Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Oct. 31, 2018	Nov. 30, 2018
Document and Entity Information [Abstract]
Entity Registrant Name	STREAMLINE HEALTH SOLUTIONS INC.
Entity Central Index Key	0001008586
Document Type	10-Q
Document Period End Date	Oct. 31, 2018
Amendment Flag	false
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q3
Entity Current Reporting Status	Yes
Current Fiscal Year End Date	--01-31
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		20,127,703

Condensed Consolidated Balance Sheets - USD ($)	Oct. 31, 2018	Jan. 31, 2018
Current assets:
Cash and cash equivalents	$ 1,144,559	$ 4,619,834
Accounts receivable, net of allowance for doubtful accounts of $307,736 and $349,058, respectively	1,562,074	3,001,170
Contract receivables	1,231,969	223,791
Prepaid hardware and third-party software for future delivery	0	5,858
Prepaid client maintenance contracts	469,335	506,911
Other prepaid assets	662,051	742,232
Other current assets	406,143	546,885
Total current assets	5,476,131	9,646,681
Property and equipment:
Computer equipment	1,414,876	2,852,776
Computer software	666,442	730,950
Office furniture, fixtures and equipment		683,443
Leasehold improvements		729,348
Property and equipment, gross	2,081,318	4,996,517
Accumulated depreciation and amortization	(1,804,305)	(3,834,153)
Property and equipment, net	277,013	1,162,364
Contract receivables, less current portion	614,725	0
Capitalized software development costs, net of accumulated amortization of $19,553,507 and $18,658,183, respectively	5,700,270	4,307,351
Intangible assets, net of accumulated amortization of $7,673,626 and $6,968,786, respectively	5,130,311	5,835,151
Goodwill	15,537,281	15,537,281
Other	328,843	642,226
Total non-current assets	27,588,443	27,484,373
Total assets	33,064,574	37,131,054
Current liabilities:
Accounts payable	1,469,954	421,425
Accrued compensation	941,349	342,351
Accrued other expenses	1,089,304	609,582
Current portion of term loan	596,984	596,984
Deferred revenues	5,845,779	9,481,807
Other	22,281
Total current liabilities	9,965,651	11,452,149
Non-current liabilities:
Term loan, net of current portion and deferred financing cost of $75,074 and $128,275, respectively	3,506,816	3,901,353
Royalty liability	889,654	2,469,193
Deferred revenues, less current portion	752,093	332,645
Other	112,848	274,128
Total non-current liabilities	5,261,411	6,977,319
Total liabilities	15,227,062	18,429,468
Series A 0% Convertible Redeemable Preferred Stock, $.01 par value per share, $8,686,392 and $8,849,985 redemption value, 4,000,000 shares authorized, 2,895,464 and 2,949,995 shares issued and outstanding, respectively	8,686,392	8,849,985
Stockholders' equity:
Common stock, $.01 par value per share, 45,000,000 shares authorized; 20,127,703 and 20,005,977 shares issued and outstanding, respectively	201,277	200,060
Additional paid in capital	82,404,377	81,776,606
Accumulated deficit	(73,454,534)	(72,125,065)
Total stockholders' equity	9,151,120	9,851,601
Total liability and stockholders' equity	$ 33,064,574	$ 37,131,054

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)	9 Months Ended	12 Months Ended
	Oct. 31, 2018	Jan. 31, 2018
Allowance for doubtful accounts	$ 307,736	$ 349,058
Accumulated amortization of capitalized software development costs	19,553,507	18,658,183
Accumulated amortization of intangible assets	7,673,626	6,968,786
Deferred financing costs, accumulated amortization	$ 75,074	$ 128,275
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Number of authorized shares of common stock (in shares)	45,000,000	45,000,000
Common stock, shares issued (in shares)	20,127,703	20,005,977
Common stock, shares outstanding (in shares)	20,127,703	20,005,977
Series A Preferred Stock
Preferred stock dividend rate	0.00%	0.00%
Convertible redeemable preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Convertible redeemable preferred stock, redemption value	$ 8,686,392	$ 8,849,985
Convertible redeemable preferred stock, shares authorized (in shares)	4,000,000	4,000,000
Convertible redeemable preferred stock, shares issued (in shares)	2,895,464	2,949,995
Convertible redeemable preferred stock, shares outstanding (in shares)	2,895,464	2,949,995

Condensed Consolidated Statements of Operations - USD ($)	3 Months Ended		9 Months Ended
	Oct. 31, 2018	Oct. 31, 2017	Oct. 31, 2018	Oct. 31, 2017
Revenues:
System sales	$ 309,522	$ 348,526	$ 1,827,071	$ 1,055,941
Professional services	576,682	801,771	1,086,117	1,793,618
Audit services	233,561	280,025	841,117	919,485
Maintenance and support	3,051,260	3,250,229	9,576,615	9,883,563
Software as a service	1,197,552	1,718,748	3,569,562	4,586,532
Total revenues	5,368,577	6,399,299	16,900,482	18,239,139
Operating expenses:
Cost of systems sales	223,235	434,138	763,109	1,596,988
Cost of professional services	675,038	555,815	2,078,735	1,814,236
Cost of audit services	323,337	404,280	1,017,397	1,236,358
Cost of maintenance and support	505,779	667,307	1,720,366	2,241,969
Cost of software as a service	206,878	289,503	805,137	914,711
Selling, general and administrative	2,391,873	2,819,549	8,159,823	8,983,248
Research and development	1,026,423	932,251	3,301,587	3,985,161
Loss on exit of operating lease	561,898		1,368,061
Total operating expenses	5,914,461	6,102,843	19,214,215	20,772,671
Operating income (loss)	(545,884)	296,456	(2,313,733)	(2,533,532)
Other expense:
Interest expense	(105,784)	(113,078)	(332,387)	(360,723)
Miscellaneous expense	(25,128)	(177,282)	(118,156)	(235,007)
Earnings (loss) before income taxes	(676,796)	6,096	(2,764,276)	(3,129,262)
Income tax expense	(1,714)	(2,607)	(5,141)	(7,822)
Net earnings (loss)	$ (678,510)	$ 3,489	$ (2,769,417)	$ (3,137,084)
Net earnings (loss) per common share - basic (in dollars per share)	$ (0.03)	$ 0.00	$ (0.14)	$ (0.16)
Weighted average number of common shares - basic (in shares)	19,753,074	19,985,822	19,903,529	19,838,691
Net earnings (loss) per common share - diluted (in dollars per share)	$ (0.03)	$ 0.00	$ (0.14)	$ (0.16)
Weighted average number of common shares - diluted (in shares)	19,753,074	23,068,423	19,903,529	19,838,691

Condensed Consolidated Statements of Cash Flows - USD ($)	9 Months Ended
	Oct. 31, 2018	Oct. 31, 2017
Operating activities:
Net earnings (loss)	$ (2,769,417)	$ (3,137,084)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	411,277	595,866
Amortization of capitalized software development costs	895,325	1,574,493
Amortization of intangible assets	704,840	922,462
Amortization of other deferred costs	347,170	229,780
Valuation adjustment for warrants liability	0	104,666
Other valuation adjustments	71,428	124,423
Loss (gain) on disposal of fixed assets	5,190	(14,871)
Loss on exit of operating lease	1,368,061
Share-based compensation expense	492,298	844,960
Provision for accounts receivable	(23,639)	181,859
Changes in assets and liabilities:
Accounts and contract receivables	590,555	1,957,439
Other assets	272,823	(671,254)
Accounts payable	1,048,529	(308,747)
Accrued expenses	53,673	134,324
Deferred revenues	(4,176,055)	(3,866,878)
Net cash used in operating activities	(707,942)	(1,328,562)
Investing activities:
Purchases of property and equipment	(21,142)	(24,517)
Proceeds from sales of property and equipment	20,408
Capitalization of software development costs	(2,288,244)	(1,336,942)
Net cash used in investing activities	(2,288,978)	(1,361,459)
Financing activities:
Principal repayments on term loan	(447,738)	(962,443)
Principal payments on capital lease obligation	(3,714)	(91,337)
Payments related to settlement of employee shared-based awards	(62,291)	(41,813)
Proceeds from exercise of stock options and stock purchase plan	35,388	23,703
Net cash used in financing activities	(478,355)	(1,071,890)
Net decrease in cash and cash equivalents	(3,475,275)	(3,761,911)
Cash and cash equivalents at beginning of period	4,619,834	5,654,093
Cash and cash equivalents at end of period	$ 1,144,559	$ 1,892,182

Basis of Presentation	9 Months Ended
Basis of Presentation	Oct. 31, 2018
Basis of Presentation
BASIS OF PRESENTATION	NOTE 1 — BASIS OF PRESENTATION The accompanying unaudited Condensed Consolidated Financial Statements have been prepared by Streamline Health Solutions, Inc. (“we”, “us”, “our”, “Streamline”, 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 U.S. generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although we believe that the disclosures made are adequate to make the information not misleading. In the opinion of our management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the Condensed Consolidated Financial Statements have been included. These Condensed Consolidated Financial Statements should be read in conjunction with the consolidated financial statements and notes thereto included in our most recent annual report on Form 10‑K, Commission File Number 0‑28132. Operating results for the nine months ended October 31, 2018 are not necessarily indicative of the results that may be expected for the fiscal year ending January 31, 2019.

Summary of Significant Accounting Policies

9 Months Ended

Oct. 31, 2018

Summary of Significant Accounting Policies

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Our significant accounting policies are presented in “Note 2 – Significant Accounting Policies” in the fiscal year 2017 Annual Report on Form 10‑K. Users of financial information for interim periods are encouraged to refer to the footnotes to the consolidated financial statements contained in the Annual Report on Form 10‑K when reviewing interim financial results.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Fair Value of Financial Instruments

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

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

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

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

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value based on the short-term maturity of these instruments. Cash and cash equivalents are classified as Level 1. The carrying amount of our long-term debt approximates fair value since the variable interest rates being paid on the amounts approximate the market interest rate. Long-term debt is classified as Level 2.

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


			Quoted Prices in		Significant Other		Significant
	Total Fair		Active Markets		Observable Inputs		Unobservable Inputs
	Value		(Level 1)		(Level 2)		(Level 3)
At October 31, 2018
Royalty liability (1) (3)	$	890,000	$	—	$	—	$	890,000

At January 31, 2018
Royalty liability (1) (2)	$	2,469,000	$	—	$	—	$	2,469,000

(1)

The initial fair value of royalty liability was determined by management with the assistance of an independent third-party valuation specialist, and by management thereafter. Fair value adjustments are included within miscellaneous expense in the condensed consolidated statements of operations.

(2)

The fair value of the royalty liability was determined based on the probability-weighted revenue scenarios for the Streamline Health® Clinical AnalyticsTM solution (“Clinical Analytics”) licensed from Montefiore Medical Center (discussed in Note 3 - Acquisitions and Divestitures).

(3)

Following the modification of the Royalty Agreement in the second quarter of fiscal 2018 (discussed in Note 3 - Acquisitions and Divestitures), the royalty liability was significantly reduced as a result of the commitment to fulfill a portion of our obligation by providing incremental maintenance services. The fair value of the royalty liability was determined based on the portion of the modified royalty commitment payable in cash.

Revenue Recognition

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

We recognize revenue in accordance with Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers (“ASC 606”), the new revenue recognition standards established by ASU 2014‑09. The core principle of ASC 606 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

We commence revenue recognition (Step 5 below) in accordance with that core principle after applying the following steps:

Step 1: Identify the contract(s) with a customer

Step 2: Identify the performance obligations in the contract

Step 3: Determine the transaction price

Step 4: Allocate the transaction price to the performance obligations in the contract

Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation

We follow the accounting revenue guidance under ASC 606 to determine whether contracts contain more than one performance obligation. Performance obligations are the unit of accounting for revenue recognition and generally represent the distinct goods or services that are promised to the customer. Revenue is recognized net of any taxes collected from customers and subsequently remitted to governmental authorities.

If we determine that we have not satisfied a performance obligation, we will defer recognition of the revenue until the performance obligation is deemed to be satisfied. Maintenance and support and SaaS agreements are generally non-cancelable or contain significant penalties for early cancellation, although clients typically have the right to terminate their contracts for cause if we fail to perform material obligations. However, if non-standard acceptance periods, non-standard performance criteria, or cancellation or right of refund terms are required, revenue is recognized upon the satisfaction of such criteria.

Significant judgment is required to determine the standalone selling price (“SSP”) for each performance obligation, the amount allocated to each performance obligation and whether it depicts the amount that the Company expects to receive in exchange for the related product and/or service. As the selling prices of the Company’s software licenses are highly variable, the Company estimates SSP of its software licenses using the residual approach when the software license is sold with other services and observable SSPs exist for the other services. The Company estimates the SSP for maintenance, professional services, and audit services based on observable standalone sales.

Contract Combination

The Company may execute more than one contract or agreement with a single customer. The Company evaluates whether the agreements were negotiated as a package with a single objective, whether the amount of consideration to be paid in one agreement depends on the price and/or performance of another agreement, or whether the good or services promised in the agreements represent a single performance obligation. The conclusions reached can impact the allocation of the transaction price to each performance obligation and the timing of revenue recognition related to those arrangements.

The Company has utilized the portfolio approach as the practical expedient. We have applied the revenue model to a portfolio of contracts with similar characteristics where we expected that the financial statements would not differ materially from applying it to the individual contracts within that portfolio.

Systems Sales

The Company’s software license arrangements provide the customer with the right to use functional intellectual property. Implementation, support, and other services are typically considered distinct performance obligations when sold with a software license unless these services are determined to significantly modify the software. Revenue is recognized at a point in time. Typically, this is upon shipment of components or electronic download of software.

Maintenance and Support Services

Our maintenance and support obligations include multiple discrete performance obligations, with the two largest being unspecified product upgrades or enhancements, and technical support, which can be offered at various points during a contract period. We believe that the multiple discrete performance obligations within our overall maintenance and support obligations can be viewed as a single performance obligation since both the unspecified upgrades and technical support are activities to fulfill the maintenance performance obligation and are rendered concurrently. Annual maintenance and support agreements entitle clients to technology support, version upgrades, bug fixes and service packs. We recognize maintenance and support revenue over time.

Software-Based Solution Professional Services

The Company provides various professional services to customers with software licenses. These include project management, software implementation and software modification services. Revenues from arrangements to provide professional services are generally distinct from the other promises in the contract and are recognized as the related services are performed. Consideration payable under these arrangements is either fixed fee or on a time-and-materials basis.

Software as a Service

SaaS-based contracts include use of the Company’s platform, implementation, support and other services which represent a single promise to provide continuous access to its software solutions. The Company recognizes revenue over time for the life of the contract.

We defer the direct costs, which includes salaries and benefits, for professional services related to SaaS contracts. These deferred costs will be amortized over the identical term as the associated revenues. As of October 31, 2018, and January 31, 2018, we had deferred costs of $262,000 and $471,000, respectively, net of accumulated amortization of $531,000 and $312,000, respectively. Amortization expense of these costs was $101,000 and $51,000 for the three months ended October 31, 2018 and 2017, respectively, and $294,000 and $177,000 for the nine months ended October 31, 2018 and 2017, respectively.

Audit Services

Audit services are a separate performance obligation. We recognize revenue over time as the services are performed.

Comparative GAAP Financials

The adoption of the new standard has the following impact to the Company’s condensed consolidated statements of operations for the nine months ended October 31, 2018:


	Nine Months Ended October 31, 2018
	As reported under ASC 606		Balances without adoption of ASC 606		Adjustments due to ASC 606
Revenues
Systems sales	$	1,827,000	$	2,500,000	$	(673,000)
Maintenance and support		9,577,000		9,585,000		(8,000)


	As of October 31, 2018
	As reported under ASC 606		Balances without adoption of Topic 606		Adjustments due to ASC 606
Assets
Contract receivables, current	$	1,232,000	$	805,000	$	427,000
Contract receivables, noncurrent		615,000		43,000		572,000

Liabilities
Deferred revenues, current		5,846,000		5,962,000		(116,000)

Shareholders' Equity
Accumulated deficit	$	(73,455,000)	$	(74,570,000)	$	1,115,000

Disaggregation of Revenue

The following table provides information about disaggregated revenue by type and nature of revenue stream:


	Nine Months Ended October 31, 2018
	Recurring Revenue		Non-recurring Revenue		Total
Systems sales	$	397,000	$	1,430,000	$	1,827,000
Professional services		—		1,086,000		1,086,000
Audit services		—		841,000		841,000
Maintenance and support		9,577,000		—		9,577,000
Software as a service		3,569,000		—		3,569,000
Total revenue:	$	13,543,000	$	3,357,000	$	16,900,000

Contract Receivables and Deferred Revenues

The Company receives payments from customers based upon contractual billing schedules. Contract receivables include amounts related to the Company’s contractual right to consideration for completed performance obligations not yet invoiced. Deferred revenues include payments received in advance of performance under the contract. Our contract receivables and deferred revenue are reported on an individual contract basis at the end of each reporting period. Contract receivables are classified as current or noncurrent based on the timing of when we expect to bill the customer. Deferred revenue is classified as current or noncurrent based on the timing of when we expect to recognize revenue. In the nine-month period ended October 31, 2018, we recognized $7,558,000 in revenue from deferred revenues outstanding as of January 31, 2018.

The cumulative effect of changes related to the adoption of ASC 606 are reflected in the opening balance of accumulated deficit as shown below:


	As Reported January 31, 2018		Adjustments due to ASC 606		As Adjusted February 1, 2018
ASSETS
Contract receivables, current	$	224,000	$	283,000	$	507,000
Contract receivables, noncurrent		—		468,000		468,000

LIABILITIES
Deferred revenues, current		9,482,000		(689,000)		8,793,000

STOCKHOLDERS' EQUITY
Accumulated deficit	$	(72,125,000)	$	1,440,000	$	(70,685,000)

Transaction price allocated to the remaining performance obligations

Revenue allocated to remaining performance obligations represents contracted revenue that will be recognized in future periods, which is comprised of deferred revenue and amounts that will be invoiced and recognized as revenue in future periods. Revenue allocated to remaining performance obligations was $26 million as of October 31, 2018, of which the Company expects to recognize approximately 71% over the next 12 months and the remainder thereafter.

Deferred commissions costs (contract acquisition costs)

Contract acquisition costs, which consists of sales commissions paid or payable, is considered incremental and recoverable costs of obtaining a contract with a customer. Sales commissions for initial and renewal contracts are deferred and then amortized on a straight-line basis over a period of benefit, which the Company has determined to be the customer life. As a practical expedient, we expense sales commissions as incurred when the amortization period of related deferred commission costs would have been one year or less.

Deferred commissions costs paid and payable are included on the condensed consolidated balance sheets within other prepaid assets and other current assets, respectively. Amortization expense associated with sales commissions is included in selling, general and administrative expenses on the condensed consolidated statements of operations.

Equity Awards

We account for share-based payments based on the grant-date fair value of the awards with compensation cost recognized as expense over the requisite vesting period. We incurred total compensation expense related to stock-based awards of $125,000 and $290,000 for the three months ended October 31, 2018 and 2017, respectively, and $492,000 and $845,000 for the nine months ended October 31, 2018 and 2017, respectively.

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

We issue restricted stock awards in the form of our common stock. The fair value of these awards is based on the market closing price per share on the date of grant. We expense the compensation cost of these awards as the restriction period lapses, which is typically a one- to four-year service period to the Company. In the nine months ended October 31, 2018, 37,249 shares of common stock were surrendered to the Company to satisfy tax withholding obligations totaling $62,000 in connection with the vesting of restricted stock awards. Shares surrendered by the restricted stock award recipients in accordance with the applicable plan are deemed canceled, and therefore are not available to be reissued.

Income Taxes

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

We provide for uncertain tax positions and the related interest and penalties based upon management’s assessment of whether certain tax positions are more likely than not to be sustained upon examination by tax authorities. We believe we have appropriately accounted for any uncertain tax positions. The Company has recorded $329,000 and $286,000 in reserves for uncertain tax positions and corresponding interest and penalties as of October 31, 2018 and January 31, 2018, respectively.

Net Earnings (Loss) Per Common Share

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

Our unvested restricted stock awards and Series A Convertible Preferred Stock are considered participating securities under ASC 260, Earnings Per Share, which means the security may participate in undistributed earnings with common stock. Our 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. The holders of the Series A Convertible Preferred Stock would be entitled to share in dividends, on an as-converted basis, if the holders of common stock were to receive dividends, other than dividends in the form of common stock. In accordance with ASC 260, a company is required to use the two-class method when computing EPS when a company has a security that qualifies as a “participating security.” The two-class method is an earnings allocation formula that determines EPS for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. In determining the amount of net earnings to allocate to common stockholders, earnings are allocated to both common and participating securities based on their respective weighted-average shares outstanding for the period. Diluted EPS for our common stock is computed using the more dilutive of the two-class method or the if-converted method.

In accordance with ASC 260, securities are deemed not to be participating in losses if there is no obligation to fund such losses. As of October 31, 2018, there were 2,895,464 shares of preferred stock outstanding, each of which is convertible into one share of our common stock. For the three and nine months ended October 31, 2018 and the nine months ended October 31, 2017, the Series A Convertible Preferred Stock would have an anti-dilutive effect if included in diluted EPS and therefore, was not included in the calculation. For the three and nine months ended October 31, 2018 and the nine months ended October 31, 2017, 469,996 and 821,587, respectively, unvested restricted shares of common stock were excluded from the diluted EPS calculation as their effect would have been anti-dilutive. For the three months ended October 31, 2017, the preferred stock and unvested restricted shares of common stock were not anti-dilutive and, accordingly, were included in the Company’s diluted EPS calculation.

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


	Three Months Ended
	October 31, 2018		October 31, 2017
Net earnings (loss)	$	(678,510)	$	3,489
Weighted average shares outstanding - Basic		19,753,074		19,985,822
Stock options, restricted stock, Series A Convertible Preferred Stock and warrants		—		3,082,601
Weighted average shares outstanding - Diluted		19,753,074		23,068,423
Basic net earnings (loss) per share of common stock	$	(0.03)	$	0.00
Diluted net earnings (loss) per share of common stock	$	(0.03)	$	0.00


	Nine Months Ended
	October 31, 2018		October 31, 2017
Net loss	$	(2,769,417)	$	(3,137,084)
Weighted average shares outstanding - Basic		19,903,529		19,838,691
Stock options, restricted stock, Series A Convertible Preferred Stock and warrants		—		—
Weighted average shares outstanding - Diluted		19,903,529		19,838,691
Basic net loss per share of common stock	$	(0.14)	$	(0.16)
Diluted net loss per share of common stock	$	(0.14)	$	(0.16)

Diluted net loss per share excludes the effect of outstanding stock options that relate to 1,612,990 and 2,239,047 shares of common stock for the three and nine months ended October 31, 2018 and the nine months ended October 31, 2017, respectively. The inclusion of these stock options would have been anti-dilutive. For the nine months ended October 31, 2017, the warrants to purchase 1,400,000 shares of common stock would have an anti-dilutive effect if included in diluted net loss per share, and therefore were not included in the calculation. For the three months ended October 31, 2017, warrants and vested stock options would have a dilutive effect and therefore were included in the diluted net loss per share calculation. The warrants expired on February 16, 2018.

Recent Accounting Pronouncements

In May 2014, the FASB issued ASU 2014‑09, Revenue from Contracts with Customers, Topic 606 (“ASC 606”), which supersedes the revenue recognition requirements in ASC 605, Revenue Recognition. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014‑09 defines a five-step process to achieve this principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than required under existing GAAP, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In July 2016, the FASB delayed the effective date by one year and the guidance became effective for us on February 1, 2018. The new revenue recognition guidance permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application as an adjustment to retained earnings (modified retrospective method). We adopted the standard effective February 1, 2018 using the modified retrospective method.

We have completed our assessment of our systems, available data and processes that will be affected by the implementation of this new revenue recognition guidance. The Company’s formal accounting policies have been established. As a result of the implementation of this standard, the Company recorded an adjustment to increase retained earnings as of February 1, 2018 by $1.4 million, related primarily to the timing of revenue. The most significant impact relates to our accounting for term software license revenue. We expect revenue related to SaaS-based offerings, hardware sales, maintenance and support, and audit services to remain substantially unchanged. For arrangements which include both software license and maintenance and support components, we expect to recognize the revenue attributed to license upfront at a point in time rather than over the term of the contract. We also expect to recognize license revenues upfront rather than be restricted to payment amounts due under extended payment term contracts as required under the previous guidance. Additionally, the new revenue recognition guidance requires the capitalization of all incremental costs of obtaining a contract with a customer that an entity expects to recover. We have already been capitalizing sales commissions associated with new and renewal contracts. We did not identify any other costs that would be eligible for capitalization under the new guidance. As a result, we did not record any additional deferral for such costs upon adoption of the new guidance on February 1, 2018.

In February 2016, the FASB issued ASU 2016‑02, Leases (Topic 842), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The ASU is effective for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. The update will be effective for us on February 1, 2019. Early adoption of the update is permitted. We do not expect that the adoption of this ASU will have a significant impact on our consolidated financial statements.

In August 2016, the FASB issued ASU 2016‑15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, to clarify how certain cash receipts and cash payments should be presented and classified in the statement of cash flows. The ASU should be applied using a retrospective transition method to each period presented. The standard became effective for us on February 1, 2018. The adoption of this ASU did not have a significant impact on our consolidated financial statements.

In January 2017, the FASB issued ASU 2017‑01, Business Combinations (Topic 805): Clarifying the Definition of a Business, to clarify the definition of a business to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The standard became effective for us on February 1, 2018. For the periods included in this report, there was no impact on our financial position or results of operations as a result of the adoption of this update.

In January 2017, the FASB issued ASU 2017‑04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which removes Step 2 from the goodwill impairment test. The standard will be effective for us on February 1, 2020. Early adoption of this update is permitted. We do not expect that the adoption of this ASU will have a significant impact on our consolidated financial statements.

In May 2017, the FASB issued ASU 2017‑09, Compensation - Stock Compensation (Topic 718), Scope of Modification Accounting, to clarify which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The update became effective for us on February 1, 2018. For the periods included in this report, there was no impact on our financial position or results of operations as a result of the adoption of this update.

Acquisitions and Divestitures	9 Months Ended
Acquisitions and Divestitures	Oct. 31, 2018
Acquisitions and Divestitures
ACQUISITIONS AND DIVESTITURES	NOTE 3 — ACQUISITIONS Acquisition of a Montefiore Medical Center Solution On October 25, 2013, we entered into a Software License and Royalty Agreement (the “Royalty Agreement”) with Montefiore Medical Center (“Montefiore”) pursuant to which Montefiore granted us an exclusive, worldwide 15‑year license of Montefiore’s proprietary clinical analytics platform solution, Clinical Looking Glass® (“CLG”), now known as our Clinical Analytics solution. In addition, Montefiore assigned to us the existing license agreement with a customer using CLG. As consideration under the Royalty Agreement, we paid Montefiore a one-time initial base royalty fee of $3,000,000. Additionally, we originally committed that Montefiore would receive at least an additional $3,000,000 of on-going royalty payments related to future sublicensing of CLG by us within the first six and one-half years of the license term. On July 1, 2018, we entered into a joint amendment to the Royalty Agreement and the existing Software License and Support Agreement with Montefiore to modify the payment obligations of the parties under both agreements. According to the modified provisions, our obligation to pay on-going royalties under the Royalty Agreement was replaced with the obligation to (i) provide maintenance services for 24 months and waive associated maintenance fees, and (ii) pay $1,000,000 in cash on July 31, 2020. As a result of the commitment to fulfill a portion of our obligation by providing maintenance services at no cost, the royalty liability was significantly reduced, with a corresponding increase to deferred revenues. The fair value of the royalty liability as of October 31, 2018 was determined based on the amount payable in cash. As of October 31, 2018, and January 31, 2018, the present value of this royalty liability was $890,000 and $2,469,000, respectively.

Leases

9 Months Ended

Oct. 31, 2018

Leases

LEASES

NOTE 4 — LEASES

We rent office space and equipment under non-cancelable operating leases that expire at various times through fiscal year 2023. Future minimum lease payments under non-cancelable operating leases for the next five fiscal years are as follows:


	Facilities		Equipment		Fiscal Year Totals
2018 (three months remaining)	$	168,000	$	2,000	$	170,000
2019		632,000		7,000		639,000
2020		116,000		7,000		123,000
2021		—		7,000		7,000
2022		—		7,000		7,000
Thereafter		—		4,000		4,000
Total	$	916,000	$	34,000	$	950,000

In the second quarter of fiscal 2018, we closed our New York office and subleased the office space for the remaining period of the original lease term. As a result of vacating and subleasing the office, we recorded an $806,000 loss on exit of the operating lease in the second quarter of fiscal 2018. As of October 31, 2018, the total minimum rentals to be received under this non-cancelable sublease was $288,000.

In the third quarter of fiscal 2018, we assigned our then current Atlanta office lease that would expire in November 2022 and entered into a new lease obligation for another office space in Atlanta. As a result of assigning the office lease, we recorded a $562,000 loss on exit of the operating lease in the third quarter of fiscal 2018. Our new Atlanta office lease commenced upon taking possession of the space and ends in November 2020. The new lease agreement provides for rent abatement, which will be aggregated with the total expected rental payments and amortized on a straight-line basis over the term of the lease.

Rent and leasing expense for facilities and equipment was $191,000 and $295,000 for the three months ended October 31, 2018 and 2017, respectively, and $994,000 and $920,000 for the nine months ended October 31, 2018 and 2017.

In fiscal 2018, we entered into a new capital lease to finance our equipment purchases. Total cost and accumulated depreciation of fixed assets acquired under our outstanding capital lease were $67,000 and $17,000 as of October 31, 2018, respectively. As of January 31, 2018, we had no capital lease obligations outstanding. The current and non-current portions of our capital lease obligation are included in other current and other non-current liabilities, respectively. The amortization expense of the leased equipment was included in depreciation expense.

Debt

9 Months Ended

Oct. 31, 2018

Debt

DEBT

NOTE 5 — DEBT

Term Loan and Line of Credit

On November 21, 2014, we entered into a Credit Agreement (the “Credit Agreement”) with Wells Fargo Bank, N.A., as administrative agent, and other lender parties thereto. Pursuant to the Credit Agreement, the lenders agreed to provide a $10,000,000 senior term loan and a $5,000,000 revolving line of credit to our primary operating subsidiary. Amounts outstanding under the Credit Agreement bear interest at either LIBOR or the base rate, as elected by the Company, plus an applicable margin. Subject to the Company’s leverage ratio, pursuant to the terms of the amendment to the Credit Agreement entered into as of April 15, 2015, the applicable LIBOR rate margin varies from 4.25% to 6.25%, and the applicable base rate margin varies from 3.25% to 5.25%. The term loan and line of credit provide support for working capital, capital expenditures and other general corporate purposes, including permitted acquisitions. The outstanding senior term loan is secured by substantially all of our assets. Pursuant to the terms of the fourth amendment to the Credit Agreement entered into as of November 20, 2018, the original term loan and line of credit maturity date of November 21, 2019 was extended to May 21, 2020. The senior term loan principal balance is payable in quarterly installments, which started in March 2015 and will continue through the maturity date, with the full remaining unpaid principal balance due at maturity. In November 2014, the Company repaid indebtedness under its prior credit facility using approximately $7,400,000 of the proceeds provided by the term loan. The prior credit facility with Fifth Third Bank was terminated concurrent with the entry into the Credit Agreement. Financing costs of $355,000 associated with the new credit facility are being amortized over its term on a straight-line basis, which is not materially different from the effective interest method.

The Credit Agreement includes customary financial covenants, including the requirements that the Company maintain minimum liquidity and achieve certain minimum EBITDA levels (as defined in the Credit Agreement). In addition, the Credit Agreement prohibits the Company from paying dividends on the common and preferred stock. Pursuant to the terms of the Credit Agreement, the Company is required to maintain minimum liquidity of at least (i) $5,000,000 through January 31, 2018, (ii) $4,000,000 from February 1, 2018 through November 19, 2018, (iii) $3,500,000 from November 20, 2018 through and including January 31, 2019, and (iv) $4,000,000 from February 1, 2019 through and including the maturity date of the credit facility.

The following table shows our minimum EBITDA covenant thresholds, as modified by the fourth amendment to the Credit Agreement entered into as of November 20, 2018:


Applicable period	Minimum EBITDA
For the fiscal quarter ending October 31, 2018	$	(509,000)
For the 2-quarter period ending January 31, 2019		20,000
For the 3-quarter period ending April 30, 2019		204,000
For the 4-quarter period ending July 31, 2019		180,000
For the 4-quarter period ending October 31, 2019		508,000
For the 4-quarter period ending January 31, 2020		408,000
For the 4-quarter period ending April 30, 2020 and each fiscal quarter thereafter		562,000

The Company was in compliance with the applicable financial loan covenants at October 31, 2018.

As of October 31, 2018, the Company had no outstanding borrowings under the revolving line of credit, and had accrued $3,000 in unused line fees. Based upon the borrowing base formula set forth in the Credit Agreement, as of October 31, 2018, the Company had access to the full amount of the $5,000,000 revolving line of credit.

Outstanding principal balances on debt consisted of the following at:


	October 31, 2018		January 31, 2018
Senior term loan	$	4,179,000	$	4,626,000
Capital lease (1)		63,000		—
Total		4,242,000		4,626,000
Deferred financing cost		(75,000)		(128,000)
Total		4,167,000		4,498,000
Less: Current portion		(619,000)		(597,000)
Non-current portion of debt	$	3,548,000	$	3,901,000

(1)

The current and non-current portions of our capital lease obligation are included in other current and other non-current liabilities, respectively.

Future principal repayments of debt consisted of the following at October 31, 2018:


Fiscal year	Senior Term Loan (1)		Capital Lease (2)		Total
2018	$	149,000	$	6,000	$	155,000
2019		4,030,000		22,000		4,052,000
2020		—		22,000		22,000
2021		—		13,000		13,000
Total repayments	$	4,179,000	$	63,000	$	4,242,000

(1)

Term loan balance on the condensed consolidated balance sheet is reported net of deferred financing costs of $75,000.

(2)

The current and non-current portions of our capital lease obligation are included in other current and other non-current liabilities, respectively.

Convertible Preferred Stock	9 Months Ended
Convertible Preferred Stock	Oct. 31, 2018
Convertible Preferred Stock
CONVERTIBLE PREFERRED STOCK	NOTE 6 — CONVERTIBLE PREFERRED STOCK Series A Convertible Preferred Stock At October 31, 2018, we had 2,895,464 shares of Series A Convertible Redeemable Preferred Stock (the “Preferred Stock”) outstanding. Each share of the Preferred Stock is convertible into one share of the Company’s common stock. The Preferred Stock does not pay a dividend; however, the holders are entitled to receive dividends equal (on an as-if-converted-to-common-stock basis) to and in the same form as dividends (other than dividends in the form of common stock) actually paid on shares of the common stock. The Preferred Stock has voting rights on a modified as-if-converted-to-common-stock-basis. The Preferred Stock has a non-participating liquidation right equal to the original issue price plus accrued unpaid dividends, which are senior to the Company’s common stock. The Preferred Stock can be converted to common shares at any time by the holders, or at the option of the Company if the arithmetic average of the daily volume weighted average price of the common stock for the 10 day period prior to the measurement date is greater than $8.00 per share, and the average daily trading volume for the 60 day period immediately prior to the measurement date exceeds 100,000 shares. The conversion price is $3.00 per share, subject to certain adjustments. At any time following August 31, 2016, subject to the terms of the Subordination and Intercreditor Agreement among the preferred stockholders, the Company and Wells Fargo, which prohibits the redemption of the Preferred Stock without the consent of Wells Fargo, each share of Preferred Stock is redeemable at the option of the holder for an amount equal to the initial issuance price of $3.00 (adjusted to reflect stock splits, stock dividends or similar events) plus any accrued and unpaid dividends thereon. The Preferred Stock is classified as temporary equity as the securities are redeemable solely at the option of the holder.

Income Taxes	9 Months Ended
Income Taxes	Oct. 31, 2018
Income Taxes
INCOME TAXES	NOTE 7 — INCOME TAXES Income tax expense consists of federal, state and local tax provisions. For the nine months ended October 31, 2018 and 2017, we recorded federal tax expense of zero. For the nine months ended October 31, 2018 and 2017, we recorded state and local tax expense of $5,000 and $8,000, respectively.

Subsequent Events	9 Months Ended
Subsequent Events	Oct. 31, 2018
Subsequent Events
SUBSEQUENT EVENTS	NOTE 8 — SUBSEQUENT EVENTS We have evaluated subsequent events occurring after October 31, 2018, and based on our evaluation we did not identify any events that would have required recognition or disclosure in these condensed consolidated financial statements, except for the following. On November 20, 2018, we executed the fourth amendment to the Credit Agreement which reset our financial covenants and extended the original term loan and line of credit maturity date from November 21, 2019 to May 21, 2020. See Note 5 for the new financial covenants. On November 27, 2018, we drew $1,000,000 upon our revolving line of credit to support our operations.

Summary of Significant Accounting Policies (Policies)

9 Months Ended

Oct. 31, 2018

Summary of Significant Accounting Policies

Use of Estimates

Fair Value of Financial Instruments

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

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

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

Revenue Recognition

Contract Receivables and Deferred Revenues

Revenue Recognition

We commence revenue recognition (Step 5 below) in accordance with that core principle after applying the following steps:

Step 1: Identify the contract(s) with a customer

Step 2: Identify the performance obligations in the contract

Step 3: Determine the transaction price

Step 4: Allocate the transaction price to the performance obligations in the contract in the contract

Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation

Contract Combination

Systems Sales

Maintenance and Support Services

Our support and maintenance obligations include multiple discrete performance obligations, with the two largest being unspecified product upgrades or enhancements, and technical support, which can be offered at various points during a contract period. We believe that the multiple discrete performance obligations within our overall support and maintenance obligations can be viewed as a single performance obligation since both the unspecified upgrades and technical support are activities to fulfill the maintenance performance obligation and are rendered concurrently. Annual maintenance and support agreements entitle clients to technology support, version upgrades, bug fixes and service packs. We recognize maintenance and support revenue over time.

Software-Based Solution Professional Services

Software as a Service

Audit Services

Audit services are a separate performance obligation. We recognize revenue over time as the services are performed.

Deferred commissions costs (contract acquisition costs)

Transaction price allocated to the remaining performance obligations

Deferred commissions costs (contract acquisition costs)

Equity Awards

Income Taxes

Net Earnings (Loss) Per Common Share

Recent Accounting Pronouncements

- Definition

Disclosure of accounting policy for income taxes, which may include its accounting policies for recognizing and measuring deferred tax assets and liabilities and related valuation allowances, recognizing investment tax credits, operating loss carryforwards, tax credit carryforwards, and other carryforwards, methodologies for determining its effective income tax rate and the characterization of interest and penalties in the financial statements.

+ References + Details

Summary of Significant Accounting Policies (Tables)

9 Months Ended

Oct. 31, 2018

Summary of Significant Accounting Policies

Fair Value of Liabilities on a Recurring Basis

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


			Quoted Prices in		Significant Other		Significant
	Total Fair		Active Markets		Observable Inputs		Unobservable Inputs
	Value		(Level 1)		(Level 2)		(Level 3)
At October 31, 2018
Royalty liability (1) (3)	$	890,000	$	—	$	—	$	890,000

At January 31, 2018
Royalty liability (1) (2)	$	2,469,000	$	—	$	—	$	2,469,000

(1)

(2)

Schedule of Adoption of New Accounting Standard

The cumulative effect of changes related to the adoption of ASC 606 are reflected in the opening balance of accumulated deficit as shown below:


	As Reported January 31, 2018		Adjustments due to ASC 606		As Adjusted February 1, 2018
ASSETS
Contract receivables, current	$	224,000	$	283,000	$	507,000
Contract receivables, noncurrent		—		468,000		468,000

LIABILITIES
Deferred revenues, current		9,482,000		(689,000)		8,793,000

STOCKHOLDERS' EQUITY
Accumulated deficit	$	(72,125,000)	$	1,440,000	$	(70,685,000)

The adoption of the new standard has the following impact to the Company’s condensed consolidated statements of operations:


	Nine Months Ended October 31, 2018
	As reported under ASC 606		Balances without adoption of ASC 606		Adjustments due to ASC 606
Revenues
Systems sales	$	1,827,000	$	2,500,000	$	(673,000)
Maintenance and support		9,577,000		9,585,000		(8,000)


	As of October 31, 2018
	As reported under ASC 606		Balances without adoption of Topic 606		Adjustments due to ASC 606
Assets
Contract receivables, current	$	1,232,000	$	805,000	$	427,000
Contract receivables, noncurrent		615,000		43,000		572,000

Liabilities
Deferred revenues, current		5,846,000		5,962,000		(116,000)

Shareholders' Equity
Accumulated deficit	$	(73,455,000)	$	(74,570,000)	$	1,115,000

Schedule of Disaggregated Revenue

The following table provides information about disaggregated revenue by type and nature of revenue stream:


	Nine Months Ended October 31, 2018
	Recurring Revenue		Non-recurring Revenue		Total
Systems sales	$	397,000	$	1,430,000	$	1,827,000
Professional services		—		1,086,000		1,086,000
Audit services		—		841,000		841,000
Maintenance and support		9,577,000		—		9,577,000
Software as a service		3,569,000		—		3,569,000
Total revenue:	$	13,543,000	$	3,357,000	$	16,900,000

Schedule of Earnings Per Share, Basic and Diluted

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


	Three Months Ended
	October 31, 2018		October 31, 2017
Net earnings (loss)	$	(678,510)	$	3,489
Weighted average shares outstanding - Basic		19,753,074		19,985,822
Stock options, restricted stock, Series A Convertible Preferred Stock and warrants		—		3,082,601
Weighted average shares outstanding - Diluted		19,753,074		23,068,423
Basic net earnings (loss) per share of common stock	$	(0.03)	$	0.00
Diluted net earnings (loss) per share of common stock	$	(0.03)	$	0.00


	Nine Months Ended
	October 31, 2018		October 31, 2017
Net loss	$	(2,769,417)	$	(3,137,084)
Weighted average shares outstanding - Basic		19,903,529		19,838,691
Stock options, restricted stock, Series A Convertible Preferred Stock and warrants		—		—
Weighted average shares outstanding - Diluted		19,903,529		19,838,691
Basic net loss per share of common stock	$	(0.14)	$	(0.16)
Diluted net loss per share of common stock	$	(0.14)	$	(0.16)

Leases (Tables)

9 Months Ended

Oct. 31, 2018

Leases

Schedule of Future Minimum Lease Payment

Future minimum lease payments under non-cancelable operating leases for the next five fiscal years are as follows:


	Facilities		Equipment		Fiscal Year Totals
2018 (three months remaining)	$	168,000	$	2,000	$	170,000
2019		632,000		7,000		639,000
2020		116,000		7,000		123,000
2021		—		7,000		7,000
2022		—		7,000		7,000
Thereafter		—		4,000		4,000
Total	$	916,000	$	34,000	$	950,000

Debt (Tables)

9 Months Ended

Oct. 31, 2018

Debt

Minimum Trailing Four Quarter Period EBITDA Covenant Thresholds

The following table shows our minimum EBITDA covenant thresholds, as modified by the fourth amendment to the Credit Agreement entered into as of November 20, 2018:


Applicable period	Minimum EBITDA
For the fiscal quarter ending October 31, 2018	$	(509,000)
For the 2-quarter period ending January 31, 2019		20,000
For the 3-quarter period ending April 30, 2019		204,000
For the 4-quarter period ending July 31, 2019		180,000
For the 4-quarter period ending October 31, 2019		508,000
For the 4-quarter period ending January 31, 2020		408,000
For the 4-quarter period ending April 30, 2020 and each fiscal quarter thereafter		562,000

Summary of Term Loan and Line of Credit

Outstanding principal balances on debt consisted of the following at:


	October 31, 2018		January 31, 2018
Senior term loan	$	4,179,000	$	4,626,000
Capital lease (1)		63,000		—
Total		4,242,000		4,626,000
Deferred financing cost		(75,000)		(128,000)
Total		4,167,000		4,498,000
Less: Current portion		(619,000)		(597,000)
Non-current portion of debt	$	3,548,000	$	3,901,000

(1)

The current and non-current portions of our capital lease obligation are included in other current and other non-current liabilities, respectively.

Schedule of Future Minimum Lease Payments for Debt and Capital Leases

Future principal repayments of debt consisted of the following at October 31, 2018:


Fiscal year	Senior Term Loan (1)		Capital Lease (2)		Total
2018	$	149,000	$	6,000	$	155,000
2019		4,030,000		22,000		4,052,000
2020		—		22,000		22,000
2021		—		13,000		13,000
Total repayments	$	4,179,000	$	63,000	$	4,242,000

Term loan balance on the condensed consolidated balance sheet is reported net of deferred financing costs of $75,000.

- Definition

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
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-Section S99
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Reference 2: http://www.xbrl.org/2003/role/presentationRef
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Reference 3: http://www.xbrl.org/2003/role/presentationRef
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Reference 4: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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-Paragraph 1
-Subparagraph (SX 210.4-08.(e),(f))
-URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690

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-Name Accounting Standards Codification
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-SubTopic 30
-Section 55
-Paragraph 8
-URI http://asc.fasb.org/extlink&oid=64930739&loc=d3e28878-108400

Reference 6: http://www.xbrl.org/2003/role/presentationRef
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Reference 7: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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Reference 8: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
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Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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-URI http://asc.fasb.org/extlink&oid=64930785&loc=d3e28551-108399

Reference 10: http://www.xbrl.org/2003/role/presentationRef
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-Name Accounting Standards Codification
-Topic 505
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-URI http://asc.fasb.org/extlink&oid=84159872&loc=d3e21521-112644

+ Details

Summary of Significant Accounting Policies - Fair Value of Liabilities (Details) - USD ($) $ in Thousands	Oct. 31, 2018	Jan. 31, 2018
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Royalty liability	$ 890	$ 2,469
Quoted Prices in Active Markets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Royalty liability	0	0
Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Royalty liability	0	0
Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Royalty liability	$ 890	$ 2,469

Summary of Significant Accounting Policies - Narrative (Details) - USD ($)	3 Months Ended		9 Months Ended
	Oct. 31, 2018	Oct. 31, 2017	Oct. 31, 2018	Oct. 31, 2017	Feb. 01, 2018	Jan. 31, 2018
Class of Stock [Line Items]
Deferred professional costs	$ 262,000		$ 262,000			$ 471,000
Accumulated amortization of deferred costs	531,000		531,000			312,000
Amortization of deferred costs	101,000	$ 51,000	294,000	$ 177,000
Revenue recognized			7,558,000
Share-based compensation expense	125,000	$ 290,000	492,298	844,960
Cost of shares for tax withholding			62,291	$ 41,813
Reserves for uncertain tax positions and corresponding interest and penalties	$ 329,000		$ 329,000			$ 286,000
ASU 2014-09 \| Retained Earnings
Class of Stock [Line Items]
Cumulative effect of new accounting principle in period of adoption					$ 1,400,000
Restricted Stock
Class of Stock [Line Items]
Antidilutive securities (in shares)			469,996	821,587
Stock Option
Class of Stock [Line Items]
Antidilutive securities (in shares)	1,612,990	2,239,047	1,612,990	2,239,047
Warrant
Class of Stock [Line Items]
Antidilutive securities (in shares)		1,400,000		1,400,000
Series A Preferred Stock
Class of Stock [Line Items]
Convertible redeemable preferred stock, shares outstanding (in shares)	2,895,464		2,895,464			2,949,995
Number of common shares for each convertible preferred share (in shares)	1		1
Restricted Stock
Class of Stock [Line Items]
Shares surrendered for tax withholding (in shares)			37,249
Cost of shares for tax withholding			$ 62,000
Minimum \| Restricted Stock
Class of Stock [Line Items]
Service period (in years)			1 year
Maximum \| Restricted Stock \| Restricted Stock
Class of Stock [Line Items]
Service period (in years)			4 years

Summary of Significant Accounting Policies - Impact on Statements of Operations From Adoption of New Accounting Standard (Details) - USD ($)	3 Months Ended		9 Months Ended
	Oct. 31, 2018	Oct. 31, 2017	Oct. 31, 2018	Oct. 31, 2017
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
System sales	$ 309,522	$ 348,526	$ 1,827,071	$ 1,055,941
Maintenance and support	$ 3,051,260	$ 3,250,229	9,576,615	$ 9,883,563
Balances without adoption of ASC 606
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
System sales			2,500,000
Maintenance and support			9,585,000
ASU 2014-09 \| Adjustments due to ASC 606
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
System sales			(673,000)
Maintenance and support			$ (8,000)

Summary of Significant Accounting Policies - Disaggregation of Revenue (Details) - USD ($)	3 Months Ended		9 Months Ended
	Oct. 31, 2018	Oct. 31, 2017	Oct. 31, 2018	Oct. 31, 2017
Disaggregation of Revenue [Line Items]
System sales	$ 309,522	$ 348,526	$ 1,827,071	$ 1,055,941
Professional services	576,682	801,771	1,086,117	1,793,618
Audit services	233,561	280,025	841,117	919,485
Maintenance and support	3,051,260	3,250,229	9,576,615	9,883,563
Software as a service	1,197,552	1,718,748	3,569,562	4,586,532
Total revenues	$ 5,368,577	$ 6,399,299	16,900,482	$ 18,239,139
Content Management
Disaggregation of Revenue [Line Items]
System sales			397,000
Professional services			0
Audit services			0
Maintenance and support			9,577,000
Software as a service			3,569,000
Total revenues			13,543,000
Financial Management
Disaggregation of Revenue [Line Items]
System sales			1,430,000
Professional services			1,086,000
Audit services			841,000
Maintenance and support			0
Software as a service			0
Total revenues			3,357,000
Coding & CDI
Disaggregation of Revenue [Line Items]
System sales			1,827,000
Professional services			1,086,000
Audit services			841,000
Maintenance and support			9,577,000
Software as a service			3,569,000
Total revenues			$ 16,900,000

Summary of Significant Accounting Policies - Impact on the Balance Sheets From Adoption of New Accounting Standard (Details) - USD ($)	Oct. 31, 2018	Feb. 01, 2018	Jan. 31, 2018
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Contract receivables, current	$ 1,231,969	$ 507,000	$ 223,791
Contract receivables, noncurrent	614,725	468,000	0
Deferred revenues	5,845,779	8,793,000	9,481,807
Accumulated deficit	(73,454,534)	(70,685,000)	(72,125,065)
Balances without adoption of ASC 606
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Contract receivables, current	805,000		224,000
Contract receivables, noncurrent	43,000		0
Deferred revenues	5,962,000		9,482,000
Accumulated deficit	(74,570,000)		$ (72,125,000)
Adjustments due to ASC 606 \| ASU 2014-09
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Contract receivables, current	427,000	283,000
Contract receivables, noncurrent	572,000	468,000
Deferred revenues	(116,000)	(689,000)
Accumulated deficit	$ 1,115,000	$ 1,440,000

- Definition

The carrying amount of consideration received or receivable as of the balance sheet date on potential earnings that were not recognized as revenue in conformity with GAAP, and which are expected to be recognized as such within one year or the normal operating cycle, if longer, including sales, license fees, and royalties, but excluding interest income.

+ References + Details

Summary of Significant Accounting Policies - Revenue Performance Obligations (Details) $ in Millions	9 Months Ended
	Oct. 31, 2018 USD ($)
Summary of Significant Accounting Policies
Remaining performance obligations	$ 26
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-11-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Percentage of remaining performance obligation to be recognized over the next 12 months	71.00%
Period in which remaining performance obligation is expected to be satisfied	1 year

Summary of Significant Accounting Policies - Loss Per Share (Details) - USD ($)	3 Months Ended		9 Months Ended
	Oct. 31, 2018	Oct. 31, 2017	Oct. 31, 2018	Oct. 31, 2017
Summary of Significant Accounting Policies
Net earnings (loss)	$ (678,510)	$ 3,489	$ (2,769,417)	$ (3,137,084)
Weighted average number of common shares - basic (in shares)	19,753,074	19,985,822	19,903,529	19,838,691
Stock options, restricted stock, Series A Convertible Preferred Stock and warrants (in shares)	0	3,082,601
Weighted average shares outstanding - Diluted (in shares)	19,753,074	23,068,423	19,903,529	19,838,691
Basic net earnings (loss) per common stock (in dollars per share)	$ (0.03)	$ 0.00	$ (0.14)	$ (0.16)
Diluted net earnings (loss) per common stock (in dollars per share)	$ (0.03)	$ 0.00	$ (0.14)	$ (0.16)

Acquisitions and Divestitures - Narrative (Details) - USD ($)	Jul. 01, 2018	Oct. 25, 2013	Oct. 31, 2018	Jan. 31, 2018
Business Acquisition [Line Items]
Royalty liability			$ 889,654	$ 2,469,193
Royalty liability			$ 890,000	$ 2,469,000
Montefiore Medical Center
Business Acquisition [Line Items]
Proprietary lease term (in years)		15 years
Royalty fee		$ 3,000,000
Additional payment	$ 1,000,000	$ 3,000,000
Maintenance term	24 months
Periodic royalty payment, term (in years)		6 years 6 months

Leases (Details) - USD ($)	3 Months Ended			9 Months Ended
Leases (Details) - USD ($)	Oct. 31, 2018	Jul. 31, 2018	Oct. 31, 2017	Oct. 31, 2018	Oct. 31, 2017	Jan. 31, 2018
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
2018 (three months remaining)	$ 170,000			$ 170,000
2019	639,000			639,000
2020	123,000			123,000
2021	7,000			7,000
2022	7,000			7,000
Thereafter	4,000			4,000
Total	950,000			950,000
Loss on exit of operating lease	561,898	$ (806,000)		1,368,061
Total sublease rentals to be received	288,000			288,000
Rent expense	191,000		$ 295,000	994,000	$ 920,000
Capital lease obligations	63,000			63,000		$ 0
Facilities
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
2018 (three months remaining)	168,000			168,000
2019	632,000			632,000
2020	116,000			116,000
2022	0			0
Total	916,000			916,000
Equipment
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
2018 (three months remaining)	2,000			2,000
2019	7,000			7,000
2020	7,000			7,000
2021	7,000			7,000
2022	7,000			7,000
Thereafter	4,000			4,000
Total	34,000			34,000
Capital lease, cost	67,000			67,000
Capital lease, accumulated depreciation	$ 17,000			$ 17,000

Debt - Narrative (Details) - USD ($)		1 Months Ended	9 Months Ended
Debt - Narrative (Details) - USD ($)	Apr. 15, 2015	Nov. 30, 2014	Oct. 31, 2018	Nov. 21, 2014
Revolving Credit Facility
Debt Instrument [Line Items]
Line of credit amount outstanding			$ 0
Commitment fee in connection with the term loan			3,000
Credit Agreement
Debt Instrument [Line Items]
Repayments of debt		$ 7,400,000
Amortization of financing costs	$ 355,000
Credit Agreement \| Senior Notes
Debt Instrument [Line Items]
Revolving line of credit				$ 10,000,000
Credit Agreement \| Revolving Credit Facility
Debt Instrument [Line Items]
Revolving line of credit			5,000,000	$ 5,000,000
LIBOR \| Credit Agreement \| Minimum
Debt Instrument [Line Items]
Basis spread on interest rate (as a percent)	4.25%
LIBOR \| Credit Agreement \| Maximum
Debt Instrument [Line Items]
Basis spread on interest rate (as a percent)	6.25%
Base Rate \| Credit Agreement \| Minimum
Debt Instrument [Line Items]
Basis spread on interest rate (as a percent)	3.25%
Base Rate \| Credit Agreement \| Maximum
Debt Instrument [Line Items]
Basis spread on interest rate (as a percent)	5.25%
Current to January 31, 2018
Debt Instrument [Line Items]
Minimum liquidity			5,000,000
February 1, 2018 through November 19, 2018
Debt Instrument [Line Items]
Minimum liquidity			4,000,000
November 20, 2018 through January 31, 2019
Debt Instrument [Line Items]
Minimum liquidity			3,500,000
February 1, 2019 through maturity date
Debt Instrument [Line Items]
Minimum liquidity			$ 4,000,000

Debt - EBITDA Covenant Thresholds (Details) - Credit Agreement	9 Months Ended
	Oct. 31, 2018 USD ($)
October 31, 2018
Debt Instrument [Line Items]
Debt covenant, minimum EBITDA	$ (509,000)
January 31, 2019
Debt Instrument [Line Items]
Debt covenant, minimum EBITDA	20,000
April 30, 2019
Debt Instrument [Line Items]
Debt covenant, minimum EBITDA	204,000
July 31, 2019
Debt Instrument [Line Items]
Debt covenant, minimum EBITDA	180,000
October 31, 2019
Debt Instrument [Line Items]
Debt covenant, minimum EBITDA	508,000
January 31, 2020
Debt Instrument [Line Items]
Debt covenant, minimum EBITDA	408,000
April 30, 2020 and each fiscal quarter thereafter
Debt Instrument [Line Items]
Debt covenant, minimum EBITDA	$ 562,000

Debt - Summary of Term Loan and Line of Credit (Details) - USD ($)	Oct. 31, 2018	Jan. 31, 2018
Debt Instrument [Line Items]
Capital lease	$ 63,000	$ 0
Total	4,242,000	4,626,000
Senior Notes
Debt Instrument [Line Items]
Long-term debt	4,179,000	4,626,000
Deferred financing cost	(75,000)	(128,000)
Total	4,167,000	4,498,000
Less: Current portion	619,000	597,000
Non-current portion of debt	$ 3,548,000	$ 3,901,000

Debt - Schedule of Future Principal Repayments of Long-Term Debt (Details) - USD ($) $ in Thousands	Oct. 31, 2018	Jan. 31, 2018
Capital Lease
2018	$ 6
2019	22
2020	22
2021	13
Total	63
Total
2018	155
2019	4,052
2020	22
2021	13
Total	4,242	$ 4,626
Senior Notes
Senior Term Loan
2018	149
2019	4,030
Total	4,179	4,626
Total
Deferred finance costs	$ 75	$ 128

Convertible Preferred Stock (Details) - Series A Preferred Stock	9 Months Ended
	Oct. 31, 2018 $ / shares shares
Class of Stock [Line Items]
Preferred stock, shares issued (in shares) \| shares	2,895,464
Number of common shares for each convertible preferred share (in shares) \| shares	1
Maximum period of conversion (in days)	10 days
Minimum share price (in dollars per share) (greater than) \| $ / shares	$ 8.00
Average daily trading volume period prior to measurement date (in days)	60 days
Average daily trading volume minimum shares (in shares) \| shares	100,000
Price per share at time of conversion (in dollars per share) \| $ / shares	$ 3.00
Shares issued, price per share (in dollars per share) \| $ / shares	$ 3.00

Income Taxes (Details) - USD ($)	9 Months Ended
Income Taxes (Details) - USD ($)	Oct. 31, 2018	Oct. 31, 2017
Income Taxes
Federal tax expense	$ 0	$ 0
State and local tax provisions	$ 5,000	$ 8,000

Subsequent Events (Details)	Nov. 27, 2018 USD ($)
Subsequent Event \| Revolving Credit Facility
Amount drawn on line of credit	$ 1,000,000

- Definition

The carrying value as of the balance sheet date of the current and noncurrent portions of long-term obligations drawn from a line of credit, which is a bank's commitment to make loans up to a specific amount. Examples of items that might be included in the application of this element may consist of letters of credit, standby letters of credit, and revolving credit arrangements, under which borrowings can be made up to a maximum amount as of any point in time conditional on satisfaction of specified terms before, as of and after the date of drawdowns on the line. Includes short-term obligations that would normally be classified as current liabilities but for which (a) postbalance sheet date issuance of a long term obligation to refinance the short term obligation on a long term basis, or (b) the enterprise has entered into a financing agreement that clearly permits the enterprise to refinance the short-term obligation on a long term basis and the following conditions are met (1) the agreement does not expire within 1 year and is not cancelable by the lender except for violation of an objectively determinable provision, (2) no violation exists at the BS date, and (3) the lender has entered into the financing agreement is expected to be financially capable of honoring the agreement.

+ References + Details