses its best estimates and assumptions as a part of the purchase price allocation process to accurately value the assets acquired, including intangible assets, and the liabilities assumed at the acquisition date, the Company’s estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the fair values of the assets acquired and the liabilities assumed, with a corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or the liabilities assumed, whichever comes first, any subsequent adjustments are reflected in our consolidated statements of operations. 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 revenue includes payments received in advance of performance under the contract. The Company’s 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 nine months ended October 31, 2022, the Company recognized approximately $ 4,918,000 20,917,000 the Company expects to recognize approximately 63% over the next 12 months and the remainder thereafter. Deferred costs (costs to fulfill a contract and contract acquisition costs) The Company defers 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 October 31, 2022 and January 31, 2022, the Company had deferred costs of $ 103,000 125,000 155,000 93,000 22,000 62,000 90,000 for the nine months ended 31, 2022 and 2021, 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, the Company expenses sales commissions as incurred when the amortization period of related deferred commission costs is expected to be one year or less. As of October 31, 2022 and January 31, 2022, deferred commission costs paid and payable, which are included on the consolidated balance sheets within other non-current assets totaled $ 1,092,000 806,000 707,000 408,000 110,000 88,000 and for the nine months ended October 31, 2022 and 2021 298,000 248,000 |
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, and forfeitures are recognized as incurred. For awards to non-employees, the Company recognizes compensation expense in the same manner as if the entity had paid cash for the goods or services. The Company incurred total compensation expense related to share-based awards of $ 555,000 537,000 1,212,000 1,659,000 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. 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 6 – Income Taxes for further details. The Company provides for uncertain tax positions and the related interest and penalties based upon management’s assessment of whether certain tax positions are more likely than not to be sustained upon examination by tax authorities. At October 31, 2022, the Company believes it has appropriately accounted for any uncertain tax positions. |
Net Loss Per Common Share | Net Loss Per Common Share The Company presents basic and diluted earnings per share (“EPS”) data for the Company’s common stock. The Company’s 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. Diluted EPS for the Company’s 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 and nine SCHEDULE OF BASIC AND DILUTED NET LOSS PER SHARE OF COMMON STOCK 1 2 3 4 Three Months Ended Nine Months Ended October 31, 2022 October 31, 2021 October 31, 2022 October 31, 2021 Basic earnings (loss) per share: Continuing operations Loss from continuing operations, net of tax $ (3,138,000 ) $ (4,379,000 ) $ (9,197,000 ) $ (6,913,000 ) Basic net loss per share of common stock from continuing operations $ (0.07 ) $ (0.10 ) (0.19 ) (0.17 ) Discontinued operations Income available to common stockholders from discontinued operations $ — $ 69,000 — 401,000 Basic net earnings per share of common stock from discontinued operations $ — $ — $ — $ 0.01 Diluted earnings (loss) per share: Continuing operations Loss available to common stockholders from continuing operations $ (3,138,000 ) $ (4,379,000 ) (9,197,000 ) (6,913,000 ) Diluted net loss per share of common stock from continuing operations $ (0.07 ) $ (0.10 ) (0.19 ) (0.17 ) Discontinued operations Income available to common stockholders from discontinued operations $ — $ 69,000 — 401,000 Diluted net earnings per share of common stock from discontinued operations $ — $ — $ — $ 0.01 Net loss $ (3,138,000 ) $ (4,310,000 ) $ (9,197,000 ) $ (6,512,000 ) Weighted average shares outstanding - Basic (1) 47,730,009 45,709,952 47,329,923 41,498,873 Effect of dilutive securities - Stock options and Restricted stock (2) 413,810 353,851 283,654 496,393 Weighted average shares outstanding – Diluted 48,143,819 46,063,803 47,613,577 41,995,266 Basic net loss per share of common stock $ (0.07 ) $ (0.10 ) $ (0.19 ) $ (0.16 ) Diluted net loss per share of common stock $ (0.07 ) $ (0.10 ) $ (0.19 ) $ (0.16 ) (1) Includes the effect of vested and excludes the effect of unvested restricted shares of common stock, which are considered non-participating securities. As of October 31, 2022 and 2021, there were 1,501,031 1,030,600 (2) Diluted net loss per share excludes the effect of shares that are anti-dilutive. For the three and nine months ended October 31, 2022, diluted earnings per share excludes 628,958 1,501,031 1,146,963 1,030,600 |
Other Operating Costs | Other Operating Costs Acquisition-related Costs SCHEDULE OF ACQUISITION RELATED COSTS 1 2 3 4 Three Months ended Nine Months ended October 31, 2022 October 31, 2021 October 31, 2022 October 31, 2021 Separation agreement expense $ — $ 706,000 $ — $ 706,000 Broker fees — 508,000 — 553,000 Professional fees 2,000 358,000 141,000 740,000 Executive bonuses — 355,000 — 705,000 Loss on exit from operating lease — 22,000 — 22,000 Other — (16,000 ) — (16,000 ) Total acquisition-related costs $ 2,000 $ 1,933,000 $ 141,000 $ 2,710,000 For the three and nine months ended October 31, 2022 the Company incurred certain acquisition-related costs related to the acquisition of Avelead totaling $ 2,000 141,000 1,933,000 2,710,000 355,000 705,000 |
Non-Cash Items | Non-Cash Items For the three and nine months ended October 31, 2021, the Company recorded the forgiveness of the PPP loan and accrued interest, totaling $ 2,327,000 |
Accounting Pronouncements Recently Adopted | Accounting Pronouncements Recently Adopted In July 2021, the FASB issued ASU 2021-05, Lessors - Certain Leases with Variable Lease Payments Leases |
Recent Accounting Pronouncements Not Yet Adopted | Recent Accounting Pronouncements Not Yet Adopted In November 2019, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Oct. 31, 2022 | |
Accounting Policies [Abstract] | |
SCHEDULE OF FAIR VALUE ASSETS AND LIABILITIES MEASURED ON RECURRING BASIS | The table below provides information on the fair value of our liabilities: SCHEDULE OF FAIR VALUE ASSETS AND LIABILITIES MEASURED ON RECURRING BASIS Total Fair Quoted Prices in Active Markets Significant Other Observable Inputs Significant Value (Level 1) (Level 2) (Level 3) At January 31, 2022 Acquisition earnout liability (1) $ 8,833,000 $ – $ – $ 8,833,000 At October 31, 2022 Acquisition earnout liability (1) $ 8,645,000 $ – $ – $ 8,645,000 (1) The fair value of the acquisition earnout liability is based upon a probability-weighted discounted cash flow that was completed at the date of acquisition and updated as of October 31, 2022. The change in the fair value of the acquisition earnout liability decreased $ 163,000 188,000 |
SCHEDULE OF DISAGGREGATION OF REVENUE | The following table provides information about disaggregated revenue by type and nature of revenue stream: SCHEDULE OF DISAGGREGATION OF REVENUE 1 2 3 4 Three Months Ended Nine Months Ended October 31, 2022 October 31, 2021 October 31, 2022 October 31, 2021 Recurring revenue $ 4,329,000 $ 3,907,000 $ 12,505,000 $ 8,536,000 Non-recurring revenue 1,888,000 1,607,000 5,639,000 2,797,000 Total revenue: $ 6,217,000 $ 5,514,000 $ 18,144,000 $ 11,333,000 |
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 and nine SCHEDULE OF BASIC AND DILUTED NET LOSS PER SHARE OF COMMON STOCK 1 2 3 4 Three Months Ended Nine Months Ended October 31, 2022 October 31, 2021 October 31, 2022 October 31, 2021 Basic earnings (loss) per share: Continuing operations Loss from continuing operations, net of tax $ (3,138,000 ) $ (4,379,000 ) $ (9,197,000 ) $ (6,913,000 ) Basic net loss per share of common stock from continuing operations $ (0.07 ) $ (0.10 ) (0.19 ) (0.17 ) Discontinued operations Income available to common stockholders from discontinued operations $ — $ 69,000 — 401,000 Basic net earnings per share of common stock from discontinued operations $ — $ — $ — $ 0.01 Diluted earnings (loss) per share: Continuing operations Loss available to common stockholders from continuing operations $ (3,138,000 ) $ (4,379,000 ) (9,197,000 ) (6,913,000 ) Diluted net loss per share of common stock from continuing operations $ (0.07 ) $ (0.10 ) (0.19 ) (0.17 ) Discontinued operations Income available to common stockholders from discontinued operations $ — $ 69,000 — 401,000 Diluted net earnings per share of common stock from discontinued operations $ — $ — $ — $ 0.01 Net loss $ (3,138,000 ) $ (4,310,000 ) $ (9,197,000 ) $ (6,512,000 ) Weighted average shares outstanding - Basic (1) 47,730,009 45,709,952 47,329,923 41,498,873 Effect of dilutive securities - Stock options and Restricted stock (2) 413,810 353,851 283,654 496,393 Weighted average shares outstanding – Diluted 48,143,819 46,063,803 47,613,577 41,995,266 Basic net loss per share of common stock $ (0.07 ) $ (0.10 ) $ (0.19 ) $ (0.16 ) Diluted net loss per share of common stock $ (0.07 ) $ (0.10 ) $ (0.19 ) $ (0.16 ) (1) Includes the effect of vested and excludes the effect of unvested restricted shares of common stock, which are considered non-participating securities. As of October 31, 2022 and 2021, there were 1,501,031 1,030,600 (2) Diluted net loss per share excludes the effect of shares that are anti-dilutive. For the three and nine months ended October 31, 2022, diluted earnings per share excludes 628,958 1,501,031 1,146,963 1,030,600 |
SCHEDULE OF ACQUISITION RELATED COSTS | SCHEDULE OF ACQUISITION RELATED COSTS 1 2 3 4 Three Months ended Nine Months ended October 31, 2022 October 31, 2021 October 31, 2022 October 31, 2021 Separation agreement expense $ — $ 706,000 $ — $ 706,000 Broker fees — 508,000 — 553,000 Professional fees 2,000 358,000 141,000 740,000 Executive bonuses — 355,000 — 705,000 Loss on exit from operating lease — 22,000 — 22,000 Other — (16,000 ) — (16,000 ) Total acquisition-related costs $ 2,000 $ 1,933,000 $ 141,000 $ 2,710,000 |
BUSINESS COMBINATION AND DIVE_2
BUSINESS COMBINATION AND DIVESTITURE (Tables) | 9 Months Ended |
Oct. 31, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
SCHEDULE OF COMPONENTS OF TOTAL CONSIDERATION | The components of the total consideration as of the acquisition date are as follows: SCHEDULE OF COMPONENTS OF TOTAL CONSIDERATION (in thousands) Components of total consideration, net of cash acquired: Cash $ 11,900 Cash, seller expenses 285 Cash, estimated net working capital adjustment 285 Restricted Common Stock 6,554 Acquisition earnout liabilities 10,684 (a) Total consideration $ 29,708 (a) Acquisition earnout liabilities represents the net present value and risk adjusted probability of the required future payments underlying the Company’s SaaS Contingent Consideration and Renewal Contingent Consideration as described above. Due to the dates that the Company is required to measure, report and agree on the calculations, $ 8,645,000 |
SCHEDULE OF ALLOCATION OF THE TOTAL CONSIDERATION | The allocation of the total consideration to net tangible and intangible assets as of the date of the closing of Avelead was as follows: SCHEDULE OF ALLOCATION OF THE TOTAL CONSIDERATION (in thousands) Net tangible assets (liabilities): Accounts receivable $ 1,246 Unbilled revenue 200 Prepaid expenses 178 Fixed assets 37 Accounts payable (490 ) Accrued expenses (397 ) Deferred revenues (863 ) Net tangible assets (liabilities) (89 ) Goodwill 12,377 Customer Relationships (SaaS) 8,370 Customer Relationships (Consulting) 1,330 Internally Developed Software 6,380 Trademarks and Tradenames 1,340 Net assets acquired and liabilities assumed $ 29,708 |
SCHEDULE OF INTANGIBLE ASSETS ESTIMATED USEFUL LIVES | The intangible assets recorded as a result of the Avelead acquisition, and their related estimated useful lives are as follows: SCHEDULE OF INTANGIBLE ASSETS ESTIMATED USEFUL LIVES Estimated Useful Lives Goodwill Indefinite Customer Relationships (SaaS) 10 Customer Relationships (Consulting) 8 Internally Developed Software 9 Trademarks and Tradenames 15 |
SCHEDULE OF PRO FORMA REVENUE AND NET EARNINGS | SCHEDULE OF PRO FORMA REVENUE AND NET EARNINGS Three Months ended October 31, 2021 Nine Months ended October 31, 2021 Actual Pro Forma Actual Pro Forma Revenues $ 5,514 $ 6,064 $ 11,333 $ 16,585 Loss from continuing operations $ (4,379 ) $ (4,763 ) $ (6,913 ) $ (8,665 ) |
OPERATING LEASES (Tables)
OPERATING LEASES (Tables) | 9 Months Ended |
Oct. 31, 2022 | |
Operating Leases | |
SCHEDULE OF MATURITIES OF OPERATING LEASE LIABILITIES | Maturities of operating lease liabilities associated with the Company’s operating lease as of October 31, 2022 are as follows for payments due based upon the Company’s fiscal year: SCHEDULE OF MATURITIES OF OPERATING LEASE LIABILITIES 2022 $ 53,000 2023 36,000 Total lease payments 89,000 Less present value adjustment (2,000 ) Present value of lease liabilities $ 87,000 |
DEBT (Tables)
DEBT (Tables) | 9 Months Ended |
Oct. 31, 2022 | |
Debt Disclosure [Abstract] | |
SCHEDULE OF MAXIMUM DEBT TO ARR RATIO | SCHEDULE OF MAXIMUM DEBT TO ARR RATIO Quarter Ending Maximum Debt to ARR Ratio October 31, 2021 0.80 1.00 January 31, 2022 0.75 1.00 April 30, 2022 0.65 1.00 July 31, 2022 0.55 1.00 October 31, 2022 0.50 1.00 January 31, 2023 0.45 1.00 |
SCHEDULE OF MAXIMUM DEBT TO ADJUSTED EBITDA RATIO | SCHEDULE OF MAXIMUM DEBT TO ADJUSTED EBITDA RATIO Quarter Ending Maximum Debt to Adjusted EBITDA Ratio April 30, 2023 11.30 1.00 July 31, 2023 4.15 1.00 October 31, 2023 2.50 1.00 January 31, 2024 and on the last day of each quarter thereafter 2.00 1.00 |
SCHEDULE OF OUTSTANDING DEBT, OTHER THAN PPP LOAN | Outstanding principal balances on debt related to the new term loan agreement that the Company entered into on August 16, 2021 with Bridge Bank consisted of the following at: SCHEDULE OF OUTSTANDING DEBT, OTHER THAN PPP LOAN October 31, 2022 January 31, 2022 Term loan $ 9,875,000 $ 10,000,000 Financing cost payable 57,000 21,000 Deferred financing cost (93,000 ) (117,000 ) Total 9,839,000 9,904,000 Less: Current portion (625,000 ) (250,000 ) Non-current portion of debt $ 9,214,000 $ 9,654,000 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 9 Months Ended |
Oct. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
SCHEDULE OF INCOME TAXES | Income taxes consist of the following: SCHEDULE OF INCOME TAXES October 31, 2022 October 31, 2021 Three months ended October 31, 2022 October 31, 2021 Current tax expense: Federal $ (6,000 ) $ — State (3,000 ) (4,000 ) Total current tax provision $ (9,000 ) $ (4,000 ) 1 2 Nine months ended October 31, 2022 October 31, 2021 Current tax expense: Federal $ (11,000 ) $ — State (11,000 ) (9,000 ) Total current tax provision $ (22,000 ) $ (9,000 ) |
DISCONTINUED OPERATIONS (Tables
DISCONTINUED OPERATIONS (Tables) | 9 Months Ended |
Oct. 31, 2022 | |
Discontinued Operations and Disposal Groups [Abstract] | |
SCHEDULE OF DISCONTINUED OPERATIONS OF CONSOLIDATED STATEMENTS OF OPERATIONS | For the three and nine months ended October 31, 2021, the Company recorded the following into discontinued operations in the accompanying condensed consolidated statements of operations: SCHEDULE OF DISCONTINUED OPERATIONS OF CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended October 31, 2021 Nine Months Ended October 31, 2021 Revenues: Transition service fees $ 102,000 $ 498,000 Total revenues 102,000 498,000 Expenses: Cost of Sales 1,000 5,000 Transition service cost 32,000 92,000 Total expenses 33,000 97,000 Income from discontinued operations $ 69,000 $ 401,000 |
SUBSEQUENT EVENTS (Tables)
SUBSEQUENT EVENTS (Tables) - Second Modification Debt Agreement [Member] | 9 Months Ended |
Oct. 31, 2022 | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |
SCHEDULE OF MAXIMUM DEBT MODIFICATION TO ARR RATIOS | SCHEDULE OF MAXIMUM DEBT MODIFICATION TO ARR RATIOS Quarter Ending Maximum Debt to ARR Ratio October 31, 2022 0.80 1.00 January 31, 2023 0.70 1.00 April 30, 2023 0.65 1.00 July 31, 2023 0.60 1.00 October 31, 2023 0.55 1.00 January 30, 2024 0.50 1.00 |
SCHEDULE OF MAXIMUM DEBT MODIFICATION TO ADJUSTED EBITDA RATIO | SCHEDULE OF MAXIMUM DEBT MODIFICATION TO ADJUSTED EBITDA RATIO Quarter Ending Maximum Debt to Adjusted EBITDA Ratio April 30, 2024 3.50 1.00 July 31, 2024 and on the last day of each quarter thereafter 2.00 1.00 |
SCHEDULE OF FAIR VALUE ASSETS A
SCHEDULE OF FAIR VALUE ASSETS AND LIABILITIES MEASURED ON RECURRING BASIS (Details) - USD ($) | Oct. 31, 2022 | Jan. 31, 2022 | |
Defined Benefit Plan Disclosure [Line Items] | |||
Acquisition earn out liability fair value, observable inputs | [1] | $ 8,645,000 | $ 8,833,000 |
Fair Value, Inputs, Level 1 [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Acquisition earn out liability fair value, observable inputs | [1] | ||
Fair Value, Inputs, Level 2 [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Acquisition earn out liability fair value, observable inputs | [1] | ||
Fair Value, Inputs, Level 3 [Member] | |||
Defined Benefit Plan Disclosure [Line Items] | |||
Acquisition earn out liability fair value, observable inputs | [1] | $ 8,645,000 | $ 8,833,000 |
[1]The fair value of the acquisition earnout liability is based upon a probability-weighted discounted cash flow that was completed at the date of acquisition and updated as of October 31, 2022. The change in the fair value of the acquisition earnout liability decreased $ 163,000 188,000 |
SCHEDULE OF FAIR VALUE ASSETS_2
SCHEDULE OF FAIR VALUE ASSETS AND LIABILITIES MEASURED ON RECURRING BASIS (Details) (Parenthetical) - USD ($) | 3 Months Ended | 9 Months Ended |
Oct. 31, 2022 | Oct. 31, 2022 | |
Restructuring Cost and Reserve [Line Items] | ||
Acquisition earnout liability | $ (188,000) | |
Avelead Consulting LLC [Member] | ||
Restructuring Cost and Reserve [Line Items] | ||
Acquisition earnout liability | $ 163,000 | $ 188,000 |
SCHEDULE OF DISAGGREGATION OF R
SCHEDULE OF DISAGGREGATION OF REVENUE (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2022 | Oct. 31, 2021 | Oct. 31, 2022 | Oct. 31, 2021 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Total revenue: | $ 6,217,000 | $ 5,514,000 | $ 18,144,000 | $ 11,333,000 |
Fair Value, Recurring [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Total revenue: | 4,329,000 | 3,907,000 | 12,505,000 | 8,536,000 |
Fair Value, Nonrecurring [Member] | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Total revenue: | $ 1,888,000 | $ 1,607,000 | $ 5,639,000 | $ 2,797,000 |
SCHEDULE OF BASIC AND DILUTED N
SCHEDULE OF BASIC AND DILUTED NET LOSS PER SHARE OF COMMON STOCK (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||||||
Oct. 31, 2022 | Jul. 31, 2022 | Apr. 30, 2022 | Oct. 31, 2021 | Jul. 31, 2021 | Apr. 30, 2021 | Oct. 31, 2022 | Oct. 31, 2021 | ||
Continuing operations | |||||||||
Loss from continuing operations, net of tax | $ (3,138,000) | $ (4,379,000) | $ (9,197,000) | $ (6,913,000) | |||||
Basic net loss per share of common stock from continuing operations | $ (0.07) | $ (0.10) | $ (0.19) | $ (0.17) | |||||
Discontinued operations | |||||||||
Income available to common stockholders from discontinued operations | $ 69,000 | $ 401,000 | |||||||
Basic net earnings per share of common stock from discontinued operations | $ 0 | $ 0 | $ 0 | $ 0.01 | |||||
Continuing operations | |||||||||
Loss available to common stockholders from continuing operations | $ (3,138,000) | $ (4,379,000) | $ (9,197,000) | $ (6,913,000) | |||||
Diluted net loss per share of common stock from continuing operations | $ (0.07) | $ (0.10) | $ (0.19) | $ (0.17) | |||||
Discontinued operations | |||||||||
Income available to common stockholders from discontinued operations | $ 69,000 | $ 401,000 | |||||||
Diluted net earnings per share of common stock from discontinued operations | $ 0 | $ 0 | $ 0 | $ 0.01 | |||||
Net loss | $ (3,138,000) | $ (3,272,000) | $ (2,787,000) | $ (4,310,000) | $ (60,000) | $ (2,142,000) | $ (9,197,000) | $ (6,512,000) | |
Weighted average shares outstanding - Basic | [1] | 47,730,009 | 45,709,952 | 47,329,923 | 41,498,873 | ||||
Effect of dilutive securities - Stock options and Restricted stock | [2] | 413,810 | 353,851 | 283,654 | 496,393 | ||||
Weighted average shares outstanding – Diluted | 48,143,819 | 46,063,803 | 47,613,577 | 41,995,266 | |||||
Basic net loss per share of common stock | $ (0.07) | $ (0.10) | $ (0.19) | $ (0.16) | |||||
Diluted net loss per share of common stock | $ (0.07) | $ (0.10) | $ (0.19) | $ (0.16) | |||||
[1]Includes the effect of vested and excludes the effect of unvested restricted shares of common stock, which are considered non-participating securities. As of October 31, 2022 and 2021, there were 1,501,031 1,030,600 628,958 1,501,031 1,146,963 1,030,600 |
SCHEDULE OF BASIC AND DILUTED_2
SCHEDULE OF BASIC AND DILUTED NET LOSS PER SHARE OF COMMON STOCK (Details) (Parenthetical) - shares | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2022 | Oct. 31, 2021 | Oct. 31, 2022 | Oct. 31, 2021 | |
Unvested Restricted Stock [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Diluted earnings per share | 1,501,031 | 1,030,600 | ||
Share-Based Payment Arrangement, Option [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Diluted earnings per share | 628,958 | 1,146,963 | 1,501,031 | 1,030,600 |
SCHEDULE OF ACQUISITION RELATED
SCHEDULE OF ACQUISITION RELATED COSTS (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2022 | Oct. 31, 2021 | Oct. 31, 2022 | Oct. 31, 2021 | |
Accounting Policies [Abstract] | ||||
Separation agreement expense | $ 706,000 | $ 706,000 | ||
Broker fees | 508,000 | 553,000 | ||
Professional fees | 2,000 | 358,000 | 141,000 | 740,000 |
Executive bonuses | 355,000 | 705,000 | ||
Loss on exit from operating lease | 22,000 | 22,000 | ||
Other | (16,000) | (16,000) | ||
Total acquisition-related costs | $ 2,000 | $ 1,933,000 | $ 141,000 | $ 2,710,000 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Oct. 31, 2022 | Oct. 31, 2021 | Oct. 31, 2022 | Oct. 31, 2021 | Jan. 31, 2022 | |
Deferred revenue | $ 4,918,000 | ||||
Revenue remaining performance obligation | $ 20,917,000 | $ 20,917,000 | |||
Revenue, remaining performance obligation, expected timing of satisfaction, explanation | the Company expects to recognize approximately 63% over the next 12 months and the remainder thereafter. | ||||
Deferred costs | 103,000 | $ 103,000 | 125,000 | ||
Accumulated amortization of deferred costs | 155,000 | 155,000 | 93,000 | ||
Amortization expenses deferred costs | 22,000 | $ 22,000 | 62,000 | $ 90,000 | |
Accumulated amortization | 707,000 | 707,000 | 408,000 | ||
Compensation expense related to share-based award | 1,212,000 | 1,659,000 | |||
Acquisition related costs | 2,000 | 1,933,000 | 141,000 | 2,710,000 | |
Executive bonuses | 355,000 | 705,000 | |||
Forgiveness of Ppp loan and accrued interest | 2,327,000 | 2,327,000 | |||
Equity Award [Member] | |||||
Compensation expense related to share-based award | 555,000 | 537,000 | 1,212,000 | 1,659,000 | |
Selling, General and Administrative Expenses [Member] | |||||
Deferred sales commissions | 110,000 | $ 88,000 | 298,000 | $ 248,000 | |
Other Noncurrent Assets [Member] | |||||
Deferred commission costs | $ 1,092,000 | $ 1,092,000 | $ 806,000 | ||
Second Amended and Restated Loan and Security Agreement [Member] | |||||
Variable rate, description | The term loan bears interest at a per annum rate equal to the Prime Rate (as published in The Wall Street Journal) plus 1.5%, with a Prime “floor” rate of 3.25%. The prime rate is variable and, thus accommodates changes in the market interest rate. However, the interest rate spread (the 1.5% added to the Prime Rate) is fixed. We estimated the impact of the changes in the interest rate spread by analogizing the effect of the change in the Corporate bond rates, reduced for any changes in the market interest rate. | ||||
Interest rate | 0.50% | 0.50% | 0.50% | ||
Debt discount | $ 9,674,000 | $ 9,674,000 | $ 9,798,000 | ||
Discount on book value | $ 201,000 | $ 201,000 | $ 202,000 |
SCHEDULE OF COMPONENTS OF TOTAL
SCHEDULE OF COMPONENTS OF TOTAL CONSIDERATION (Details) - Avelead Consulting LLC [Member] | Aug. 16, 2021 USD ($) | |
Business Acquisition [Line Items] | ||
Total consideration | $ 29,700,000 | |
Unit Purchase Agreement [Member] | ||
Business Acquisition [Line Items] | ||
Cash | 11,900,000 | |
Cash, seller expenses | 285,000 | |
Cash, estimated net working capital adjustment | 285,000 | |
Restricted Common Stock | 6,554,000 | |
Acquisition earnout liabilities | 10,684,000 | [1] |
Total consideration | $ 29,708,000 | |
[1]Acquisition earnout liabilities represents the net present value and risk adjusted probability of the required future payments underlying the Company’s SaaS Contingent Consideration and Renewal Contingent Consideration as described above. Due to the dates that the Company is required to measure, report and agree on the calculations, $ 8,645,000 |
SCHEDULE OF COMPONENTS OF TOT_2
SCHEDULE OF COMPONENTS OF TOTAL CONSIDERATION (Details) (Parenthetical) - USD ($) | Oct. 31, 2022 | Jan. 31, 2022 | Oct. 31, 2021 |
Business Combination and Asset Acquisition [Abstract] | |||
Short-term liability | $ 8,645,000 | $ 4,672,000 | $ 8,645,000 |
SCHEDULE OF ALLOCATION OF THE T
SCHEDULE OF ALLOCATION OF THE TOTAL CONSIDERATION (Details) - USD ($) | Oct. 31, 2022 | Jan. 31, 2022 | Aug. 16, 2021 |
Net tangible assets (liabilities): | |||
Goodwill | $ 23,089,000 | $ 23,089,000 | |
Avelead Consulting LLC [Member] | |||
Net tangible assets (liabilities): | |||
Accounts receivable | $ 1,246,000 | ||
Unbilled revenue | 200,000 | ||
Prepaid expenses | 178,000 | ||
Fixed assets | 37,000 | ||
Accounts payable | (490,000) | ||
Accrued expenses | (397,000) | ||
Deferred revenues | (863,000) | ||
Net tangible assets (liabilities) | (89,000) | ||
Goodwill | 12,377,000 | ||
Customer Relationships (SaaS) | 8,370,000 | ||
Customer Relationships (Consulting) | 1,330,000 | ||
Internally Developed Software | 6,380,000 | ||
Trademarks and Tradenames | 1,340,000 | ||
Net assets acquired and liabilities assumed | $ 29,708,000 |
SCHEDULE OF INTANGIBLE ASSETS E
SCHEDULE OF INTANGIBLE ASSETS ESTIMATED USEFUL LIVES (Details) | Aug. 16, 2021 |
Customer Relationships [Member] | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Estimated useful life, intangible assets | 10 years |
Customer Relationships Consulting [Member] | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Estimated useful life, intangible assets | 8 years |
Computer Software, Intangible Asset [Member] | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Estimated useful life, intangible assets | 9 years |
Trademarks and Trade Names [Member] | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Estimated useful life, intangible assets | 15 years |
SCHEDULE OF PRO FORMA REVENUE A
SCHEDULE OF PRO FORMA REVENUE AND NET EARNINGS (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2022 | Oct. 31, 2021 | Oct. 31, 2022 | Oct. 31, 2021 | |
Business Combination and Asset Acquisition [Abstract] | ||||
Revenues, Actual | $ 5,514,000 | $ 11,333,000 | ||
Revenues, Pro Forma | 6,064,000 | 16,585,000 | ||
Loss from continuing operations, Actual | $ (3,138,000) | (4,379,000) | $ (9,197,000) | (6,913,000) |
Loss from continuing operations, Pro Forma | $ (4,763,000) | $ (8,665,000) |
BUSINESS COMBINATION AND DIVE_3
BUSINESS COMBINATION AND DIVESTITURE (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Aug. 16, 2021 | Oct. 31, 2022 | Oct. 31, 2021 | Oct. 31, 2022 | Oct. 31, 2021 | |
Business Acquisition [Line Items] | |||||
Acquisition earnout liability change in valuation | $ (188,000) | ||||
Business acquisition, pro forma revenue | $ 6,064,000 | $ 16,585,000 | |||
Loss from continuing operations | (4,763,000) | (8,665,000) | |||
Avelead Revenue [Member] | |||||
Business Acquisition [Line Items] | |||||
Loss from continuing operations | $ (553,000) | (1,359,000) | (1,847,000) | (2,727,000) | |
Avelead Consulting LLC [Member] | |||||
Business Acquisition [Line Items] | |||||
Business combination, consideration transferred | $ 29,700,000 | ||||
Business combination consideration holdback | 100,000 | ||||
Business acquisition, equity interest issued or issuable, value assigned | 6,500,000 | ||||
Business combination, contingent consideration, liability | $ 10,700,000 | ||||
Acquisition earnout liability change in valuation | 163,000 | 188,000 | |||
Business acquisition, pro forma revenue | $ 2,788,000 | $ 2,595,000 | $ 7,827,000 | $ 7,297,000 | |
Number of stock options granted | 583,333 | ||||
Share based compensation arrangement by share based payment award, options, outstanding, weighted average exercise price | $ 1.53 | ||||
Avelead Consulting LLC [Member] | Share-Based Payment Arrangement, Tranche One [Member] | |||||
Business Acquisition [Line Items] | |||||
Number of stock options granted | 500,000 | ||||
Share based compensation arrangement by share based payment award, award vesting period | 3 years | ||||
Share based compensation arrangement by share based payment award, options, outstanding, intrinsic value | $ 395,000 | ||||
Avelead Consulting LLC [Member] | Share-Based Payment Arrangement, Tranche Two [Member] | |||||
Business Acquisition [Line Items] | |||||
Number of stock options granted | 83,333 | ||||
Avelead Consulting LLC [Member] | Unit Purchase Agreement [Member] | |||||
Business Acquisition [Line Items] | |||||
Business combination, consideration transferred | $ 29,708,000 | ||||
Payments to acquire businesses, net of cash acquired | 11,900,000 | ||||
Payments to acquire businesses seller expenses | 285,000 | ||||
Working capital | $ 285,000 | ||||
Payment of SaaS contingent consideration in cash, percentage | 50% | ||||
Payment of SaaS contingent consideration in shares, percentage | 50% | ||||
First year payment of SaaS contingent consideration, description | The first year of SaaS Contingent Consideration is calculated as 75% of Avelead’s recognized SaaS revenue from September 1, 2021 to August 31, 2022. The first-year payment is subject to a deduction of $665,000 spread equally between the cash and common stock portion of the earnout consideration. The first year earnout will be paid on or about October 15, 2022, subject to a dispute and resolution period. Assuming that Avelead is within 80% of its forecasted SaaS revenue in the first year earnout1, the Company agreed to a floor and ceiling on the value of the Company’s restricted common stock issued as consideration for the earnout. That collar has a floor of $3.50 per share and a ceiling of $5.50 per share for the first year earnout. | ||||
Second year Payment of SaaS contingent consideration, description | The second year of SaaS Contingent Consideration is calculated as 40% of Avelead’s recognized SaaS revenue from September 1, 2022 to August 31, 2023. The second year earnout will be paid on or about October 15, 2023, subject to a dispute and resolution period. Assuming that Avelead is within 80% of its forecasted SaaS revenue in the second year earnout1, the Company agreed to a floor and ceiling on the Company’s restricted common stock issued as consideration for the earnout. That collar has a floor of $4.50 per share and a ceiling of $6.50 per share for the second year earnout. | ||||
Renewal contingent consideration, description | The Renewal Contingent Consideration is tied directly to a successful renewal of a specific customer of Avelead. To meet the definition of a renewal, Avelead must achieve a minimum threshold of contracted revenue in an updated, annual, renewed contract with the specified customer. The renewal occurs on or about June 1, 2022 and June 1, 2023. The Company will remit the Renewal Contingent Consideration on or about each of October 15, 2022 and 2023, respectively. The Renewal Contingent Consideration is payable in shares of Company restricted common stock valued as of the date of Closing. Accordingly, upon achieving the Renewal Contingent Consideration, the Company will issue 627,747 shares of restricted common stock on or about each of October 15, 2022 and October 15, 2023, subject to a dispute and resolution period. The Renewal Contingent Consideration is either earned or not earned based upon the renewal of the specified customer at the minimum amount of contracted revenue. There is no pro-ration of the underlying Renewal Contingent Consideration. | ||||
Forecasted revenue description | If Avelead does not achieve 80% of its forecasted revenue, the price per share will revert back to the Company’s market price based upon a 30-day average. | ||||
Avelead Consulting LLC [Member] | Acquisition Restricted Common Stock [Member] | |||||
Business Acquisition [Line Items] | |||||
Business acquisition, equity interest issued or issuable, number of shares | 5,021,972 | ||||
Business acquisition equity fair value | $ 6,500,000 | ||||
Business combination description | Additionally, the Company contracted two types of contingent consideration; the first is referred to herein as “SaaS Contingent Consideration” and the second is referred to herein as “Renewal Contingent Consideration.” The SaaS Contingent Consideration and Renewal Contingent Consideration had an aggregate value of approximately $10.7 million as of the date of closing. | ||||
Avelead Consulting LLC [Member] | Acquisition Restricted Common Stock [Member] | Unit Purchase Agreement [Member] | |||||
Business Acquisition [Line Items] | |||||
Business acquisition equity fair value | $ 6,500,000 | ||||
Avelead Consulting LLC [Member] | Restricted Stock Units (RSUs) [Member] | |||||
Business Acquisition [Line Items] | |||||
Number of stock options granted | 100,000 |
SCHEDULE OF MATURITIES OF OPERA
SCHEDULE OF MATURITIES OF OPERATING LEASE LIABILITIES (Details) | Oct. 31, 2022 USD ($) |
Operating Leases | |
2022 | $ 53,000 |
2023 | 36,000 |
Total lease payments | 89,000 |
Less present value adjustment | (2,000) |
Present value of lease liabilities | $ 87,000 |
OPERATING LEASES (Details Narra
OPERATING LEASES (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
Oct. 02, 2021 | Aug. 16, 2021 | Feb. 28, 2022 | Oct. 31, 2022 | Oct. 31, 2022 | Oct. 31, 2021 | Jan. 31, 2022 | |
Sublease income | $ 49,000 | $ 145,000 | |||||
Operating lease, right-of-use asset | 80,000 | 80,000 | $ 218,000 | ||||
Current portion of operating lease obligation | 87,000 | $ 87,000 | $ 204,000 | ||||
Operating lease, cost | $ 48,000 | $ 145,000 | |||||
Right of Use Asset [Member] | |||||||
Lessee, operating lease, discount rate | 6.50% | 6.50% | |||||
At inception [Member] | |||||||
Operating lease, right-of-use asset | $ 540,000 | ||||||
Sublease Agreement [Member] | |||||||
Sublease, term | 18 months | ||||||
Sublease income | $ 292,000 | ||||||
Suwanee Office Lease [Member] | |||||||
Lease expiration date | Feb. 28, 2022 | ||||||
Operating lease, payments | $ 71,984 | ||||||
Payments for rent | $ 18,000 | $ 55,000 |
SCHEDULE OF MAXIMUM DEBT TO ARR
SCHEDULE OF MAXIMUM DEBT TO ARR RATIO (Details) | Oct. 31, 2022 |
October 31, 2021 [Member] | Minimum [Member] | |
Debt Instrument [Line Items] | |
Maximum Debt to ARR Ratio | 0.80% |
October 31, 2021 [Member] | Maximum [Member] | |
Debt Instrument [Line Items] | |
Maximum Debt to ARR Ratio | 1% |
January 31, 2022 [Member] | Minimum [Member] | |
Debt Instrument [Line Items] | |
Maximum Debt to ARR Ratio | 0.75% |
January 31, 2022 [Member] | Maximum [Member] | |
Debt Instrument [Line Items] | |
Maximum Debt to ARR Ratio | 1% |
April 30, 2022 [Member] | Minimum [Member] | |
Debt Instrument [Line Items] | |
Maximum Debt to ARR Ratio | 0.65% |
April 30, 2022 [Member] | Maximum [Member] | |
Debt Instrument [Line Items] | |
Maximum Debt to ARR Ratio | 1% |
July 31, 2022 [Member] | Minimum [Member] | |
Debt Instrument [Line Items] | |
Maximum Debt to ARR Ratio | 0.55% |
July 31, 2022 [Member] | Maximum [Member] | |
Debt Instrument [Line Items] | |
Maximum Debt to ARR Ratio | 1% |
October 31, 2022 [Member] | Minimum [Member] | |
Debt Instrument [Line Items] | |
Maximum Debt to ARR Ratio | 0.50% |
October 31, 2022 [Member] | Maximum [Member] | |
Debt Instrument [Line Items] | |
Maximum Debt to ARR Ratio | 1% |
January 31, 2023 [Member] | Minimum [Member] | |
Debt Instrument [Line Items] | |
Maximum Debt to ARR Ratio | 0.45% |
January 31, 2023 [Member] | Maximum [Member] | |
Debt Instrument [Line Items] | |
Maximum Debt to ARR Ratio | 1% |
SCHEDULE OF MAXIMUM DEBT TO ADJ
SCHEDULE OF MAXIMUM DEBT TO ADJUSTED EBITDA RATIO (Details) | Oct. 31, 2022 |
April 30, 2023 [Member] | Minimum [Member] | |
Debt Instrument [Line Items] | |
Maximum Debt to Adjusted EBITDA Ratio | 11.30% |
April 30, 2023 [Member] | Maximum [Member] | |
Debt Instrument [Line Items] | |
Maximum Debt to Adjusted EBITDA Ratio | 1% |
July 31, 2023 [Member] | Minimum [Member] | |
Debt Instrument [Line Items] | |
Maximum Debt to Adjusted EBITDA Ratio | 4.15% |
July 31, 2023 [Member] | Maximum [Member] | |
Debt Instrument [Line Items] | |
Maximum Debt to Adjusted EBITDA Ratio | 1% |
October 31, 2023 [Member] | Minimum [Member] | |
Debt Instrument [Line Items] | |
Maximum Debt to Adjusted EBITDA Ratio | 2.50% |
October 31, 2023 [Member] | Maximum [Member] | |
Debt Instrument [Line Items] | |
Maximum Debt to Adjusted EBITDA Ratio | 1% |
January 31, 2024 and on the last day of each quarter thereafter [Member] | Minimum [Member] | |
Debt Instrument [Line Items] | |
Maximum Debt to Adjusted EBITDA Ratio | 2% |
January 31, 2024 and on the last day of each quarter thereafter [Member] | Maximum [Member] | |
Debt Instrument [Line Items] | |
Maximum Debt to Adjusted EBITDA Ratio | 1% |
SCHEDULE OF OUTSTANDING DEBT, O
SCHEDULE OF OUTSTANDING DEBT, OTHER THAN PPP LOAN (Details) - USD ($) | Oct. 31, 2022 | Jan. 31, 2022 |
Debt Disclosure [Abstract] | ||
Term loan | $ 9,875,000 | $ 10,000,000 |
Financing cost payable | 57,000 | 21,000 |
Deferred financing cost | (93,000) | (117,000) |
Total | 9,839,000 | 9,904,000 |
Current portion | (625,000) | (250,000) |
Non-current portion of debt | $ 9,214,000 | $ 9,654,000 |
DEBT (Details Narrative)
DEBT (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||||
Nov. 29, 2022 | Aug. 26, 2021 | Mar. 02, 2021 | Oct. 31, 2022 | Oct. 31, 2021 | Oct. 31, 2022 | Oct. 31, 2021 | |
Line of Credit Facility [Line Items] | |||||||
Amortization of debt issuance costs | $ 60,000 | ||||||
Gain (Loss) on Extinguishment of Debt | $ (43,000) | $ (43,000) | |||||
Base Rate [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Debt instrument, basis spread on variable rate | 1.50% | ||||||
Debt instrument, interest rate, stated percentage | 3.25% | ||||||
Bridge Bank [Member] | Revolving Credit Facility [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Extinguishment of debt, amount | $ 3,000,000 | ||||||
Security Agreement [Member] | Bridge Bank [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Line of credit facility, maximum borrowing capacity | 10,000,000 | ||||||
Long term debt, maturity, year two | 500,000 | ||||||
Long term debt, maturity, year three | 1,000,000 | ||||||
Long term debt, maturity, year four | 2,000,000 | ||||||
Long term debt, maturity, year five | 3,000,000 | ||||||
Loan and Security Agreement [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Deferred offering costs | 130,000 | ||||||
Amortization of debt issuance costs | 200,000 | ||||||
Accretion expense | $ 200,000 | ||||||
Debt financial covenants, description | Borrowers shall, at all times, maintain unrestricted cash of Borrowers at Bank in an amount not less than (i) on the Closing Date and for the first eleven (11) months immediately following the Closing Date, Five Million Dollars ($5,000,000) and (ii) at all times thereafter, Three Million Dollars ($3,000,000). | ||||||
Loan and Security Agreement [Member] | Maximum [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Fixed charge coverage ratio | 1.20% | 1.20% | |||||
Loan and Security Agreement [Member] | Minimum [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Fixed charge coverage ratio | 1% | 1% | |||||
Second Modification Debt Agreement [Member] | Subsequent Event [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Line of credit facility, maximum borrowing capacity | $ 2,000,000 | ||||||
Debt financial covenants, description | Borrowers shall, at all times, maintain unrestricted cash of Borrowers at Bank in an amount not less than Two Million Dollars ($2,000,000). | ||||||
Second Modification Debt Agreement [Member] | Maximum [Member] | Subsequent Event [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Fixed charge coverage ratio | 1.20% | ||||||
Second Modification Debt Agreement [Member] | Minimum [Member] | Subsequent Event [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Fixed charge coverage ratio | 1% | ||||||
Second Modification Debt Agreement [Member] | Base Rate [Member] | Subsequent Event [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Debt instrument, basis spread on variable rate | 1.50% | ||||||
Debt instrument, interest rate, stated percentage | 3.25% | ||||||
Second Modification Debt Agreement [Member] | Bridge Bank [Member] | Subsequent Event [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Long term debt, maturity, year four | $ 2,000,000 | ||||||
Amended and Restated Loan and Security Agreement [Member] | Revolving Credit Facility [Member] | |||||||
Line of Credit Facility [Line Items] | |||||||
Line of credit facility, maximum borrowing capacity | $ 3,000,000 | ||||||
Gain (Loss) on Extinguishment of Debt | $ 43,000 |
SCHEDULE OF INCOME TAXES (Detai
SCHEDULE OF INCOME TAXES (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2022 | Oct. 31, 2021 | Oct. 31, 2022 | Oct. 31, 2021 | |
Current tax expense: | ||||
Federal | $ (6,000) | $ (11,000) | ||
State | (3,000) | (4,000) | (11,000) | (9,000) |
Total current tax provision | $ (9,000) | $ (4,000) | $ (22,000) | $ (9,000) |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | 9 Months Ended | |
Oct. 31, 2022 | Jan. 31, 2022 | |
Operating Loss Carryforwards [Line Items] | ||
Operating loss carry forwards | $ 46,250,000 | |
Effective income tax rate reconciliation, percent | 0.24% | |
Federal statutory income tax rates | 25.15% | |
Uncertain tax positions | $ 318,000 | 315,000 |
Income tax description | The Company and its subsidiaries 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, 2018. All material state and local income tax matters have been concluded for years through January 31, 2017. The Company is no longer subject to IRS examination for periods prior to the tax year ended January 31, 2018; however, carryforward losses that were generated prior to the tax year ended January 31, 2018 may still be adjusted by the IRS if they are used in a future period. | |
State [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Operating loss carry forwards | 21,318,000 | |
Federal RD [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Operating loss carry forwards | 1,575,000 | |
Georgia RD [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Operating loss carry forwards | $ 94,000 |
EQUITY (Details Narrative)
EQUITY (Details Narrative) - USD ($) | 9 Months Ended | |||||||||
Oct. 24, 2022 | Jun. 07, 2022 | Feb. 25, 2021 | Oct. 31, 2022 | Oct. 31, 2021 | Jun. 22, 2022 | Jan. 31, 2022 | May 24, 2021 | May 23, 2021 | May 03, 2021 | |
Subsidiary, Sale of Stock [Line Items] | ||||||||||
Common stock, par or stated value per share | $ 0.01 | $ 0.01 | ||||||||
Proceeds from issuance of common stock | $ 8,316,000 | $ 16,100,000 | ||||||||
Common stock, shares authorized | 85,000,000 | 85,000,000 | 65,000,000 | 45,000,000 | ||||||
Number of additional shares authorized to issue | 2,000,000 | 2,000,000 | ||||||||
Minimum [Member] | ||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||
Common stock, shares authorized | 65,000,000 | |||||||||
Maximum [Member] | ||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||
Common stock, shares authorized | 85,000,000 | |||||||||
180 Consulting LLC [Member] | ||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||
Common stock issued for resale | 272,653 | 248,424 | ||||||||
2013 Incentive Compensation Plan [Member] | Stock Options [Member] | Minimum [Member] | ||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||
Number of additional shares authorized to issue | 8,223,246 | 6,223,246 | ||||||||
2013 Incentive Compensation Plan [Member] | Stock Options [Member] | Maximum [Member] | ||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||
Number of additional shares authorized to issue | 10,223,246 | 8,223,246 | ||||||||
Purchase Agreement [Member]. | 2022 Offering [Member] | ||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||
Stock issued during period, shares, new issues | 6,299,989 | |||||||||
Common stock, par or stated value per share | $ 0.01 | |||||||||
Shares issued, price per share | $ 1.32 | |||||||||
Proceeds from issuance of common stock | $ 8,316,000 | |||||||||
Underwriting Agreement [Member] | Craig-Hallum Capital Group LLC [Member] | ||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||
Stock issued during period, shares, new issues | 10,062,500 | |||||||||
Common stock, par or stated value per share | $ 0.01 | |||||||||
Shares issued, price per share | $ 1.60 | |||||||||
Proceeds from issuance of common stock | $ 16,100,000 | |||||||||
Underwriting Agreement [Member] | Craig-Hallum Capital Group LLC [Member] | Over-Allotment Option [Member] | ||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||
Sale of stock, number of shares issued in transaction | 1,312,500 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 16, 2022 | Oct. 31, 2022 | Oct. 31, 2021 | Oct. 31, 2022 | Oct. 31, 2021 | |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||
Shares issued | 53,836 | 183,284 | 293,190 | ||
Master Services Agreement [Member] | 180 Consulting LLC [Member] | |||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||
Shares issued | 814,267 | ||||
Professional fees | $ 751,000 | $ 376,000 | $ 1,781,000 | $ 1,092,000 |
SCHEDULE OF DISCONTINUED OPERAT
SCHEDULE OF DISCONTINUED OPERATIONS OF CONSOLIDATED STATEMENTS OF OPERATIONS (Details) - USD ($) | 3 Months Ended | 9 Months Ended |
Oct. 31, 2021 | Oct. 31, 2021 | |
Total revenues | $ 102,000 | $ 498,000 |
Expenses: Cost of sales | 1,000 | 5,000 |
Expenses: Transition service cost | 32,000 | 92,000 |
Total expenses | 33,000 | 97,000 |
Income from discontinued operations | 69,000 | 401,000 |
Transition Service Fees [Member] | ||
Total revenues | $ 102,000 | $ 498,000 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2022 | Oct. 31, 2021 | Oct. 31, 2022 | Oct. 31, 2021 | |
Related Party Transaction [Line Items] | ||||
Research and development services | $ 1,754,000 | $ 1,339,000 | $ 4,527,000 | $ 3,280,000 |
Suwanee Office Lease [Member] | ||||
Related Party Transaction [Line Items] | ||||
Payments for rent | 18,000 | 55,000 | ||
AscendTek, LLC [Member] | ||||
Related Party Transaction [Line Items] | ||||
Research and development services | $ 0 | $ 32,000 |
SCHEDULE OF MAXIMUM DEBT MODIFI
SCHEDULE OF MAXIMUM DEBT MODIFICATION TO ARR RATIOS (Details) | Nov. 29, 2022 | Oct. 31, 2022 |
October 31, 2021 [Member] | Minimum [Member] | ||
Subsequent Event [Line Items] | ||
Maximum Debt to ARR Ratio | 0.80% | |
October 31, 2021 [Member] | Minimum [Member] | Subsequent Event [Member] | Second Modification Debt Agreement [Member] | ||
Subsequent Event [Line Items] | ||
Maximum Debt to ARR Ratio | 0.80% | |
October 31, 2021 [Member] | Maximum [Member] | ||
Subsequent Event [Line Items] | ||
Maximum Debt to ARR Ratio | 1% | |
October 31, 2021 [Member] | Maximum [Member] | Subsequent Event [Member] | Second Modification Debt Agreement [Member] | ||
Subsequent Event [Line Items] | ||
Maximum Debt to ARR Ratio | 1% | |
January 31, 2023 [Member] | Minimum [Member] | ||
Subsequent Event [Line Items] | ||
Maximum Debt to ARR Ratio | 0.45% | |
January 31, 2023 [Member] | Minimum [Member] | Subsequent Event [Member] | Second Modification Debt Agreement [Member] | ||
Subsequent Event [Line Items] | ||
Maximum Debt to ARR Ratio | 0.70% | |
January 31, 2023 [Member] | Maximum [Member] | ||
Subsequent Event [Line Items] | ||
Maximum Debt to ARR Ratio | 1% | |
January 31, 2023 [Member] | Maximum [Member] | Subsequent Event [Member] | Second Modification Debt Agreement [Member] | ||
Subsequent Event [Line Items] | ||
Maximum Debt to ARR Ratio | 1% | |
April 30, 2023 [Member] | Minimum [Member] | Subsequent Event [Member] | Second Modification Debt Agreement [Member] | ||
Subsequent Event [Line Items] | ||
Maximum Debt to ARR Ratio | 0.65% | |
April 30, 2023 [Member] | Maximum [Member] | Subsequent Event [Member] | Second Modification Debt Agreement [Member] | ||
Subsequent Event [Line Items] | ||
Maximum Debt to ARR Ratio | 1% | |
July 31, 2023 [Member] | Minimum [Member] | Subsequent Event [Member] | Second Modification Debt Agreement [Member] | ||
Subsequent Event [Line Items] | ||
Maximum Debt to ARR Ratio | 0.60% | |
July 31, 2023 [Member] | Maximum [Member] | Subsequent Event [Member] | Second Modification Debt Agreement [Member] | ||
Subsequent Event [Line Items] | ||
Maximum Debt to ARR Ratio | 1% | |
October 31, 2023 [Member] | Minimum [Member] | Subsequent Event [Member] | Second Modification Debt Agreement [Member] | ||
Subsequent Event [Line Items] | ||
Maximum Debt to ARR Ratio | 0.55% | |
October 31, 2023 [Member] | Maximum [Member] | Subsequent Event [Member] | Second Modification Debt Agreement [Member] | ||
Subsequent Event [Line Items] | ||
Maximum Debt to ARR Ratio | 1% | |
January 31, 2024 [Member] | Minimum [Member] | Subsequent Event [Member] | Second Modification Debt Agreement [Member] | ||
Subsequent Event [Line Items] | ||
Maximum Debt to ARR Ratio | 0.50% | |
January 31, 2024 [Member] | Maximum [Member] | Subsequent Event [Member] | Second Modification Debt Agreement [Member] | ||
Subsequent Event [Line Items] | ||
Maximum Debt to ARR Ratio | 1% |
SCHEDULE OF MAXIMUM DEBT MODI_2
SCHEDULE OF MAXIMUM DEBT MODIFICATION TO ADJUSTED EBITDA RATIO (Details) - Subsequent Event [Member] - Second Modification Debt Agreement [Member] | Nov. 29, 2022 |
April 30, 2024 [Member] | Minimum [Member] | |
Subsequent Event [Line Items] | |
Maximum Debt to Adjusted EBITDA Ratio | 3.50% |
April 30, 2024 [Member] | Maximum [Member] | |
Subsequent Event [Line Items] | |
Maximum Debt to Adjusted EBITDA Ratio | 1% |
July 31, 2024 and Thereafter [Member] | Minimum [Member] | |
Subsequent Event [Line Items] | |
Maximum Debt to Adjusted EBITDA Ratio | 2% |
July 31, 2024 and Thereafter [Member] | Maximum [Member] | |
Subsequent Event [Line Items] | |
Maximum Debt to Adjusted EBITDA Ratio | 1% |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) | Nov. 29, 2022 | Nov. 22, 2022 | Aug. 26, 2021 | Oct. 31, 2022 | Jan. 31, 2022 | Aug. 16, 2021 |
Subsequent Event [Line Items] | ||||||
Common Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 | ||||
Avelead Consulting LLC [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Business Combination, Contingent Consideration, Liability | $ 10,700,000 | |||||
Base Rate [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Debt instrument, basis spread on variable rate | 1.50% | |||||
Debt instrument, interest rate, stated percentage | 3.25% | |||||
Second Modification Debt Agreement [Member] | Subsequent Event [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Line of credit facility, maximum borrowing capacity | $ 2,000,000 | |||||
Professional fees | 20,000 | |||||
Early repayment of loan | 50,000 | |||||
Repayments of long term debt and capital securities | $ 250,000 | |||||
Debt financial covenants, description | Borrowers shall, at all times, maintain unrestricted cash of Borrowers at Bank in an amount not less than Two Million Dollars ($2,000,000). | |||||
Second Modification Debt Agreement [Member] | Subsequent Event [Member] | Maximum [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Fixed charge coverage ratio | 1.20% | |||||
Second Modification Debt Agreement [Member] | Subsequent Event [Member] | Minimum [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Fixed charge coverage ratio | 1% | |||||
Second Modification Debt Agreement [Member] | Subsequent Event [Member] | Base Rate [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Debt instrument, basis spread on variable rate | 1.50% | |||||
Debt instrument, interest rate, stated percentage | 3.25% | |||||
Unit Purchase Agreement [Member] | Subsequent Event [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Common Stock, Par or Stated Value Per Share | $ 0.01 | |||||
Business Combination, Contingent Consideration, Liability | $ 2,012,000 | |||||
Unit Purchase Agreement [Member] | Subsequent Event [Member] | First Year Earnout [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Sale of Stock, Consideration Received on Transaction | $ 4,000,000 | |||||
Unit Purchase Agreement [Member] | Subsequent Event [Member] | Renewal Contingent Consideration [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Common Stock, Par or Stated Value Per Share | $ 0.01 | |||||
Sale of Stock, Number of Shares Issued in Transaction | 627,746 | |||||
Sale of Stock, Consideration Received on Transaction | $ 1,000,000 | |||||
Unit Purchase Agreement [Member] | Subsequent Event [Member] | Avelead Consulting LLC [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Business acquisition, equity interest issued or issuable, number of shares | 1,243,291 |