e10vq
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
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þ |
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended July 31, 2011
or
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o |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number: 0-28132
STREAMLINE HEALTH SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)
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Delaware
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31-1455414 |
(State or other jurisdiction of
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(I.R.S. Employer |
incorporation or organization)
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Identification No.) |
10200 Alliance Road, Suite 200
Cincinnati, Ohio 45242-4716
(Address of principal executive offices) (Zip Code)
(513) 794-7100
(Registrants telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such files). Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer or a smaller reporting company. See definitions of large
accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act. (Check one):
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Large accelerated filer o
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Accelerated filer o
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Non-accelerated filer o
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Smaller reporting company þ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). Yes o No þ
Number of shares of Registrants Common Stock ($.01 par value per share) issued and
outstanding, as of September 13, 2011: 10,053,979.
PART I. FINANCIAL INFORMATION
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Item 1. |
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CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
STREAMLINE HEALTH SOLUTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
Assets
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(Unaudited) |
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(Audited) |
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July 31, 2011 |
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January 31, 2011 |
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Current assets: |
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Cash and cash equivalents |
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$ |
577,885 |
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$ |
1,403,949 |
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Accounts receivable, net of allowance for doubtful
accounts of $140,000 and $100,000, respectively |
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2,151,458 |
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2,620,756 |
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Contract receivables |
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535,941 |
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680,096 |
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Prepaid hardware and third party software for future delivery |
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40,963 |
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72,259 |
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Prepaid customer maintenance contracts |
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925,667 |
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794,299 |
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Other prepaid assets |
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217,187 |
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200,056 |
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Deferred income taxes |
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167,000 |
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167,000 |
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Total current assets |
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4,616,101 |
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5,938,415 |
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Property and equipment: |
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Computer equipment |
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2,815,087 |
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2,708,819 |
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Computer software |
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2,037,063 |
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1,947,135 |
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Office furniture, fixtures and equipment |
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747,867 |
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747,867 |
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Leasehold improvements |
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639,864 |
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639,864 |
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6,239,881 |
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6,043,685 |
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Accumulated depreciation and amortization |
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(4,895,412 |
) |
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(4,517,860 |
) |
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1,344,469 |
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1,525,825 |
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Other assets: |
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Contract receivables, less current portion |
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274,647 |
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241,742 |
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Capitalized software development costs, net of accumulated
amortization of $13,833,284 and $12,832,347, respectively |
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7,965,127 |
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7,575,064 |
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Other, including deferred income taxes of $711,000,
respectively |
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738,475 |
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734,376 |
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Total other assets |
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8,978,249 |
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8,551,182 |
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$ |
14,938,819 |
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$ |
16,015,422 |
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See Notes to Condensed Consolidated Financial Statements
3
STREAMLINE HEALTH SOLUTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
Liabilities and Stockholders Equity
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(Unaudited) |
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(Audited) |
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July 31, 2011 |
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January 31, 2011 |
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Current liabilities: |
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Accounts payable |
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$ |
752,454 |
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$ |
565,252 |
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Accrued compensation |
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575,603 |
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1,163,843 |
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Accrued other expenses |
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285,215 |
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480,422 |
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Capital lease obligation |
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132,299 |
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183,637 |
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Deferred revenues |
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5,093,616 |
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5,766,795 |
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Total current liabilities |
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6,839,187 |
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8,159,949 |
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Long-term liabilities: |
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Line of credit |
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1,250,000 |
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1,200,000 |
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Lease incentive liability, less current portion |
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54,464 |
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61,034 |
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Total liabilities |
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8,143,651 |
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9,420,983 |
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Stockholders equity: |
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Convertible redeemable preferred stock, $.01 par value per share,
5,000,000 shares authorized, no shares issued |
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Common stock, $.01 par value per share, 25,000,000 shares
authorized, 10,053,979 and 9,856,517 shares issued and
outstanding,
respectively |
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100,539 |
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98,565 |
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Additional paid in capital |
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37,461,711 |
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36,975,242 |
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Accumulated deficit |
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(30,767,082 |
) |
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(30,479,368 |
) |
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Total stockholders equity |
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6,795,168 |
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6,594,439 |
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$ |
14,938,819 |
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$ |
16,015,422 |
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See Notes to Condensed Consolidated Financial Statements
4
STREAMLINE HEALTH SOLUTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three and Six Months Ended July 31,
(Unaudited)
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Three Months |
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Six Months |
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2011 |
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2010 |
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2011 |
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2010 |
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Revenues: |
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Systems sales |
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$ |
163,200 |
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$ |
960,880 |
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$ |
294,202 |
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$ |
1,111,318 |
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Services, maintenance and support |
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3,069,869 |
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2,830,935 |
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6,153,830 |
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5,374,510 |
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Software as a service |
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912,864 |
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884,662 |
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1,837,923 |
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1,734,665 |
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Total revenues |
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4,145,933 |
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4,676,477 |
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8,285,955 |
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8,220,493 |
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Operating expenses: |
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Cost of systems sales |
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627,550 |
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780,506 |
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1,168,502 |
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1,518,395 |
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Cost of services, maintenance and support |
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1,155,667 |
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1,378,778 |
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2,489,538 |
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2,760,988 |
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Cost of software as a service |
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417,868 |
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472,098 |
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854,291 |
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929,126 |
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Selling, general and administrative |
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1,582,532 |
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1,505,863 |
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3,247,193 |
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3,203,440 |
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Product research and development |
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342,157 |
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567,147 |
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759,931 |
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1,037,318 |
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Total operating expenses |
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4,125,774 |
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4,704,392 |
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8,519,455 |
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9,449,267 |
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Operating income (loss) |
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20,159 |
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(27,915 |
) |
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(233,500 |
) |
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(1,228,774 |
) |
Other income (expense): |
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Interest expense |
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(21,791 |
) |
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(34,001 |
) |
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(41,633 |
) |
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(56,336 |
) |
Miscellaneous income (expenses) |
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(311 |
) |
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(9,023 |
) |
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(5,266 |
) |
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42,786 |
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Loss before income taxes |
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(1,943 |
) |
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(70,939 |
) |
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(280,399 |
) |
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(1,242,324 |
) |
Income tax (expense) |
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(5,000 |
) |
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(5,000 |
) |
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(7,315 |
) |
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(10,000 |
) |
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Net loss |
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$ |
(6,943 |
) |
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$ |
(75,939 |
) |
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$ |
(287,714 |
) |
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$ |
(1,252,324 |
) |
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Basic and diluted net earnings (loss) per
common share |
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$ |
(0.00 |
) |
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$ |
(0.01 |
) |
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$ |
(0.03 |
) |
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$ |
(0.13 |
) |
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Number of shares used in basic and
diluted per common share computation |
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9,817,370 |
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9,506,904 |
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9,847,348 |
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9,460,911 |
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See Notes to Condensed Consolidated Financial Statements
5
STREAMLINE HEALTH SOLUTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended July 31,
(Unaudited)
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2011 |
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2010 |
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Operating activities: |
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Net loss |
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$ |
(287,714 |
) |
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$ |
(1,252,324 |
) |
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities: |
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Depreciation and amortization |
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1,391,822 |
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1,708,706 |
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Loss on disposal of fixed asset |
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26,667 |
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Stock-based compensation expense |
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395,732 |
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243,104 |
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Provision for accounts receivable |
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40,000 |
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50,000 |
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Change in assets and liabilities: |
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Accounts, contract and installment receivables |
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540,548 |
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(133,787 |
) |
Other assets |
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(121,302 |
) |
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(114,459 |
) |
Accounts payable |
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|
187,202 |
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|
200,007 |
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Accrued expenses |
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(790,017 |
) |
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(388,100 |
) |
Deferred revenues |
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(673,179 |
) |
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(328,530 |
) |
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Net cash provided by (used in) operating activities |
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709,759 |
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(15,383 |
) |
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Investing activities: |
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Purchases of property and equipment |
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(236,196 |
) |
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(302,292 |
) |
Capitalization of software development costs |
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(1,391,000 |
) |
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(1,274,000 |
) |
Other |
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2,974 |
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Net cash used in investing activities |
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(1,627,196 |
) |
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(1,573,318 |
) |
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Financing activities: |
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Net change under revolving credit facility |
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50,000 |
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|
1,100,000 |
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Proceeds from exercise of stock options and stock
purchase plan |
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|
92,711 |
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|
127,391 |
|
Payments on capital lease obligation |
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(51,338 |
) |
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(83,289 |
) |
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Net cash provided by financing activities |
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|
91,373 |
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|
1,144,102 |
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Decrease in cash and cash equivalents |
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(826,064 |
) |
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|
(444,599 |
) |
Cash and cash equivalents at beginning of period |
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|
1,403,949 |
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|
1,025,173 |
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Cash and cash equivalents at end of period |
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$ |
577,885 |
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$ |
580,574 |
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Supplemental cash flow disclosures: |
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Interest paid |
|
$ |
29,621 |
|
|
$ |
30,664 |
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Income taxes paid |
|
$ |
16,957 |
|
|
$ |
16,534 |
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|
|
|
|
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|
See Notes to Condensed Consolidated Financial Statements
6
STREAMLINE HEALTH SOLUTIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE A BASIS OF PRESENTATION
The accompanying unaudited Condensed Consolidated Financial Statements have been prepared by
Streamline Health Solutions, Inc. (Streamline Health® or the Company), pursuant to the
rules and regulations applicable to quarterly reports on Form 10-Q of the U. S. Securities and
Exchange Commission. Certain information and note disclosures normally included in annual
financial statements prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to those rules and regulations, although the Company believes that
the disclosures made are adequate to make the information not misleading. In the opinion of
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 financial
statements and notes thereto included in the most recent Streamline Health Solutions, Inc. Annual
Report on Form 10-K, Commission File Number 0-28132. Operating results for the three and six
months ended July 31, 2011 are not necessarily indicative of the results that may be expected for
the fiscal year ending January 31, 2012.
NOTE B SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the Companys significant accounting policies is presented in Note B Significant
Accounting Policies in the fiscal year 2010 Annual Report on Form 10-K. Users of financial
information for interim periods are encouraged to refer to the footnotes contained in the Annual
Report when reviewing interim financial results.
Recently Adopted Accounting Pronouncements
ASU 2009-13. In October 2009, the Financial Accounting Standards Board (FASB) issued Accounting
Standard Update (ASU) 2009-13 Multiple-Deliverable Revenue Arrangements (ASU 2009-13). ASU
2009-13 requires a vendor to allocate revenue to each unit of accounting in many arrangements
involving multiple deliverables based on the relative selling price of each deliverable. It also
changes the level of evidence of stand-alone selling price required to separate deliverables by
allowing a vendor to make its best estimate of the stand-alone selling price of deliverables when
more objective evidence of selling price is not available.
The Company adopted ASU 2009-13 for all new and materially modified arrangements on a prospective
basis beginning February 1, 2011. Upon review of the primary accounting literature, if
the Company is unable to establish selling price using VSOE (vendor specific objective evidence) or
third-party evidence, the Company will establish an estimated selling price. The estimated selling
price is the price at which the Company would transact a sale if the product or service were sold
on a stand-alone basis. The Company establishes a best estimate of selling price by considering
internal factors relevant to pricing practices such as costs and margin objectives, stand-alone
sales prices of similar services and percentage of the fee charged for a primary service relative
to a particular piece of licensed software. Additional consideration is
also given to market conditions such as competitor pricing strategies and market trends. The
Company regularly reviews VSOE for professional services in addition to estimated selling
price.
7
The Company has not experienced a change in units of accounting nor was there a change in
allocation of fair value to the various units of accounting. Historically, the Company has been
able to obtain VSOE or third-party evidence for significant service deliverables. No material
changes in assumptions, inputs or methodology used in determining VSOE or third-party evidence have
been made. The pattern of revenue recognition is expected to remain consistent with prior periods
and the Company does not expect a material change in the timing of revenue recognition from
previous generally accepted accounting principles as applied in the prior period.
Revenue Recognition Multiple-Deliverable Revenue Arrangements
The Company may bundle certain proprietary software technology licenses with post-contract customer
support (PCS), and implementation services. The Company may also bundle software as a service
(SaaS) offerings with implementation services. In addition, the Company may also bundle
additional consulting services such as Business Process Management (BPM) and Revenue Cycle
Management (RCM) services with proprietary software license agreements and SaaS subscriptions.
Provided that the undelivered elements in arrangements that include multiple elements are fixed and
determinable, the Company allocates the total revenue to be earned under the arrangement to the
elements based on their relative fair value of vendor specific objective evidence (VSOE),
third-party evidence or estimated selling price, relative to the hierarchy. The amounts
representing the fair value of the undelivered items are deferred until delivered, or recognized
pro rata over the service contract.
NOTE C EQUITY AWARDS
During the six months ended July 31, 2011, the Company granted 858,000 options with a weighted
average exercise price of $1.94 per share. During the same period 115,916 options expired with an
average exercise price of $1.84 per share and 32,598 options were exercised under all plans.
The fair value of each option grant during the six months ended July 31, 2011 was estimated at the
date of the grants using a Black-Scholes option pricing model with the following weighted average
assumptions:
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For the three |
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For the six |
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|
months ended, |
|
|
months ended, |
|
|
|
April 30, 2011 |
|
|
July 31, 2011 |
|
Risk-free interest rate |
|
|
2.50 |
% |
|
|
2.17 |
% |
Dividend yield |
|
|
|
|
|
|
|
|
Current weighted-average volatility factor of
the expected market price of Common Stock |
|
|
0.53 |
|
|
|
0.65 |
|
Weighted-average expected life of stock options |
|
5 years |
|
|
5 years |
|
Forfeiture rate |
|
|
0 |
% |
|
|
0 |
% |
8
During the six months ended July 31, 2011, the Company granted 110,412 restricted stock shares
with a weighted average fair value of $1.68 per share. These shares are subject to the 2005
Incentive Compensation Plan as amended, and are granted to certain independent members of the Board
of Directors. The shares have an approximate one-year restriction period. During the same period
223,090 restricted shares had their restriction period lapse; these shares had a weighted average
fair value of $1.92 per share.
During the six months ended July 31, 2011, the Company granted 25,000 restricted stock shares as
executive inducement grants with a weighted average fair value of $1.91 per share. The restrictions
lapsed immediately upon the grant of the shares, and the Company recognized $48,000 of compensation
expense for the six months ended July 31, 2011 relating to these inducement grants. These executive
inducement grants were approved by the board pursuant to Nasdaq Marketplace Rule 5635(c)(4). The
terms of the grants are nearly as practicable identical to the terms and conditions of the
Companys 2005 Incentive Compensation Plan.
NOTE D EARNINGS PER SHARE
The two-class method is used to calculate basic and diluted earnings (loss) per share (EPS) as
unvested restricted stock awards are considered participating securities because they entitle
holders to non-forfeitable rights to dividends or dividend equivalents during the vesting term.
Under the two-class method, basic earnings (loss) per common share is computed by dividing the net
earnings (loss) allocated to common stock holders by the weighted average number of common shares
outstanding. In determining the amount of net earnings (loss) to allocate to common holders,
earnings are allocated to both common shares and participating securities based on their respective
weighted-average shares outstanding for the period. Diluted net earnings (loss) per common share
reflects the potential dilution that could occur if stock options, stock purchase plan commitments,
and restricted stock were exercised into common stock, under certain circumstances, that then would
share in the earnings of Streamline Health. The dilutive effect is calculated using the treasury
stock method. A reconciliation of basic and diluted weighted average shares for basic and diluted
EPS, as well as anti-dilutive securities is as follows:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended, |
|
|
|
July 31, 2011 |
|
|
July 31, 2010 |
|
Numerator for Basic and Diluted Loss per Share: |
|
|
|
|
|
|
|
|
Net loss |
|
|
(6,943 |
) |
|
|
(75,939 |
) |
|
|
|
|
|
|
|
Denominator for basic loss per share weighted
average shares |
|
|
9,817,370 |
|
|
|
9,506,904 |
|
Effect of dilutive securities (1) |
|
|
|
|
|
|
|
|
Stock options |
|
|
|
|
|
|
|
|
Restricted stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator for basic loss per share, with
assumed conversions |
|
|
9,817,370 |
|
|
|
9,506,904 |
|
|
|
|
|
|
|
|
Basic net loss per common share |
|
|
(0.00 |
) |
|
|
(0.01 |
) |
|
|
|
|
|
|
|
Diluted net loss per common share |
|
|
(0.00 |
) |
|
|
(0.01 |
) |
|
|
|
|
|
|
|
Anti-dilutive securities: |
|
|
|
|
|
|
|
|
Stock options, out-of-the-money |
|
|
1,272,467 |
|
|
|
847,000 |
|
|
|
|
|
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended, |
|
|
|
July 31, 2011 |
|
|
July 31, 2010 |
|
Numerator for Basic and Diluted Loss per Share: |
|
|
|
|
|
|
|
|
Net loss |
|
|
(287,714 |
) |
|
|
(1,252,324 |
) |
|
|
|
|
|
|
|
Denominator for basic loss per share weighted
average shares |
|
|
9,847,348 |
|
|
|
9,460,911 |
|
Effect of dilutive securities (1) |
|
|
|
|
|
|
|
|
Stock options |
|
|
|
|
|
|
|
|
Restricted stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator for basic loss per share, with
assumed conversions |
|
|
9,847,348 |
|
|
|
9,460,911 |
|
|
|
|
|
|
|
|
Basic net loss per common share |
|
|
(0.03 |
) |
|
|
(0.13 |
) |
|
|
|
|
|
|
|
Diluted net loss per common share |
|
|
(0.03 |
) |
|
|
(0.13 |
) |
|
|
|
|
|
|
|
Anti-dilutive securities: |
|
|
|
|
|
|
|
|
Stock options, out-of-the-money |
|
|
1,282,467 |
|
|
|
847,000 |
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Excluded common stock equivalents (stock options and restricted stock), as the
inclusion thereof would be antidilutive. |
NOTE E CONTRACTUAL OBLIGATIONS
The following table details the remaining obligations including accrued interest, by fiscal year,
as of the end of the quarter:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Line of Credit |
|
|
Operating Leases |
|
|
Capital Lease |
|
|
Fiscal Year Totals |
|
2011 |
|
$ |
1,256,000 |
|
|
$ |
224,000 |
|
|
$ |
137,000 |
|
|
$ |
1,617,000 |
|
2012 |
|
|
|
|
|
|
389,000 |
|
|
|
|
|
|
|
389,000 |
|
2013 |
|
|
|
|
|
|
329,000 |
|
|
|
|
|
|
|
329,000 |
|
2014 |
|
|
|
|
|
|
335,000 |
|
|
|
|
|
|
|
335,000 |
|
2015 |
|
|
|
|
|
|
164,000 |
|
|
|
|
|
|
|
164,000 |
|
Thereafter |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
1,256,000 |
|
|
$ |
1,441,000 |
|
|
$ |
137,000 |
|
|
$ |
2,834,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTE F DEBT
On April 13, 2011, the Companys wholly owned subsidiary, Streamline Health, Inc., entered into a
second amended and restated revolving note with Fifth Third Bank, Cincinnati, OH. The terms of the
loan remain the same as set forth in the revolving note entered into on July 31, 2008, as amended
on January 6, 2009, and October 21, 2009, except as follows: (i) the maximum principal amount that
can be borrowed was increased to $3,000,000 from the prior maximum amount of $2,750,000, subject to
the borrowing base limitation; and (ii) the maturity date of the loan has been extended to October
1, 2013 from October 1, 2011. The interest rate on the outstanding principal balance of the loan
accrues at an annual floating rate of interest equal to the Adjusted Libor Rate (as defined in the
revolving note) plus 3.25%, payable monthly. The interest rate on the note was 3.5% at July 31,
2011. In accordance with the revised maturity date, the outstanding balance on the note is
classified as a long-term obligation at July 31, 2011.
10
In connection with entering into the second amended and restated revolving note in April 2011, the
Company also entered into an amendment to the amended and restated continuing guaranty agreement.
The terms of the continuing guarantee agreement remain the same as set forth in the guaranty
agreement entered into on July 31, 2008, as amended on January 6, 2009 and on
October 21, 2009, except that: (i) the minimum fixed charge coverage ratio covenant has been
revised, whereas the Company shall maintain a minimum trailing twelve months fixed charge coverage
ratio of 1.25, measured each fiscal quarter; (ii) the funded indebtedness to EBITDA covenant has
been revised, whereas the Company shall report a funded indebtedness to EBITDA ratio no greater
than 2.0, measured each fiscal quarter and; (iii) a covenant has been added whereas the Companys
EBITDA shall cover its capitalized software development costs each fiscal quarter. The covenant
becomes effective on October 31, 2011 and is calculated based on the trailing nine months. As of
January 31, 2012 and thereafter, the calculation will be based on the trailing twelve months.
The note also continues to be secured by a first lien on all of the assets of the Company pursuant
to security agreements entered into by the Company.
The Company was in compliance with all of the covenants at July 31, 2011. The Company pays a
commitment fee on the unused portion of the facility of .06%. The Company had outstanding
borrowings of $1,250,000 and $1,200,000 under this revolving loan as of July 31, 2011 and January
31, 2011, respectively.
NOTE G COMMITTMENTS AND CONTINGENCIES
Streamline Health has entered into employment agreements with its officers and certain employees
that generally provide annual salary, a minimum bonus, discretionary bonus, and stock incentive
provisions.
As a result of a reduction in force implemented by management during the quarter ended July 31,
2011, the Company expensed $100,000 in the second quarter of fiscal 2011, in accordance with
severance agreements.
11
|
|
|
Item 2. |
|
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS |
In addition to historical information contained herein, this Report on Form 10-Q contains
forward-looking statements relating to the Companys plans, strategies, expectations, intentions,
etc. and are made pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. The forward-looking statements contained herein are no guarantee of future
performance and are subject to certain risks and uncertainties that are difficult to predict and
actual results could differ materially from those reflected in the forward-looking statements.
These risks and uncertainties include, but are not limited to, the timing of contract negotiations
and executions and the related timing of the revenue recognition related thereto, the potential
cancellation of existing contracts or clients not completing projects included in the backlog, the
impact of competitive products and pricing, product demand and market acceptance, new product
development, key strategic alliances with vendors that resell Streamline Health solutions, the
ability of Streamline Health to control costs, availability of products obtained from third-party
vendors, the healthcare regulatory environment, potential changes in legislation, regulatory and
government funding affecting the healthcare industry, healthcare information system budgets,
availability of healthcare information systems trained personnel for implementation of new systems,
as well as maintenance of legacy systems, fluctuations in operating results and other risk factors
that might cause such differences including those discussed herein, and including, effects of
critical accounting policies and judgments, changes in accounting policies or procedures as may be
required by the Financial Accounting Standards Board or other similar entities, changes in
economic, business and market conditions impacting the healthcare industry, the markets in which
the Company operates, and the Companys ability to maintain compliance with the terms of its credit
facilities, but not limited to, discussions in the most recent Form 10-K, Part I, Item 1
Business, Item 1A Risk Factors, Part II, Item 7 Managements Discussion and Analysis of
Financial Condition and Results of Operations and Item 8 Financial Statements and Supplemental
Data. In addition, other written or oral statements that constitute forward-looking statements
may be made by or on behalf of the Company. Readers are cautioned not to place undue reliance on
these forward-looking statements, which reflect managements analysis only as of the date thereof.
The Registrant undertakes no obligation to publicly revise these forward-looking statements, to
reflect events or circumstances that arise after the date hereof. Readers should carefully review
the risk factors described in this and other documents Streamline Health Solutions, Inc. files from
time to time with the Securities and Exchange Commission, including future Quarterly Reports on
Form 10-Q and any Current Reports on Form 8-K.
Streamline Healths discussion and analysis of its financial condition and results of operations
are based upon its consolidated financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States. The preparation of these financial
statements requires Streamline Health to make estimates and judgments that affect the reported
amounts of assets, liabilities, revenues, and expenses, and related disclosure of contingent
liabilities. On an ongoing basis, Streamline Health evaluates its estimates, including those
related to product revenues, bad debts, capitalized software development costs, income taxes,
support contracts, contingencies, and litigation. Streamline Health bases its estimates on
historical experience and on various other assumptions that Streamline Health believes are
reasonable under the circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities and revenue and expense recognition. Actual results
may differ from these estimates under different assumptions or conditions.
12
General
Streamline Health Solutions, Inc. (Streamline Health® or the Company) is a leading developer of
workflow and document management technology solutions that drive process efficiencies and cost
reductions for leading healthcare facilities throughout North America. Since our inception in 1989,
Streamline Healths technology solutions have seamlessly interfaced with our customers existing
enterprise or departmental electronic medical record systems. The Companys solutions efficiently
integrate paper-based and unstructured data with electronic data in the areas of Health Information
Management, Patient Financial Services, Human Resources, and Supply Chain Management to provide
real-time comprehensive patient profiles and generate substantial operational savings. Streamline
Healths workflow and document management solutions assist hospitals in meeting the requirements of
meaningful use to become eligible for significant incentive payments as outlined in the HITECH
act (a provision of American Recovery and Reinvestment Act of 2009), and they are an integral part
of an enterprise-wide Electronic Health Record (EHR). The Company sells its products and services
in North America to remarketers, hospitals, clinical and ambulatory services through its direct
sales force, and its reseller partnerships.
Streamline Healths core technology is a secure document management repository called
accessANYwareTM that collects, indexes, and intelligently routes unstructured,
document-based medical and financial data throughout the enterprise. The accessANYware family of
solutions work complementary to, and can be seamlessly integrated with existing transaction-centric
clinical, financial and management information systems. The Companys fifth-generation
accessANYware architecture includes the consolidation of technology platforms onto the
Microsoft.NET platform, and also the internationalization of the software to reach international
markets.
The Companys core technology is supplemented by departmental workflow-based solutions and services
which offer solutions to specific healthcare business processes within Health Information
Management (HIM) and the revenue cycle. Additionally, the Company offers a full complement of high
quality consulting and implementation services to complement and enhance its software applications.
The Companys software solutions are delivered either by purchased perpetual license which is
installed locally in the customers data center; or by subscription and accessed through a secure
internet connection (also known as software as a service
or SaaS). A SaaS subscription provides Streamline Healths
complete suite of document management and workflow products, which also enables improved security,
and accessibility to patient records at significant cost savings; with minimal up-front capital
investment, maintenance, and support costs. In addition, the healthcare provider need not have
knowledge of, expertise in, or control over the technology infrastructure in the data center that
supports them. SaaS systems allow customers to realize the benefits of our systems with an
accelerated return on investment, and less economic risk.
The Company operates primarily in one segment as a provider of health information technology
solutions. The financial information required by Item 101(b) of Regulation S-K is contained in Item
6 Selected Financial Information of the Companys January 31, 2011 Form 10-K.
13
Signed Agreements Backlog
At July 31, 2011 Streamline Health has master agreements and purchase orders from customers and
remarketing partners for systems and related services (excluding support and maintenance, and
transaction-based SaaS subscription revenues), which have not been delivered or installed which, if
fully performed, would generate future revenues of approximately $4,805,000 compared with
$4,312,000 at July 31, 2010. The related systems and services are expected to be delivered over
the next two to three years. The increase in the backlog is the result of several contracts for
professional services, or third-party hardware and
software entered into subsequent to the prior year comparable quarter end, net of the revenues
recognized from backlog since July 31, 2010. At July 31, 2011, Streamline Health had maintenance
agreements purchase orders, from customers and remarketing partners for maintenance, which if fully
performed, will generate future revenues of approximately $6,009,000 compared with $5,788,000 at
July 31, 2010, through their respective renewal dates in fiscal year 2012 and 2011. This increase
is primarily the result of new or renewed maintenance contracts that have entered their service
period, and therefore, added to backlog, net of recognized maintenance revenues since July 31,
2010. At July 31, 2011, Streamline Health has entered into SaaS agreements, which are expected to
generate revenues in excess of $7,275,000 through their respective renewal dates in fiscal years
2011 through 2014. The software as a service backlog decreased to $7,275,000 from $8,818,000 at
July 31, 2010, due to recognized revenues from backlog on contracts signed in prior years, net of
new SaaS business, conversions from license to SaaS, and contract renewals.
Below is a summary of the backlog at July 31, 2011, January 31, 2011 and July 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
July 31, 2011 |
|
|
January 31, 2011 |
|
|
July 31, 2010 |
|
Streamline Health Software Licenses |
|
$ |
51,000 |
|
|
$ |
121,000 |
|
|
$ |
174,000 |
|
Custom Software |
|
|
29,000 |
|
|
|
42,000 |
|
|
|
62,000 |
|
Hardware and Third Party Software |
|
|
152,000 |
|
|
|
66,000 |
|
|
|
95,000 |
|
Professional Services |
|
|
4,573,000 |
|
|
|
4,629,000 |
|
|
|
3,981,000 |
|
Software as a service |
|
|
7,275,000 |
|
|
|
7,362,000 |
|
|
|
8,818,000 |
|
Recurring Maintenance |
|
|
6,009,000 |
|
|
|
5,384,000 |
|
|
|
5,788,000 |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
18,089,000 |
|
|
$ |
17,604,000 |
|
|
$ |
18,918,000 |
|
|
|
|
|
|
|
|
|
|
|
Streamline Health believes its future revenues will come from its direct sales force, as well
as remarketing agreements with third-party health information systems vendors. Streamline Health
continues to actively pursue additional remarketing agreements with other companies.
The commencement of revenue recognition varies depending on the size and complexity of the system;
the implementation schedule requested by the customer and usage by customers of the Companys SaaS
services. Therefore, it is difficult for the Company to accurately predict the revenue it expects
to achieve in any particular period. Streamline Healths master agreements generally provide that
the customer may terminate its agreement upon a material breach by Streamline Health, or may delay
certain aspects of the installation. There can be no assurance that a customer will not cancel all
or any portion of a master agreement or delay installations. A termination or installation delay
of one or more phases of an agreement, or the failure of Streamline Health to procure additional
agreements, could have a material adverse effect on Streamline Healths business, financial
condition, and results of operations.
14
Operating Results
The Company recognized revenues in the three and six month periods ending July 31, 2011 of
$4,146,000 and $8,286,000, compared to $4,676,000 and $8,220,000; a decrease of $530,000 and an
increase of $66,000 respectively. The revenues recognized are derived primarily from recurring
revenues recognized from SaaS subscriptions and recurring maintenance contracts. The Company
earned an operating profit of $20,000 in the second quarter of fiscal 2011 and incurred an
operating loss of $234,000 for the six month period ended July 31, 2011. In the prior year
comparable periods the Company incurred operating losses of $28,000 and $1,229,000, respectively.
Operating expenses for the three and six month periods ending July 31, 2011 were $4,126,000 and
$8,519,000, compared to $4,704,000 and $9,449,000 in the comparable prior periods; a decrease of
$578,000 or 12% and $930,000 or 10%, respectively over the prior comparable periods.
The Companys revenues from proprietary systems sales have varied, and may continue to vary,
significantly from quarter-to-quarter because of the volume and timing of systems sales and
delivery. Professional services revenues also fluctuate from quarter-to-quarter because of the
timing of the implementation services, project management, and timing of the recognition of
revenues under generally accepted accounting principles. Conversely, revenues from SaaS
subscription sales, and maintenance services do not fluctuate significantly from
quarter-to-quarter, but have been increasing, on an annual basis, as the number of customers
increase. Substantial portions of the operating expenses are fixed; therefore operating profits are
expected to vary depending on the factors that drive fluctuations in revenues and the mix of
proprietary system sales versus SaaS subscriptions sold.
Statement of Operations(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended July 31, |
|
|
Six Months Ended July 31, |
|
|
|
2011 |
|
|
2010 |
|
|
2011 |
|
|
2010 |
|
Systems sales |
|
|
4 |
% |
|
|
20 |
% |
|
|
4 |
% |
|
|
14 |
% |
Services, maintenance and support |
|
|
74 |
|
|
|
61 |
|
|
|
74 |
|
|
|
65 |
|
Application-hosting services |
|
|
22 |
|
|
|
19 |
|
|
|
22 |
|
|
|
21 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
53 |
% |
|
|
56 |
% |
|
|
55 |
% |
|
|
63 |
% |
Selling, general and administrative |
|
|
38 |
|
|
|
32 |
|
|
|
39 |
|
|
|
39 |
|
Product research and development |
|
|
8 |
|
|
|
12 |
|
|
|
9 |
|
|
|
13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
|
99 |
% |
|
|
100 |
% |
|
|
103 |
% |
|
|
115 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit (loss) |
|
|
1 |
% |
|
|
(1 |
)% |
|
|
(3 |
)% |
|
|
(15 |
)% |
Other income (expense), net |
|
|
(1 |
)% |
|
|
(1 |
)% |
|
|
(1 |
)% |
|
|
|
|
Income tax net benefit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings(loss) |
|
|
|
|
|
|
(2 |
)% |
|
|
(4 |
)% |
|
|
(15 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of systems sales |
|
|
385 |
% |
|
|
81 |
% |
|
|
397 |
% |
|
|
137 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services, maintenance and support |
|
|
38 |
% |
|
|
49 |
% |
|
|
41 |
% |
|
|
51 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of application-hosting services |
|
|
46 |
% |
|
|
53 |
% |
|
|
47 |
% |
|
|
54 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Because a significant percentage of the operating costs are incurred at levels that are
not necessarily correlated with revenue levels, a variation in the timing of systems sales
and installations and the resulting revenue recognition can cause significant variations in
operating results. As a result, period-to-period comparisons may not be meaningful with
respect to the past operations nor are they necessarily indicative of the future operations
of Streamline Health in the near or long-term. The data in the table is presented solely
for the purpose of reflecting the relationship of various operating elements to revenues
for the periods indicated. |
15
Revenues
Revenues consisted of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended, |
|
|
|
|
|
|
|
|
|
July 31, 2011 |
|
|
July 31, 2010 |
|
|
Change |
|
|
% Change |
|
Proprietary software (1) |
|
$ |
14 |
|
|
$ |
674 |
|
|
$ |
(660 |
) |
|
|
(98 |
%) |
Hardware & third party software (1) |
|
|
149 |
|
|
|
287 |
|
|
|
(138 |
) |
|
|
(48 |
%) |
Professional services (2) |
|
|
868 |
|
|
|
929 |
|
|
|
(61 |
) |
|
|
(7 |
%) |
Maintenance & support (2) |
|
|
2,202 |
|
|
|
1,902 |
|
|
|
300 |
|
|
|
16 |
% |
Software as a service |
|
|
913 |
|
|
|
884 |
|
|
|
29 |
|
|
|
3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Revenues |
|
$ |
4,146 |
|
|
$ |
4,676 |
|
|
$ |
(530 |
) |
|
|
(11 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended, |
|
|
|
|
|
|
|
|
|
July 31, 2011 |
|
|
July 31, 2010 |
|
|
Change |
|
|
% Change |
|
Proprietary software (1) |
|
$ |
51 |
|
|
$ |
702 |
|
|
$ |
(651 |
) |
|
|
(93 |
%) |
Hardware & third party software (1) |
|
|
242 |
|
|
|
409 |
|
|
|
(167 |
) |
|
|
(41 |
%) |
Professional services (2) |
|
|
1,875 |
|
|
|
1,587 |
|
|
|
288 |
|
|
|
18 |
% |
Maintenance & support (2) |
|
|
4,279 |
|
|
|
3,787 |
|
|
|
492 |
|
|
|
13 |
% |
Software as a service |
|
|
1,839 |
|
|
|
1,735 |
|
|
|
104 |
|
|
|
6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Revenues |
|
$ |
8,286 |
|
|
$ |
8,220 |
|
|
$ |
66 |
|
|
|
1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Proprietary software and hardware are the components of the system sales line item |
|
(2) |
|
Professional services and maintenance & support are the components of the service,
maintenance and support
line item. BPM consulting services are
included in professional services. |
Revenues for the three and six month periods ended July 31, 2011, were $4,146,000 and
$8,286,000 respectively; as compared to $4,676,000 and $8,220,000 respectively in the comparable
periods of fiscal 2010. The quarterly decrease was primarily attributable to two large proprietary
license sales recognized in the second quarter of fiscal 2010, that had no comparable sales in
fiscal 2011; which resulted in a significant decrease in proprietary licensed software sales. The
decrease in proprietary software revenues were partially offset by increases in recurring revenues
from software maintenance and software as a service subscription revenue. The increase in software
as a service subscription revenue on a quarterly and year-to-date basis is due to one SaaS customer
contract sold in fiscal 2010 that reached go-live status in the first quarter of fiscal 2011 and
was able to begin ratable revenue recognition, as well as the continued recognition of subscription
revenues from backlog. Additionally, the increase in recurring maintenance and support is due to
revenues recognized for maintenance periods commencing on software sold since the close of the
second quarter 2010. The year-to-date increase in professional services is primarily the result of
increased revenue earned from implementations of systems and other professional services sold in
prior quarters.
16
Cost of Sales
Cost of sales consisted of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended, |
|
|
|
|
|
|
|
|
|
July 31, 2011 |
|
|
July 31, 2010 |
|
|
Change |
|
|
% Change |
|
Cost of system sales |
|
$ |
628 |
|
|
$ |
781 |
|
|
$ |
(153 |
) |
|
|
(20 |
%) |
Cost of services, maintenance and support |
|
|
1,156 |
|
|
|
1,379 |
|
|
|
(223 |
) |
|
|
(16 |
%) |
Cost of software as a service |
|
|
418 |
|
|
|
472 |
|
|
|
(54 |
) |
|
|
(11 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of sales |
|
$ |
2,202 |
|
|
$ |
2,632 |
|
|
$ |
(430 |
) |
|
|
(16 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended, |
|
|
|
|
|
|
|
|
|
July 31, 2011 |
|
|
July 31, 2010 |
|
|
Change |
|
|
% Change |
|
Cost of system sales |
|
$ |
1,169 |
|
|
$ |
1,518 |
|
|
$ |
(349 |
) |
|
|
(23 |
%) |
Cost of services, maintenance and support |
|
|
2,490 |
|
|
|
2,761 |
|
|
|
(271 |
) |
|
|
(10 |
%) |
Cost of software as a service |
|
|
854 |
|
|
|
929 |
|
|
|
(75 |
) |
|
|
(8 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of sales |
|
$ |
4,513 |
|
|
$ |
5,208 |
|
|
$ |
(695 |
) |
|
|
(13 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of systems sales includes amortization of capitalized software expenditures, royalties,
and the cost of third-party hardware and software. The quarterly and year-to-date decrease in the
cost of systems sales is primarily the result of quarterly and year-to-date decreases in
capitalized software amortization of $132,000 and $253,000, respectively; primarily due to products
released in prior years becoming fully amortized in fiscal 2011. Cost of systems sales
was also reduced on a quarterly and year-to-date basis due to a decrease in third-party hardware
and software sales over the prior year comparable periods.
Cost of services, maintenance and support includes compensation and benefits for support and
professional services personnel and the cost of third party maintenance contracts. The quarterly
and year-to-date decrease is primarily due to reduced salary and benefits expenses during fiscal 2011, primarily through the reduction in
force in the second quarter; and reductions in the cost of third-party provider maintenance
contracts over the prior year comparable quarter. These reductions were partially offset by
increased expense due to the increased use of third-party outside contractors.
The cost of software as a service operations is relatively fixed, but is generally subject to
annual increases for the goods and services required. The quarterly and year-to-date decrease is
primarily attributable to reductions in salary and related benefits through reduced staffing; as
well as several annual third party provider license and maintenance agreements that were
re-negotiated, resulting in quarterly and year-to-date cost savings.
17
Selling, General and Administrative Expense
Selling, general and administrative expenses consisted of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended, |
|
|
|
|
|
|
|
|
|
July 31, 2011 |
|
|
July 31, 2010 |
|
|
Change |
|
|
% Change |
|
Selling, general, and administrative |
|
$ |
1,583 |
|
|
$ |
1,506 |
|
|
$ |
77 |
|
|
|
5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended, |
|
|
|
|
|
|
|
|
|
July 31, 2011 |
|
|
July 31, 2010 |
|
|
Change |
|
|
% Change |
|
Selling, general, and administrative |
|
$ |
3,247 |
|
|
$ |
3,203 |
|
|
$ |
44 |
|
|
|
1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, General and Administrative expenses consist primarily of compensation and related
benefits and reimbursable travel and living expenses related to the Companys sales, marketing and
administrative personnel; advertising and marketing expenses, including trade shows and similar
type sales and marketing expenses; and general corporate expenses, including occupancy costs. The
quarterly and year-to-date increase over the respective comparable prior period is due to increases
in equity awards expense, performance bonus accruals, increased travel and living expenses, and
increased investor relations costs. These quarterly and year-to-date increases were offset by
reduced commissions expense, reduced use of third-party outside consultants, and reduced bad debt
expense.
Product Research and Development Expense
Product research and development expenses consisted of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended, |
|
|
|
|
|
|
|
|
|
July 31, 2011 |
|
|
July 31, 2010 |
|
|
Change |
|
|
% Change |
|
Research and development expense |
|
$ |
342 |
|
|
$ |
567 |
|
|
$ |
(225 |
) |
|
|
(40 |
%) |
Capitalized research and
development cost |
|
|
606 |
|
|
|
578 |
|
|
|
28 |
|
|
|
5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total R&D Cost |
|
$ |
948 |
|
|
$ |
1,145 |
|
|
$ |
(197 |
) |
|
|
(17 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended, |
|
|
|
|
|
|
|
|
|
July 31, 2011 |
|
|
July 31, 2010 |
|
|
Change |
|
|
% Change |
|
Research and development expense |
|
$ |
760 |
|
|
$ |
1,037 |
|
|
$ |
(277 |
) |
|
|
(27 |
%) |
Capitalized research and
development cost |
|
|
1,391 |
|
|
|
1,274 |
|
|
|
117 |
|
|
|
9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total R&D Cost |
|
$ |
2,151 |
|
|
$ |
2,311 |
|
|
$ |
(160 |
) |
|
|
(7 |
%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product research and development expenses consist primarily of compensation and related
benefits; the use of independent contractors for specific near-term development projects; and an
allocated portion of general overhead costs, including occupancy. Quarterly and year-to-date
research and development expenses decreased $225,000 and $277,000, respectively, from the prior
comparable periods. These decreases in research and development expense and the offsetting
increases in capitalized software development costs, are primarily due to an increase in costs
eligible for capitalization, decreased product support costs, and reductions in development
staffing that were partially offset by increased use of third-party outside contractors. The total
research and development expenditures on a quarterly and year-to-date basis have decreased by
$197,000 and $160,000, respectively when considering both capitalized software development costs
and non-capitalizable research and development expense; this is primarily due to the
aforementioned reductions in force, and less cost for product support as compared to the prior
comparable periods.
18
Operating Profit (Loss)
The Company incurred an operating profit of $20,000 in the second quarter of fiscal 2011, compared
to an operating loss of $28,000 in the second quarter of fiscal 2010. The Company had a changeover
in management during the first quarter of fiscal 2011 and the subsequent across-the-board analysis
of staffing levels, processes, and costs, resulted in significant reductions of operating expenses.
These reductions were coupled with decreases in capitalized software amortization expense; which
resulted in quarterly and year-to-date decreases in operating expenses of $579,000 or 12%, and
$930,000 or 10%, respectively.
Other Income (Expense)
Quarterly and year-to-date interest expense in the second quarter of fiscal 2011 was $22,000 and
$42,000 respectively, compared to $34,000 and $56,000 in the comparable prior periods. Interest
expense from the working capital facility was $17,000 in the second quarter of fiscal 2011 compared
with $22,000 in the comparable prior quarter, primarily due to a larger average balance outstanding
in the prior comparable quarter. Interest expense from the capital lease decreased by $7,000 and
$12,000, respectively over the prior comparable three and six month periods; primarily due to a
lower principal balance.
Provision for Income Taxes
The quarterly and year-to-date tax provision in fiscal 2011 and 2010 is comprised of primarily
state and local provisions.
Net Loss
The Company incurred quarterly and year-to-date net losses of $7,000 and $288,000 respectively in
fiscal 2011; as compared to quarterly and year-to-date net losses of
$76,000 and $1,252,000 respectively in fiscal 2010.
Operational Metrics and Use of Non-GAAP Financial Measures
Streamline Healths primary metrics used to assess the performance of the business include gross
margin, cash flow from operations, non-GAAP Adjusted EBITDA (A non-GAAP measure meaning, Earnings
before Interest, Tax, Depreciation, Amortization, and Stock-based compensation expense; for
explanation and reconciliation of all non-GAAP financial measures, see Use of Non-GAAP Financial
Measures), non-GAAP Adjusted EBITDA less capitalized software development costs, and non-GAAP
Adjusted EBITDA margin. Management uses these measures as i) one of the primary methods for
planning and forecasting overall expectations and for evaluating, on at least a quarterly and
annual basis, actual results against such expectations; and, ii) as a performance evaluation metric
in determining achievement of certain executive and employee incentive compensation programs.
19
Additionally, the Companys lenders use Adjusted EBITDA, to assess operating performance. The
Companys working capital credit agreement requires compliance with financial covenants certain
of which are based on an Adjusted EBITDA measurement that is the same as the Adjusted EBITDA
measurement reviewed by Company management. The current metrics are outlined in the table below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended, |
|
|
|
|
|
|
|
|
|
July 31, |
|
|
July 31, |
|
|
|
|
|
|
|
|
|
2011 |
|
|
2010 |
|
|
Change |
|
|
% Change |
|
Gross margin |
|
$ |
3,774,000 |
|
|
$ |
3,012,000 |
|
|
|
762,000 |
|
|
|
25 |
% |
Gross margin % |
|
|
46 |
% |
|
|
37 |
% |
|
|
9 |
% |
|
|
|
|
Cash flow provided by
(used in) operations |
|
$ |
710,000 |
|
|
$ |
(15,000 |
) |
|
|
725,000 |
|
|
|
4833 |
% |
Adjusted EBITDA |
|
$ |
1,549,000 |
|
|
$ |
766,000 |
|
|
|
783,000 |
|
|
|
102 |
% |
Adjusted EBITDA, less
capitalized software
development costs |
|
$ |
158,000 |
|
|
$ |
(508,000 |
) |
|
|
666,000 |
|
|
|
131 |
% |
Adjusted EBITDA margin |
|
|
19 |
% |
|
|
9 |
% |
|
|
10 |
% |
|
|
|
|
Non-GAAP financial measures have limitations as analytical tools and should not be considered
in isolation or as a substitute for analysis of Company results as reported under GAAP. The Company
compensates for such limitations by relying primarily on our GAAP results and using non-GAAP
financial measures only as supplemental data. A reconciliation of non-GAAP to GAAP measures used is
provided below, and investors are encouraged to carefully review this reconciliation. In addition,
because these non-GAAP measures are not measures of financial performance under GAAP and are
susceptible to varying calculations, these measures, as defined by the Company, may differ from and
may not be comparable to similarly titled measures used by other companies. The following is a
summary of non-GAAP measurements used by the Company:
EBITDA, Adjusted EBITDA, Adjusted EBITDA Less Capitalized Software Development Costs, Adjusted
EBITDA Margin, and Adjusted EBITDA per diluted share
The Company defines: (i) EBITDA, as net income (loss) before net interest expense, income tax
expense (benefit), depreciation and amortization; (ii) Adjusted EBITDA, as net income (loss) before
net interest expense, income tax expense (benefit), depreciation, amortization, and stock-based
compensation expense; (iii) Adjusted EBITDA Less Capitalized Software Development Costs, includes
the effect of cash spent on research and development that was capitalized; (iv) Adjusted EBITDA
Margin, as Adjusted EBITDA as a percentage of net revenue; and (v) Adjusted EBITDA per diluted
share as adjusted EBITDA divided by adjusted diluted shares outstanding. EBITDA, Adjusted EBITDA,
Adjusted EBITDA Margin and Adjusted EBITDA per diluted share are used to facilitate a comparison of
our operating performance on a consistent basis from period to period and provide for a more
complete understanding of factors and trends affecting our business than GAAP measures alone. These
measures assist management and the Board and may be useful to investors in comparing the Companys
operating performance consistently over time as they remove the impact of our capital structure
(primarily interest charges), asset base (primarily depreciation and amortization) and
items outside the control of the management team (taxes). Adjusted EBITDA removes the impact of
share-based compensation expense, which is another non-cash item. Adjusted EBITDA per diluted
share will include incremental shares in the share count that would be considered anti-dilutive in
a GAAP net loss position.
20
EBITDA and its variants used by management are not measures of liquidity under GAAP, or
otherwise, and are not alternatives to cash flow from continuing operating activities; therefore
the Company suggests that readers of the quarterly reports refer to the Companys Annual Report on
Form 10-K for the year ended January 31, 2011 in the section Use of Non-GAAP Financial Measures
for complete detail of the limitations of non-GAAP financial measures presented in this quarterly
report.
The following table sets forth a reconciliation of EBITDA and its variants used by management,
as described to assess the Companys on-going operating performance (amounts in thousands, except
per share data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended, |
|
|
Six Months Ended, |
|
|
|
July 31, |
|
|
July 31, |
|
|
July 31, |
|
|
July 31, |
|
Adjusted EBITDA Reconciliation |
|
2011 |
|
|
2010 |
|
|
2011 |
|
|
2010 |
|
Net loss |
|
$ |
(7 |
) |
|
$ |
(76 |
) |
|
$ |
(288 |
) |
|
$ |
(1,252 |
) |
Interest expense |
|
|
22 |
|
|
|
34 |
|
|
|
42 |
|
|
|
56 |
|
Income tax expense |
|
|
5 |
|
|
|
5 |
|
|
|
7 |
|
|
|
10 |
|
Depreciation and other amortization |
|
|
193 |
|
|
|
233 |
|
|
|
391 |
|
|
|
455 |
|
Amortization of capitalized software development
costs |
|
|
507 |
|
|
|
639 |
|
|
|
1,001 |
|
|
|
1,254 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA |
|
|
720 |
|
|
|
835 |
|
|
|
1,153 |
|
|
|
523 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense |
|
|
199 |
|
|
|
155 |
|
|
|
396 |
|
|
|
243 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
919 |
|
|
$ |
990 |
|
|
$ |
1,549 |
|
|
$ |
766 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capitalized software development costs |
|
|
606 |
|
|
|
578 |
|
|
|
1,391 |
|
|
|
1,274 |
|
Adjusted EBITDA, less capitalized software
development costs |
|
|
313 |
|
|
|
412 |
|
|
|
158 |
|
|
|
(508 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA Margin (1) |
|
|
22 |
% |
|
|
21 |
% |
|
|
19 |
% |
|
|
9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA per diluted share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share diluted |
|
$ |
(0.00 |
) |
|
$ |
(0.01 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.13 |
) |
Interest expense (2) |
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
Tax expenses (2) |
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
|
|
0.00 |
|
Depreciation and other amortization (2) |
|
|
0.02 |
|
|
|
0.02 |
|
|
|
0.04 |
|
|
|
0.05 |
|
Amortization of capitalized software development
costs (2) |
|
|
0.05 |
|
|
|
0.07 |
|
|
|
0.10 |
|
|
|
0.13 |
|
Stock-based compensation expense (2) |
|
|
0.02 |
|
|
|
0.02 |
|
|
|
0.04 |
|
|
|
0.03 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA per adjusted diluted share |
|
$ |
0.09 |
|
|
$ |
0.10 |
|
|
$ |
0.15 |
|
|
$ |
0.08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted weighted average shares |
|
|
9,817,370 |
|
|
|
9,506,904 |
|
|
|
9,847,348 |
|
|
|
9,460,911 |
|
Includable incremental shares adjusted EBITDA
(3) |
|
|
12,715 |
|
|
|
19,336 |
|
|
|
17,951 |
|
|
|
19,336 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted diluted shares |
|
$ |
9,830,085 |
|
|
$ |
9,526,240 |
|
|
|
9,865,299 |
|
|
|
9,480,247 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Adjusted EBITDA as a percentage of GAAP revenues |
|
(2) |
|
Per adjusted diluted shares |
|
(3) |
|
The number of incremental shares that would be dilutive under profit assumption, only
applicable under a GAAP net loss. If GAAP profit is earned in the current period, no
additional incremental shares are assumed. If negative adjusted EBITDA is incurred, no
additional incremental shares are assumed for adjusted diluted shares. |
21
Liquidity and Capital Resources
Traditionally, Streamline Health has funded its operations, working capital needs, and capital
expenditures primarily from a combination of cash generated by operations, bank loans, and
revolving lines of credit. Streamline Healths liquidity is dependent upon numerous factors
including: (i) the timing and amount of revenues and collection of contractual amounts from
customers, (ii) amounts invested in research and development, capital expenditures, and (iii) the
level of operating expenses, all of which can vary significantly from quarter-to-quarter.
Streamline Health has no significant obligations for capital resources, other than the $1,250,000
borrowed under its bank line of credit at July 31, 2011, the non-cancelable operating leases of
approximately $1,441,000 payable over the next four years, and $132,000 for capital leases.
Capital expenditures for property and equipment for fiscal 2011 are not expected to exceed
$1,500,000.
Net cash provided by operations for the six month period ended July 31, 2011 was $710,000, an
increase of approximately $725,000 from the prior year comparable quarter. The increase was
primarily due to a $541,000 decrease in net accounts receivable, the $673,000 decrease in deferred
revenues which reflects the revenue recognition of prepaid maintenance contracts during fiscal
2011, net of any additional payments received in 2011; as well as a $790,000 decrease in accrued
expenses, primarily payment on executive severance agreements, executive inducement incentives,
fiscal 2010 annual bonus and commission payments; and was offset primarily by fiscal 2011 annual
bonuses accrued, and severance agreements accrued during the first six months of fiscal 2011.
Net cash used in investing activities for the six month period ended July 31, 2011 was $1,627,000,
an increase of $54,000 from the prior comparable quarter. This increase was primarily due to the
increase in capitalized software development costs, which is the result of certain projects
reaching technological feasibility for which development cost began being capitalized relating to
the development of the Companys core solutions and the expanded work flow module development.
Increases in capitalized software development costs were partially offset by reduced purchases of
capital assets.
The net cash provided by financing activities for the six month period ended July 31, 2011 was
$91,000, a decrease of $1,053,000 which is primarily the net change on the line of credit of
$50,000 for the six months ended July 31, 2011 as compared to a net change of $1,100,000 for the six
months ended July 31, 2010. This was coupled with decrease in proceeds received for exercise of
stock options, and payments on the capital lease obligation.
At July 31, 2011, Streamline Health had cash
on hand of $578,000, and total eligible
borrowings on the line of credit of approximately $1,790,000, or $540,000 in excess availability
under the line of credit. Streamline Health believes that its present cash position, combined with
cash generation currently anticipated from operations, the availability of the revolving credit
facility, and possible access to new funding sources will be sufficient to meet anticipated cash
requirements for the next twelve months. However, expansion of the Company will require additional
resources. The Company may need to incur debt, obtain an additional infusion of capital, or a
combination of both, depending on the extent of the expansion of the Company and future revenues
and expenses. However, there can be no assurance Streamline Health will be able to do so. The
Company is evaluating financing options available to the Company.
22
Notwithstanding the current levels of revenues and expenses, for the foreseeable future, Streamline
Health will need to continually assess its revenue prospects compared to its then
current expenditure levels. If it does not appear likely that revenues will increase, it may be
necessary to reduce operating expenses or raise cash through additional borrowings, the sale of
assets, or other equity financing. Certain of these actions will require current lender approval.
However, there can be no assurance Streamline Health will be successful in any of these efforts.
If it is necessary to significantly reduce operating expenses, this could have an adverse effect on
future operating performance.
To date, inflation has not had a material impact on Streamline Healths revenues or expenses.
|
|
|
Item 3. |
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
For quantitative and qualitative disclosures about market risk, see Item 7A, Quantitative and
Qualitative Disclosures About Market Risk, of the Annual Report on Form 10-K for the fiscal year
ended January 31, 2011. The Companys exposures to market risk have not changed materially since
January 31, 2011.
|
|
|
Item 4. |
|
CONTROLS AND PROCEDURES |
Streamline Health maintains disclosure controls and procedures that are designed to ensure that
there is reasonable assurance that the information required to be disclosed in Streamline Healths
Exchange Act reports is recorded, processed, summarized and reported within the time periods
specified in the SECs rules and forms, and that such information is accumulated and communicated
to Streamline Healths management, including its Chief Executive Officer and Chief Financial
Officer, as appropriate, to allow timely decisions regarding required disclosure based on the
definition of disclosure controls and procedures in Exchange Act Rules 13a-15(e) and 15d-15(e).
In designing and evaluating the disclosure controls and procedures, management recognizes that any
controls and procedures, no matter how well designed and operated, can provide only reasonable
assurance of achieving the desired control objectives, and management necessarily was required to
apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
As of the end of the period covered by this report, an evaluation was performed under the
supervision and with the participation of Streamline Healths senior management, including the
Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and
operation of Streamline Healths disclosure controls and procedures to provide reasonable assurance
of achieving the desired objectives of the disclosure controls and procedures. Based on that
evaluation, Streamline Healths management, including the Chief Executive Officer and Chief
Financial Officer, concluded that there is reasonable assurance that Streamline Healths disclosure
controls and procedures were effective as of the end of the period covered by this report.
There were no material changes in the Companys internal controls over financial reporting during
the three months ended July 31, 2011 that have affected or are reasonably likely to materially
affect the Companys internal controls over financial reporting.
23
Part II. OTHER INFORMATION
|
|
|
Item 1. |
|
LEGAL PROCEEDINGS |
Streamline Health is, from time to time, a party to various legal proceedings and claims, which
arise, in the ordinary course of business. Streamline Health is not aware of any legal matters
that will have a material adverse effect on Streamline Healths consolidated results of operations
or consolidated financial position.
In addition to the other information set forth in this report, you should carefully consider the
risk factors discussed in Part I, Item 1A, Risk Factors in the Annual Report on Form 10-K for the
fiscal year ended January 31, 2011. The risk factors in the Annual Report have not materially
changed since January 31, 2011, but are not the only risks facing the Company. In addition, risks
and uncertainties not currently known to the Company or that the Company currently deems to be
immaterial also may materially adversely affect the Company, its financial condition and/or
operating results.
24
|
|
|
Item 3. |
|
DEFAULTS UPON SENIOR SECURITIES |
The Company was not in default of its existing credit facility at July 31, 2011.
|
3.1(a) |
|
Certificate of Incorporation of Streamline Health Solutions, Inc. (*) |
|
|
3.1(b) |
|
Certificate of Incorporation of Streamline Health Solutions, Inc., amendment No. 1 (*) |
|
|
3.2 |
|
Bylaws of Streamline Health Solutions, Inc. (*) |
|
|
11.1 |
|
Computation of earnings (loss) per common share** |
|
|
31.1 |
|
Certification of Chief Executive Officer pursuant to Rule 13a -14(a) and
Rule 15d 14(a) of the Securities Exchange Act, as Amended** |
|
|
31.2 |
|
Certification of Chief Financial Officer pursuant to Rule 13a -14(a) and
Rule 15d 14(a) of the Securities Exchange Act, as Amended** |
|
|
32.1 |
|
Certification of the Chief Executive Officer Pursuant to
18 U.S.C. 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002** |
|
|
32.2 |
|
Certification of the Chief Financial Officer Pursuant to
18 U.S.C. 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002** |
|
|
|
(*) |
|
Incorporated herein by reference from, the Registrants SEC filings.
(See INDEX TO EXHIBITS) |
|
(**) |
|
Included herein. |
25
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
|
|
|
|
STREAMLINE HEALTH SOLUTIONS, INC.
|
|
DATE: September 13, 2011 |
By: |
/s/ Robert E. Watson
|
|
|
|
Robert E. Watson |
|
|
|
Chief Executive Officer |
|
|
|
|
DATE: September 13, 2011 |
By: |
/s/ Stephen H. Murdock
|
|
|
|
Stephen H. Murdock |
|
|
|
Chief Financial Officer |
|
26
INDEX TO EXHIBITS
|
|
|
|
|
|
|
Exhibit No. |
|
Description of Exhibit |
|
|
|
|
|
|
|
|
|
|
3.1 |
(a) |
|
Certificate of Incorporation of Streamline Health
Solutions, Inc. f/k/a/ LanVision Systems, Inc.
(Previously filed with the Commission and
incorporated herein by reference from, the
Registrants (LanVision System, Inc.) Registration
Statement on Form S-1, File Number 333-01494, as
filed with the Commission on April 15, 1996.)
|
|
* |
|
|
|
|
|
|
|
|
3.1 |
(b) |
|
Certificate of Incorporation of Streamline Health
Solutions, Inc. f/k/a LanVision Systems, Inc.,
amendment No. 1. (Previously filed with the
Commission and incorporated herein by reference from
the Registrants Form 10-Q, as filed with the
Commission on September 8, 2006.)
|
|
* |
|
|
|
|
|
|
|
|
3.2 |
|
|
Bylaws of Streamline Health Solutions, Inc. as
amended and restated on July 22, 2010, and previously
filed with the Commission and incorporated herein by
reference from the Registrants Form 10-Q, as filed
with the Commission on September 9, 2010.
|
|
* |
|
|
|
|
|
|
|
|
11.1 |
|
|
Statement Regarding Computation of Per Share Earnings
|
|
** |
|
|
|
|
|
|
|
|
31.1 |
|
|
Certification by Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
** |
|
|
|
|
|
|
|
|
31.2 |
|
|
Certification by Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
** |
|
|
|
|
|
|
|
|
32.1 |
|
|
Certification by Chief Executive Officer pursuant to
U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
|
|
** |
|
|
|
|
|
|
|
|
32.2 |
|
|
Certification by Chief Financial Officer pursuant to
U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
|
|
** |
|
|
|
* |
|
Incorporated by reference herein as indicated |
|
** |
|
Included herein |
27
exv11w1
EXHIBIT
11.1
STREAMLINE HEALTH SOLUTIONS, INC.
Computation of (loss) per share
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
July 31, 2011 |
|
|
July 31, 2010 |
|
|
|
|
|
|
|
|
|
|
Net (loss) |
|
$ |
(287,714 |
) |
|
$ |
(1,252,324 |
) |
|
|
|
|
|
|
|
Average shares outstanding |
|
|
9,847,348 |
|
|
|
9,460,911 |
|
Stock options & purchase plan: |
|
|
|
|
|
|
|
|
Total options & purchase plan shares |
|
|
|
|
|
|
|
|
Assumed treasury stock buyback |
|
|
|
|
|
|
|
|
Convertible redeemable preferred stock
assumed converted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of shares used in per
common share computation |
|
|
9,847,348 |
|
|
|
9,460,911 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net ( loss ) per share of common stock |
|
$ |
(0.03 |
) |
|
$ |
(0.13 |
) |
|
|
|
|
|
|
|
Diluted net ( loss ) per share of common stock |
|
$ |
(0.03 |
) |
|
$ |
(0.13 |
) |
|
|
|
|
|
|
|
exv31w1
Exhibit 31.1
STREAMLINE HEALTH SOLUTIONS, INC.
Certification of Chief Executive Officer pursuant to Rule 13a -14(a) and
Rule 15d 14(a) of the Securities Exchange Act, as Amended
I, Robert E. Watson, certify that:
I have reviewed this quarterly report on Form 10-Q of Streamline Health Solutions, Inc.;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this
report, fairly present in all material respects the financial condition, results of operations and
cash flows of the Registrant as of, and for, the periods presented in this report;
The registrants other certifying officer and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) for the Registrant and have:
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under our supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures, as
of the end of the period covered by this report based on such evaluation; and
Disclosed in this report any change in the registrants internal control over financial reporting
that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal
quarter in the case of an annual report) that has materially affected, or is reasonably likely to
materially affect, the registrants internal control over financial reporting; and
The registrants other certifying officer and I have disclosed, based on our most recent evaluation
of internal control over financial reporting, to the registrants auditors and the audit committee
of the registrants board of directors (or persons performing the equivalent functions):
All significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the registrants ability
to record, process, summarize and report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrants internal control over financial reporting.
|
|
|
|
|
September 13, 2011 |
/s/ Robert E. Watson
|
|
|
Chief Executive Officer and |
|
|
President |
|
exv31w2
EXHIBIT 31.2
STREAMLINE HEALTH SOLUTIONS, INC.
Certification of Chief Financial Officer pursuant to Rule 13a -14(a) and
Rule 15d 14(a) of the Securities Exchange Act, as Amended
I, Stephen H. Murdock, certify that:
I have reviewed this quarterly report on Form 10-Q of Streamline Health Solutions, Inc.;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this
report, fairly present in all material respects the financial condition, results of operations and
cash flows of the Registrant as of, and for, the periods presented in this report;
The registrants other certifying officer and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) for the Registrant and have:
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under our supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures, as
of the end of the period covered by this report based on such evaluation; and
Disclosed in this report any change in the registrants internal control over financial reporting
that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal
quarter in the case of an annual report) that has materially affected, or is reasonably likely to
materially affect, the registrants internal control over financial reporting; and
The registrants other certifying officer and I have disclosed, based on our most recent evaluation
of internal control over financial reporting, to the registrants auditors and the audit committee
of the registrants board of directors (or persons performing the equivalent functions):
All significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the registrants ability
to record, process, summarize and report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrants internal control over financial reporting.
|
|
|
|
|
September 13, 2011 |
/s/ Stephen H. Murdock
|
|
|
Chief Financial Officer |
|
|
|
|
exv32w1
EXHIBIT 32.1
STREAMLINE HEALTH SOLUTIONS, INC.
Certification of the Chief Executive Officer Pursuant to
18 U.S.C. 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002
I, Robert E. Watson, Chief Executive Officer and President of Streamline Health Solutions, Inc.
(the Company), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C.
Section 1350, that:
|
(1) |
|
The Quarterly Report on Form
10-Q of the Company for the quarter ended July 31, 2011
(the Report) fully complies with the requirements of section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (15 U.S.C. 78m); and |
|
(2) |
|
The information contained in the Report fairly presents, in all material respects, the
financial condition, and results of operations of the Company. |
September 13, 2011
|
|
|
/s/ Robert E. Watson
Chief Executive Officer and
|
|
|
President |
|
|
A signed original of this written statement required by Section 906 has been provided to the
Company and will be retained by the Company and furnished to the Securities and Exchange Commission
or its staff upon request.
exv32w2
EXHIBIT 32.2
STREAMLINE HEALTH SOLUTIONS, INC.
Certification of the Chief Financial Officer Pursuant to
18 U.S.C. 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002
I, Stephen H. Murdock, Chief Financial Officer of Streamline Health Solutions, Inc. (the Company),
certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:
|
(1) |
|
The Quarterly Report on Form 10-Q of the Company for the quarter ended July 31, 2011
(the Report) fully complies with the requirements of section 13(a) or 15 (d) of the
Securities Exchange Act of 1934 (15 U.S.C. 78m); and |
|
(2) |
|
The information contained in the Report fairly presents, in all material respects, the
financial condition, and results of operations of the Company. |
September 13, 2011
|
|
|
/s/ Stephen H. Murdock
Chief Financial Officer
|
|
|
A signed original of this written statement required by Section 906 has been provided to the
Company and will be retained by the Company and furnished to the Securities and Exchange Commission
or its staff upon request.