0001493152-21-009467 | 10-K | XBRL Viewer | Streamline Health Solutions INC

Cost of professional services

$ 11,346,000

$ 11,853,000

Operating expenses:

Cost of system sales

501,000

1,004,000

1,040,000

1,548,000

Cost of audit services

1,558,000

1,255,000

Cost of maintenance and support

684,000

676,000

Cost of software as a service

1,906,000

868,000

Selling, general and administrative expense

8,565,000

9,606,000

Research and development

2,933,000

2,690,000

Executive transition cost

789,000

Rationalization charges

388,000

Transaction costs

230,000

Loss on exit of membership agreement

105,000

Total operating expenses

17,292,000

19,054,000

Operating loss

(5,946,000)

(7,201,000)

Other expense:

Interest expense

(51,000)

(309,000)

Loss on early extinguishment of debt

(150,000)

Miscellaneous expense

(62,000)

(216,000)

Loss from continuing operations before income taxes

(6,059,000)

(7,876,000)

Income tax benefit

1,260,000

1,632,000

Loss from continuing operations

(4,799,000)

(6,244,000)

Income from discontinued operations:

Gain on sale of discontinued operations

6,013,000

Income from discontinued operations

356,000

5,035,000

Income tax expense

(1,274,000)

(1,654,000)

Income from discontinued operations, net of tax

5,095,000

3,381,000

Net income (loss)

296,000

(2,863,000)

Add: Redemption of Series A Preferred Stock

4,894,000

Net income from continuing operations attributable to common stockholders

$ 296,000

$ 2,031,000

Basic Earnings Per Share:

Continuing operations

$ (0.16)

$ (0.06)

Discontinued operations

0.17

0.14

Net income

$ 0.01

$ 0.08

Weighted average number of common shares - basic

^[1]

30,152,383

22,739,679

Diluted Earnings Per Share:

Continuing operations

^[2],[3]

$ (0.16)

$ (0.27)

Discontinued operations

0.17

0.13

Net income (loss) per common share - diluted

$ 0.01

$ (0.14)

Weighted average number of common shares - diluted

30,640,742

25,083,061

System Sales [Member]

Revenues:

Professional Services [Member]

$ 590,000

$ 1,121,000

Revenues:

618,000

1,163,000

Audit Services [Member]

Revenues:

Maintenance and Support [Member]

1,891,000

1,712,000

Revenues:

Software as a Service [Member]

4,586,000

5,356,000

Revenues:

$ 3,661,000

$ 2,501,000

[1]	Excludes the effect of unvested restricted shares of common stock, which are considered non-participating securities. As of January 31, 2021 and 2020, there were 931,125 and 803,498 unvested restricted shares of common stock, respectively.
[2]	Diluted EPS for our common stock was computed using the if-converted method, which yields the same result as the two-class method. The two-class method has not been used in the current period as a result of the redemption of the participating securities.
[3]	Diluted net loss per share excludes the effect of shares that are anti-dilutive. As of January 31, 2021, there were zero outstanding shares of Series A Convertible Preferred Stock, 625,830 outstanding stock options and 931,125 unvested restricted shares of common stock. As of January 31, 2020, there were zero outstanding shares of Series A Convertible Preferred Stock, 798,603 outstanding stock options and 803,498 unvested restricted shares of common stock.

Consolidated Statements of Changes in Stockholders' Equity - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Deficit [Member]	Total
Balance at Jan. 31, 2019	$ 208,000	$ 82,544,000	$ (76,550,000)	$ 6,202,000
Balance, shares at Jan. 31, 2019	20,767,708
Stock issued pursuant to ESPP		8,000		8,000
Stock issued pursuant to ESPP, shares	8,310
Restricted stock issued	$ 9,000	(9,000)
Restricted stock issued, shares	912,518
Restricted stock forfeited	$ (6,000)	6,000
Restricted stock forfeited, shares	(556,097)
Surrender of stock	$ (1,000)	(98,000)		(99,000)
Surrender of stock, shares	(75,487)
Issuance of common stock, net of $711,000 offering expenses	$ 95,000	8,857,000		8,952,000
Issuance of common stock, net of $711,000 offering expenses, shares	9,473,691
Share-based compensation expense		934,000		934,000
Stock Options repurchased		(18,000)		(18,000)
Capital contribution		16,000		16,000
Redemption of Series A Preferred Stock		2,873,000		2,873,000
Net income (loss)			(2,863,000)	(2,863,000)
Balance at Jan. 31, 2020	$ 305,000	95,113,000	(79,413,000)	16,005,000
Balance, shares at Jan. 31, 2020	30,530,643
Restricted stock issued	$ 14,000	(14,000)
Restricted stock issued, shares	1,395,917
Restricted stock forfeited	$ (2,000)	2,000
Restricted stock forfeited, shares	(166,490)
Surrender of stock	$ (1,000)	(255,000)		(256,000)
Surrender of stock, shares	(162,095)
Share-based compensation expense		1,444,000		1,444,000
Net income (loss)			296,000	296,000
Balance at Jan. 31, 2021	$ 316,000	$ 96,290,000	$ (79,117,000)	$ 17,489,000
Balance, shares at Jan. 31, 2021	31,597,975

Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) - USD ($)	12 Months Ended
	Jan. 31, 2021	Jan. 31, 2020
Statement of Stockholders' Equity [Abstract]
Offering expenses		$ 711,000

Consolidated Statements of Cash Flows - USD ($)	12 Months Ended
Consolidated Statements of Cash Flows - USD ($)	Jan. 31, 2021	Jan. 31, 2020
Cash flows from operating activities:
Net income (loss)	$ 296,000	$ (2,863,000)
LESS: Income from discontinued operations, net of tax	5,095,000	3,381,000
Loss from continuing operations, net of tax	(4,799,000)	(6,244,000)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	64,000	43,000
Amortization of capitalized software development costs	1,662,000	1,494,000
Amortization of intangible assets	491,000	554,000
Amortization of other deferred costs	359,000	480,000
Valuation adjustments	31,000	64,000
Loss on early extinguishment of debt		150,000
Provision for income taxes	(1,274,000)	(1,654,000)
Loss on exit of operating lease	105,000
Share-based compensation expense	1,403,000	934,000
Benefit for accounts receivable allowance	(31,000)	(201,000)
Changes in assets and liabilities:
Accounts and contract receivables	(253,000)	250,000
Other assets	(519,000)	(338,000)
Accounts payable	(484,000)	281,000
Accrued expenses	(592,000)	(580,000)
Deferred revenues	344,000	(942,000)
Net cash used in operating activities - continuing operations	(3,493,000)	(5,709,000)
Net cash (used in) provided by operating activities - discontinued operations	(2,264,000)	5,701,000
Cash flows from investing activities:
Purchases of property and equipment	(44,000)	(52,000)
Proceeds from sale of ECM assets	11,288,000
Capitalization of software development costs	(1,784,000)	(2,800,000)
Net cash provided by (used in) investing activities - continuing operations	9,460,000	(2,852,000)
Net cash used in investing activities - discontinued operations		(558,000)
Cash flows from financing activities:
Proceeds from issuance of common stock		9,663,000
Payments for costs directly attributable to the issuance of common stock		(711,000)
Proceeds from term loan		4,000,000
Principal payments on term loan		(4,030,000)
Repayment of bank term loan	(4,000,000)
Proceeds from term loan payable	2,301,000
Payments related to settlement of employee shared-based awards	(256,000)	(99,000)
Redemption of Series A Convertible Preferred Stock		(5,791,000)
Payment of deferred financing costs		(325,000)
Payment on royalty liability	(1,000,000)
Other	12,000	(16,000)
Net cash (used in) provided by financing activities - continuing operations	(2,943,000)	2,691,000
Net increase (decrease) in cash and cash equivalents	760,000	(727,000)
Cash and cash equivalents at beginning of period	1,649,000	2,376,000
Cash and cash equivalents at end of period	2,409,000	1,649,000
Supplemental cash flow disclosures:
Interest paid, net of amounts capitalized	17,000	337,000
Income taxes paid		$ 9,000

Organization and Description of Business

12 Months Ended

Jan. 31, 2021

Organization and Description of Business

NOTE 1 — ORGANIZATION AND DESCRIPTION OF BUSINESS

Streamline Health Solutions, Inc. and its subsidiary (“we”, “us”, “our”, “Streamline”, or the “Company”) operates in one segment as a provider of healthcare information technology solutions and associated services. The Company provides these capabilities through the licensing of its Coding & CDI, eValuator Coding Analysis Platform, Financial Management and Patient Care solutions and other workflow software applications and the use of such applications by software as a service (“SaaS”). The Company also provides audit services to help customers optimize their internal clinical documentation and coding functions, as well as implementation and consulting services to complement its software solutions. The Company’s software and services enable hospitals and integrated healthcare delivery systems in the United States and Canada to capture, store, manage, route, retrieve and process patient clinical, financial and other healthcare provider information related to the patient revenue cycle.

Fiscal Year

All references to a fiscal year refer to the fiscal year commencing February 1 in that calendar year and ending on January 31 of the following calendar year.

Significant Accounting Policies

12 Months Ended

Jan. 31, 2021

Significant Accounting Policies

NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The consolidated financial statements include the accounts of Streamline Health Solutions, Inc. and its wholly-owned subsidiary, Streamline Health, Inc. All significant intercompany transactions and balances are eliminated in consolidation. All amounts in the consolidated financial statements, notes and tables have been rounded to the nearest thousand dollars, except share and per share amounts, unless otherwise indicated.

The Company determined that it has one operating segment and one reporting unit due to the single nature of our products, product development, distribution process, and customer base as a provider of computer software-based solutions and services for healthcare providers.

On February 24, 2020, the Company sold a portion of its business (the ECM Assets). The Company signed the definitive agreement with respect to the sale of the ECM Assets in December 2019 and prepared and filed a proxy statement to obtain stockholder approval of the transaction. We applied the standard of ASC 205-20-1 to ascertain the timing of accounting for the discontinued operations. Based on ASC 205-20-1, the Company determined that it did not have the authority to sell the assets until the date of the stockholder approval, which was February 21, 2020. Accordingly, the Company did not present the ECM Assets as held for sale in previously filed financial statements. On February 21, 2020, the Company, having the authority and ability to consummate the sale of the ECM Assets, met the criteria to present discontinued operations as described in ASC 205-20-1. Accordingly, the Company is reporting the results of operations and cash flows, and related balance sheet items associated with the ECM Assets in discontinued operations in the accompanying consolidated statements of operations, cash flows and balance sheets for the current and comparative prior periods. Refer to Note 13 – Discontinued Operations for further details.

Use of Estimates

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

Reclassifications

Certain amounts in the preparation of financial statements for fiscal year 2020 resulted in reclassifications of fiscal year 2019 amounts, with a total of $47,000 current prepaid assets being reclassed to other non-current assets for deferred financing costs relating to the revolving credit agreement.

ASC 606-10-25-19(a) provides guidance on the presentation of revenue as it relates to identifying distinct performance obligations in contracts containing multiple deliverables. As the Company has begun to shift to a primarily SaaS solution, the professional services revenue related to implementation of SaaS contracts has grown. With this growth, and expected continued growth, of professional services which are not determined to be a distinct performance obligation for our SaaS contracts, we have reclassed SaaS professional services from professional services revenue and cost of sales on the consolidated statement of operations to Software as a Service revenue and cost of sales. For fiscal 2020 and fiscal 2019, the reclass of revenue was $95,000 and $41,000, respectively. For fiscal 2020 and fiscal 2019, the reclass of cost of sales was $111,000 and $85,000, respectively.

Cash and Cash Equivalents

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash demand deposits. Cash deposits are placed in Federal Deposit Insurance Corporation (“FDIC”) insured financial institutions. Cash deposits may exceed FDIC insured levels from time to time. For purposes of the consolidated balance sheets and consolidated statements of cash flows, the Company considers all highly-liquid investments purchased with an original maturity of three months or less to be cash equivalents.

Non-Cash Items

The Company had the following items that were non-cash items related to the consolidated statements of cash flows:

	Fiscal Year
	2020		2019
Escrowed funds from sale of ECM Assets	$	800,000		—
Right-of Use Assets from operating lease	$	540,000	$	—
Capitalized software purchased with stock (Note 12)		41,000		—

Receivables

Accounts and contract receivables are comprised of amounts owed to the Company for licensed software, professional services, including coding audit services, maintenance services, and software as a service and are presented net of the allowance for doubtful accounts. The timing of revenue recognition may not coincide with the billing terms of the customer contract, resulting in unbilled receivables or deferred revenues; therefore, certain contract receivables represent revenues recognized prior to customer billings. Individual contract terms with customers or resellers determine when receivables are due. Accounts receivable represent amounts that the entity has an unconditional right to consideration. For billings where the criteria for revenue recognition have not been met, deferred revenue is recorded until the Company satisfies the respective performance obligations.

Allowance for Doubtful Accounts

The Company adjusts accounts receivable down to net realizable value with its allowance methodology. In determining the allowance for doubtful accounts, aged receivables are analysed periodically by management. Each identified receivable is reviewed based upon the most recent information available and the status of any open or unresolved issues with the customer preventing the payment thereof. Corrective action, if necessary, is taken by the Company to resolve open issues related to unpaid receivables. During these periodic reviews, the Company determines the required allowances for doubtful accounts for estimated losses resulting from the unwillingness or inability of its customers or resellers to make required payments. The allowance for doubtful accounts was approximately $65,000 and $96,000 at January 31, 2021 and 2020, respectively. The Company believes that its reserve is adequate, however, results may differ in future periods.

Bad debt benefit for fiscal years 2020 and 2019 was as follows:

		2020				2019
Bad debt benefit		$	(31,000	)		$	(201,000	)

Concessions Accrual

In determining the concessions accrual, the Company evaluates historical concessions granted relative to revenue. The Company records a provision, reducing revenue, each period for the estimated amount of concessions incurred. The Company evaluates the amount of the provision and the concession accrual each period. The concession accrual included in accrued other expenses on the Company’s consolidated balance sheets was $99,000 and $44,000 as of January 31, 2021 and 2020, respectively.

Property and Equipment

Property and equipment are stated at cost. Depreciation is computed using the straight-line method, over the estimated useful lives of the related assets. Estimated useful lives are as follows:

Computer equipment and software		3-4 years
Office equipment		5 years
Office furniture and fixtures		7 years
Leasehold improvements		Term of lease or estimated useful life, whichever is shorter

Depreciation expense for property and equipment in fiscal 2020 and 2019 was $64,000 and $43,000, respectively.

Normal repairs and maintenance are expensed as incurred. Replacements are capitalized and the property and equipment accounts are relieved of the items being replaced or disposed of, if no longer of value. The related cost and accumulated depreciation of the disposed assets are eliminated and any gain or loss on disposition is included in the results of operations in the year of disposal.

Leases

We adopted ASC 842, Leases, on February 1, 2019 using the effective date transition method. Prior period balances were not adjusted upon adoption of this standard. We elected the group of practical expedients to forego assessing upon adoption: (1) whether any expired contracts are or contain leases; (2) the lease classification for any existing or expired leases; and (3) any indirect costs that would have qualified for capitalization for any existing leases. The adoption of the new standard resulted in the recording of a right-of-use asset of $175,000 and an operating lease liability of $464,000 as of February 1, 2019 and did not materially impact our consolidated results of operations and had no impact on cash flows.

We recognize operating lease cost on a straight-line basis by aggregating any rent abatement with the total expected rental payments and amortizing the expense ratably over the term of the lease. See Note 4 – Operating Leases for further details.

As of January 31, 2021 and 2020, the Company had no financing lease obligations.

Debt Issuance Costs

Costs related to the issuance of debt are capitalized and amortized to interest expense on a straight-line basis, which is not materially different from the effective interest method, over the term of the related debt. Deferred financing costs are presented on the Company’s consolidated balance sheets as a direct deduction from the carrying amount of the non-current portion of our term loan.

Impairment of Long-Lived Assets

The Company reviews the carrying value of long-lived assets for impairment whenever facts and circumstances exist that would suggest that assets might be impaired or that the useful lives should be modified. Among the factors the Company considers in making the evaluation are changes in market position and profitability. If facts and circumstances are present which may indicate that the carrying amount of the assets may not be recoverable, the Company will prepare a projection of the undiscounted cash flows of the specific asset or asset group and determine if the long-lived assets are recoverable based on these undiscounted cash flows. If impairment is indicated, an adjustment will be made to reduce the carrying amount of these assets to their fair values.

Capitalized Software Development Costs

Software development costs for software to be sold, leased, or marketed are accounted for in accordance with ASC 985-20, Software — Costs of Software to be Sold, Leased or Marketed. Costs associated with the planning and design phase of software development are classified as research and development costs and are expensed as incurred. Once technological feasibility has been established, a portion of the costs incurred in development, including coding, testing and quality assurance, are capitalized until available for general release to customers, and subsequently reported at the lower of unamortized cost or net realizable value. Amortization is calculated on a solution-by-solution basis and is included in Cost of system sales on the consolidated statements of operations. Annual amortization is measured at the greater of a) the ratio of the software product’s current gross revenues to the total of current and expected gross revenues or b) straight-line over the remaining economic life of the software (typically three to five years). Unamortized capitalized costs determined to be in excess of the net realizable value of a solution are expensed at the date of such determination. Capitalized software development costs for software to be sold, leased, or marketed, net of accumulated amortization, totalled $1,103,000 and $1,274,000 as of January 31, 2021 and 2020, respectively.

Internal-use software development costs are accounted for in accordance with ASC 350-40, Internal-Use Software. The costs incurred in the preliminary stages of development are expensed as research and development costs as incurred. Once an application has reached the development stage, internal and external costs incurred to develop internal-use software are capitalized and amortized on a straight-line basis over the estimated useful life of the software (typically three to five years). Maintenance and enhancement costs, including those costs in the post-implementation stages, are typically expensed as incurred, unless such costs relate to substantial upgrades and enhancements to the software that result in added functionality, in which case the costs are capitalized and amortized on a straight-line basis over the estimated useful life of the software. The Company reviews the carrying value for impairment whenever facts and circumstances exist that would suggest that assets might be impaired or that the useful lives should be modified. Amortization expense related to capitalized internal-use software development costs is included in Cost of software as a service on the consolidated statements of operations. Capitalized software development costs for internal-use software, net of accumulated amortization, totalled $4,842,000 and $4,509,000 as of January 31, 2021 and 2020, respectively.

The estimated useful lives of software (including software to be sold and internal-use software) are reviewed frequently and adjusted as appropriate to reflect upcoming development activities that may include significant upgrades and/or enhancements to the existing functionality. The Company reviews, on an on-going basis, the carrying value of its capitalized software development expenditures, net of accumulated amortization.

Amortization expense on all capitalized software development cost was $1,662,000 and $1,494,000 in fiscal 2020 and 2019, respectively. Further, the Company recognized an impairment of approximately $164,000 and $354,000 in fiscal 2020 and fiscal 2019, respectively, related to cancelled or abandoned enhancement projects during fiscal 2020 and fiscal 2019 that has been recognized within amortization expense. Additionally, in fiscal 2020, approximately $5,437,000 of fully amortized and abandoned assets, including previously acquired assets, were cleared from their corresponding capitalization and accumulated amortization balance sheet accounts.

The Company uses the “carry-over” method for amortizing capitalized software development costs. Under the “carry-over” method, the costs of the enhancements are added to the unamortized costs of the previous version of the product and the combined amount is amortized over the remaining useful life of the product. Including unamortized cost of the original product with the cost of the enhancement for purposes of applying the net realizable value test and amortization provisions is consistent with accounting guidance for software companies that improve their software and discontinue selling or marketing the older versions.

	Fiscal Year
	2020		2019
Amortization expense on internally-developed software included in:
Cost of systems sales	$	501,000	$	964,000
Cost of software as a service		1,148,000		517,000
Cost of audit services		13,000		13,000
Total amortization expense on internally-developed software	$	1,662,000	$	1,494,000

Interest capitalized to software development cost in fiscal 2020 and 2019 was $13,000 and $191,000, respectively. The interest capitalized to software development cost reduces the Company’s interest expense recognized in the consolidated statements of operations.

Research and development expense was $2,933,000 and $2,690,000 in fiscal 2020 and 2019, respectively.

Fair Value of Financial Instruments

The FASB’s 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. For fiscal 2019, the carrying amount of the Company’s long-term debt approximates fair value since the variable interest rates being paid on the amounts approximate the market interest rate. For fiscal 2019, 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 January 31, 2020

Royalty liability (1)

969,000

—

969,000

(1)

The fair value of the royalty liability was determined based on discounting the portion of the modified royalty commitment payable in cash. During fiscal 2020 and 2019, the Company recognized a fair value adjustment of $31,000 and $64,000, respectively. In fiscal 2020, the royalty liability was paid in full (refer to Note 12 – Commitments and Contingencies for additional information on our royalty liability). There were no changes to the fair value methods. Fair value adjustments are included within miscellaneous expense in the consolidated statements of operations.

The fair value of the PPP loan was determined based on discounting the loan amount as of January 31, 2021. The fair value using market rates the Company believes would be available for similar types of financial instruments would have resulted in a lower fair value of $2,206,000 as compared to the book value of $2,301,000, a reduction of $95,000.

Revenue Recognition

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

Often 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 defer recognition of the revenue until the performance obligation is satisfied. Maintenance and support and SaaS agreements are generally non-cancellable or contain significant penalties for early cancellation, although customers typically have the right to terminate their contracts for cause if we fail to perform material obligations. However, if non-standard acceptance periods, non-standard performance criteria, or cancellation or right of refund terms are required, revenue is recognized upon the satisfaction of such criteria.

The determined transaction price is allocated based on the standalone selling price of the performance obligations in contract. Significant judgment is required to determine the standalone selling price (“SSP”) for each performance obligation, the amount allocated to each performance obligation and whether it depicts the amount that the Company expects to receive in exchange for the related product and/or service. 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 goods or services promised in the agreements represent a single performance obligation. The conclusions reached can impact the allocation of the transaction price to each performance obligation and the timing of revenue recognition related to those arrangements.

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

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. Maintenance and support agreements entitle customers to technology support, version upgrades, bug fixes and service packs. We recognize maintenance and support revenue over the contract term.

Software-Based Solution Professional Services

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

Software as a Service

SaaS-based contracts include 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.

Audit Services

The Company provides technology-enabled coding audit services to help customers review and optimize their internal clinical documentation and coding functions across the applicable segment of the customer’s enterprise. Audit services are a separate performance obligation. We recognize revenue over time as the services are performed.

Disaggregation of Revenue

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

	Year Ended January 31, 2021
	Recurring Revenue		Non-recurring Revenue		Total
Systems sales	$	153,000	$	437,000	$	590,000
Professional services		—		618,000		618,000
Audit services		—		1,891,000		1,891,000
Maintenance and support		4,586,000		—		4,586,000
Software as a service		3,661,000		—		3,661,000
Total revenue:	$	8,400,000	$	2,946,000	$	11,346,000

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 year ended January 31, 2021, we recognized approximately $4.026 million in revenue from deferred revenues outstanding as of January 31, 2020. Revenue allocated to remaining performance obligations was $17.031 million as of January 31, 2021, of which the Company expects to recognize approximately 55.56% over the next 12 months and the remainder thereafter.

Deferred costs (costs to fulfill a contract and contract acquisition costs)

We defer the direct costs, which include salaries and benefits, for professional services related to SaaS contracts as a cost to fulfill a contract. These deferred costs will be amortized on a straight-line basis over the contractual term. As of January 31, 2021, and 2020, we had deferred costs of $168,000 and $140,000, respectively, net of accumulated amortization of $126,000 and $284,000, respectively. Amortization expense of these costs was $125,000 and $227,000 in fiscal 2020 and 2019, respectively. There were no impairment losses for these capitalized costs for the fiscal years 2020 and 2019. In fiscal 2020, the deferred cost to fulfill a contract and the associated accumulated amortization accounts were reduced by $283,000 for projects with fully amortized costs.

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

Deferred commissions costs paid and payable, which are included on the consolidated balance sheets within other non-current assets totalled $666,000 and $394,000, respectively, as of January 31, 2021 and 2020. In fiscal 2020 and 2019, $206,000 and $150,000, respectively, in amortization expense associated with deferred sales commissions was included in selling, general and administrative expenses on the consolidated statements of operations. There were no impairment losses for these capitalized costs for the years ended January 31, 2021 and 2020.

Concentrations

Financial instruments, which potentially expose the Company to concentrations of credit risk, consist primarily of accounts receivable. The Company’s accounts receivable are concentrated in the healthcare industry. However, the Company’s customers typically are well-established hospitals, medical facilities or major health information systems companies with good credit histories that resell the Company’s solutions. Payments from customers have been received within normal time frames for the industry. However, some hospitals and medical facilities have experienced significant operating losses as a result of limits on third-party reimbursements from insurance companies and governmental entities and extended payment of receivables from these entities is not uncommon.

To date, the Company has relied on a limited number of customers and remarketing partners for a substantial portion of its total revenues. The Company expects that a significant portion of its future revenues will continue to be generated by a limited number of customers and its remarketing partners.

Goodwill and Intangible Assets

Goodwill and other intangible assets were recognized in conjunction with the Interpoint, Meta, CLG and Opportune IT acquisitions, as well as the Unibased acquisition (prior to divestiture of such assets). Identifiable intangible assets include purchased intangible assets with finite lives, which primarily consist of internally-developed software and customer relationships. Finite-lived purchased intangible assets are amortized over their expected period of benefit, which generally ranges from one to 10 years, using the straight-line and undiscounted expected future cash flows methods.

The Company assesses the useful lives and possible impairment of intangible assets when an event occurs that may trigger such a review. Factors considered important which could trigger a review include:

	●	significant underperformance relative to historical or projected future operating results;

	●	significant changes in the manner of use of the acquired assets or the strategy for the overall business;

	●	identification of other impaired assets within a reporting unit;

	●	disposition of a significant portion of an operating segment;

	●	significant negative industry or economic trends;

	●	significant decline in the Company’s stock price for a sustained period; and

	●	a decline in the market capitalization relative to the net book value.

Determining whether a triggering event has occurred involves significant judgment by the Company.

The Company assesses goodwill annually (as of November 1), or more frequently when events and circumstances, such as the ones mentioned above, occur indicating that the recorded goodwill may be impaired. During the years ended January 31, 2021 and 2020, the Company did not note any of the above qualitative factors, which would be considered a triggering event for goodwill impairment. In assessing qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company assesses relevant events and circumstances that may impact the fair value and the carrying amount of a reporting unit. The identification of relevant events and circumstances and how these may impact a reporting unit’s fair value or carrying amount involve significant judgments by management. These judgments include the consideration of macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, events which are specific to the Company and trends in the market price of the Company’s common stock. Each factor is assessed to determine whether it impacts the impairment test positively or negatively, and the magnitude of any such impact.

Reporting units are determined based on the organizational structure the entity has in place at the date of the impairment test. A reporting unit is an operating segment or component business unit with the following characteristics: (a) it has discrete financial information, (b) segment management regularly reviews its operating results (generally an operating segment has a segment manager who is directly accountable to and maintains regular contact with the chief operating decision maker to discuss operating activities, financial results, forecasts or plans for the segment), and (c) its economic characteristics are dissimilar from other units (this contemplates the nature of the products and services, the nature of the production process, the type or class of customer for the products and services and the methods used to distribute the products and services). The Company determined that it has one operating segment and one reporting unit.

The Company estimates the fair value of its reporting unit using a blend of market and income approaches. The market approach consists of two separate methods, including reference to the Company’s market capitalization, as well as the guideline publicly traded company method. The market capitalization valuation method is based on an analysis of the Company’s stock price on and around the testing date, plus a control premium. The guideline publicly traded company method was made by reference to a list of publicly traded software companies providing services to healthcare organizations, as determined by management. The market value of common equity for each comparable company was derived by multiplying the price per share on the testing date by the total common shares outstanding, plus a control premium. Selected valuation multiples are then determined and applied to appropriate financial statistics based on the Company’s historical and forecasted results. The Company estimates the fair value of its reporting unit using the income approach, via discounted cash flow valuation models which include, but are not limited to, assumptions such as a “risk-free” rate of return on an investment, the weighted average cost of capital of a market participant and future revenue, operating margin, working capital and capital expenditure trends. Determining the fair value of reporting unit and goodwill includes significant judgment by management, and different judgments could yield different results.

The Company performed its annual assessment of goodwill during the fourth quarter of fiscal 2020, using the approach described above. Based on the analysis performed, the fair value of the reporting unit exceeded the carrying amount of the reporting unit, including goodwill, and, therefore, a goodwill impairment loss was not recognized.

Equity Awards

The Company accounts for share-based payments based on the grant-date fair value of the awards with compensation cost recognized as expense over the requisite service period. For awards to non-employees, the Company recognizes compensation expense in the same manner as if the entity had paid cash for the goods or services. The Company incurred total annual compensation expense related to stock-based awards of $1,444,000 and $934,000 in fiscal 2020 and 2019, respectively.

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

The Company issues restricted stock awards in the form of Company common stock. The fair value of these awards is based on the market close price per share on the grant date. The Company expenses the compensation cost of these awards as the restriction period lapses, which is typically a one- to four-year service period to the Company. In fiscal 2020 and 2019, 162,095 and 75,487 shares of common stock were surrendered to the Company to satisfy tax withholding obligations totalling $256,000 and $99,000, respectively, 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 cancelled, and therefore are not available to be reissued. The Company awarded 748,245 and 862,518 shares of restricted stock to officers and directors of the Company in fiscal 2020 and 2019, respectively.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and for tax credit and loss carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. In assessing net deferred tax assets, the Company considers whether it is more likely than not that some or all of the deferred tax assets will not be realized. The Company establishes a valuation allowance when it is more likely than not that all or a portion of deferred tax assets will not be realized. See Note 7 - Income Taxes for further details.

The Company provides for uncertain tax positions and the related interest and penalties based upon management’s assessment of whether certain tax positions are more likely than not to be sustained upon examination by tax authorities. At January 31, 2021, the Company believes it has appropriately accounted for any uncertain tax positions.

Net Loss Per Common Share

The Company presents basic and diluted earnings per share (“EPS”) data for our common stock. Our Series A Convertible Preferred Stock were considered participating securities under ASC 260, Earnings Per Share (“ASC 260”), which means the security may participate in undistributed earnings with common stock. The holders of the Series A Convertible Preferred Stock were 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, the Company is required to use the two-class method when computing EPS. 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 (with the exception of the gain on the redemption of our Series A Convertible Preferred Stock, which was allocated in its entirety to the common stock).

Our unvested restricted stock awards are considered non-participating securities because holders are not entitled to non-forfeitable rights to dividends or dividend equivalents during the vesting term. In accordance with ASC 260, securities are deemed not to be participating in losses if there is no obligation to fund such losses. The Series A Convertible Preferred Stock does not participate in losses, and as a result, the Company does not allocate losses to these securities in periods of loss. Diluted EPS for our common stock is computed using the more dilutive of the two-class method or the “if-converted” and treasury stock methods. See Note 3 – Preferred Stock for further discussion of the redemption of our Series A Convertible Preferred Stock.

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

	Fiscal Year
	2020			2019
Basic earnings (loss) per share:
Continuing operations
Loss from continuing operations, net of tax	$	(4,799,000	)	$	(6,244,000	)
Add: Redemption of Series A Preferred Stock		—			4,894,000
Net loss from continuing operations	$	(4,799,000	)	$	(1,350,000	)
Basic net loss per share of common stock from continuing operations	$	(0.16	)	$	(0.06	)

Discontinued operations
Gain from discontinued operations, net of tax	$	5,095,000		$	3,381,000
Less: Allocation of earnings to participating securities		—			(281,000	)
Income available to common stockholders from discontinued operations	$	5,095,000		$	3,100,000
Basic net earnings per share of common stock from discontinued operations	$	0.17		$	0.14

Diluted earnings (loss) per share (1):
Continuing operations
Loss available to common stockholders from continuing operations	$	(4,799,000	)	$	(6,244,000	)
Diluted net loss per share of common stock from continuing operations (3)	$	(0.16	)	$	(0.27	)

Discontinued operations
Income available to common stockholders from discontinued operations	$	5,095,000		$	3,381,000
Diluted net earnings per share of common stock from discontinued operations	$	0.17		$	0.13

Net income	$	296,000		$	2,031,000

Weighted average shares outstanding - Basic (2)		30,152,383			22,739,679
Effect of dilutive securities - Stock options, Restricted stock and Series A Convertible Preferred Stock (3)		488,359			2,343,382
Weighted average shares outstanding – Diluted		30,640,742			25,083,061
Basic net income per share of common stock	$	0.01		$	0.08
Diluted net income (loss) per share of common stock	$	0.01		$	(0.14	)

	(1)	Diluted EPS for our common stock was computed using the if-converted method, which yields the same result as the two-class method. The two-class method has not been used in the current period as a result of the redemption of the participating securities.

	(2)	Excludes the effect of unvested restricted shares of common stock, which are considered non-participating securities. As of January 31, 2021 and 2020, there were 931,125 and 803,498 unvested restricted shares of common stock, respectively.

	(3)	Diluted net loss per share excludes the effect of shares that are anti-dilutive. As of January 31, 2021, there were zero outstanding shares of Series A Convertible Preferred Stock, 625,830 outstanding stock options and 931,125 unvested restricted shares of common stock. As of January 31, 2020, there were zero outstanding shares of Series A Convertible Preferred Stock, 798,603 outstanding stock options and 803,498 unvested restricted shares of common stock.

Other Operating Costs

Executive Transition Costs

We recorded $789,000 in cost related to replacing the Company’s CEO in the fiscal year ended January 31, 2020. These costs included placement fees, retention bonuses for existing key personnel and certain required consulting costs. Each of these costs were directly attributable to the successful placement of our new CEO with the Company.

Rationalization Charges

In the fourth quarter of fiscal 2019, we implemented a rationalization plan to make the operation of the Company more efficient and for the purpose of aligning its personnel needs and capital requirements with the sale of the ECM Assets. The rationalization plan included a reduction in workforce of approximately twenty (20) employees, or approximately twenty percent (20%) of the Company’s total workforce. As a result of the rationalization plan, the Company recorded $388,000 in one-time severance and other employee termination-related costs that was recorded within accrued expenses in fiscal 2019 and was paid in fiscal 2020. The Company did not incur, in fiscal 2020, any other significant charges as a result of the rationalization plan.

Transaction Costs

The Company incurred approximately $230,000 of legal and accounting cost in conjunction with the Company’s immaterial correction of an error in the prior year. These costs were necessary to file the Company’s Quarterly Report on Form 10-Q for the quarter ended October 30, 2019, which was filed on January 7, 2020.

Loss on Exit of Membership Agreement

In the first quarter of fiscal 2020, the Company decided to exit the membership agreement to occupy shared office space in Atlanta. As a result of that decision, we recorded a $105,000 loss on exit of the membership agreement in fiscal 2020.

Loss Contingencies

We are subject to the possibility of various loss contingencies arising in the normal course of business. We consider the likelihood of the loss or impairment of an asset or the incurrence of a liability as well as our ability to reasonably estimate the amount of loss in determining loss contingencies. An estimated loss contingency is accrued when it is probable that a liability has been incurred or an asset has been impaired and the amount of loss can be reasonably estimated. We regularly evaluate current information available to us to determine whether to accrue for a loss contingency and adjust any previous accrual.

Recent Accounting Pronouncements

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This ASU is intended to simplify various aspects related to accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and clarifying certain aspects of the current guidance to promote consistency among reporting entities. ASU 2019-12 is effective for annual periods beginning after December 15, 2020 and interim periods within those annual periods, with early adoption permitted. An entity that elects early adoption must adopt all the amendments in the same period. Most amendments within this ASU are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. The standard became effective for us on February 1, 2021. We do not anticipate that the adoption of this ASU will have a material impact on our consolidated financial statements or disclosures.

In November 2019, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which improves guidance around accounting for financial losses on accounts receivable. For smaller reporting entities, ASU 2016-13 is effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years. We do not anticipate that the adoption of this ASU will have a material impact on our consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which removes Step 2 from the goodwill impairment test. The standard became effective for us on February 1, 2020. The adoption of this ASU did not have any material impact on our consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) - Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, to remove, modify, and add certain disclosure requirements within Topic 820 in order to improve the effectiveness of fair value disclosures in the notes to financial statements. The standard became effective for us on February 1, 2020. The adoption of this ASU did not have a material impact on our consolidated financial statements.

Preferred Stock

12 Months Ended

Jan. 31, 2021

Stockholders' Equity Note [Abstract]

Preferred Stock

NOTE 3 — PREFERRED STOCK

Redemption of Series A Convertible Preferred Stock

On October 16, 2019, the Company issued 9,473,691 shares of common stock in consideration for aggregate proceeds of $9,663,000 in a private placement transaction. Each share of common stock was sold at $1.02 per share. The proceeds from the sale of common stock were used to redeem all 2,895,464 outstanding shares of Series A Convertible Preferred Stock at $2.00 per share for a total redemption payment of $5,813,000, which includes $22,000 in direct costs associated with the redemption.

Pursuant to the guidance in ASC 260-10-S99-2 for redemptions of preferred stock, the Company compared the difference between the carrying amount of the Series A Convertible Preferred Stock, net of issuance costs, of $8,686,000 to the fair value of the consideration transferred of $5,813,000, which was reduced by the commitment date intrinsic value of the conversion option since the redemption included the reacquisition of a previously recognized beneficial conversion feature of $2,021,000, and added this difference to net income to arrive at income available to common stockholders in the calculation of basic earnings per share. As the carrying value of the Series A Convertible Preferred Stock was $8,686,000 on the date of redemption, the Company reflected the resulting return from the preferred stockholders of $4,894,000 as an adjustment to net income (loss) attributable to common stockholders in the Company’s basic and diluted EPS calculations for the year ended January 31, 2020.

Balance at January 31, 2019	$	8,686,000
Redemption of Series A Convertible Preferred Stock		(5,791,000	)
Fees paid for redemption of Series A Convertible Preferred Stock		(22,000	)
Previously recognized beneficial conversion feature		2,021,000
Return from the preferred stockholders	$	4,894,000

See Note 2 for the Company’s basic and diluted EPS calculations.

Operating Leases

12 Months Ended

Jan. 31, 2021

Leases [Abstract]

Operating Leases

NOTE 4 — OPERATING LEASES

We determine whether an arrangement is a lease at inception. Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the expected lease term. Since our lease arrangements do not provide an implicit rate, we use our incremental borrowing rate for the expected remaining lease term at commencement date for new leases, or as of February 1, 2019 for existing leases, in determining the present value of future lease payments. Operating lease expense is recognized on a straight-line basis over the lease term.

The Company entered into a new lease for office space in Alpharetta, Georgia, on March 1, 2020. The lease terminates on March 31, 2023. At inception, the Company recorded a right-of use asset of $540,000, and related current and long-term operating lease obligation in the accompanying consolidated balance sheet. As of January 31, 2021, operating lease right-of use assets totalled $391,000, and the associated lease liability is included in both current and long-term liabilities of $198,000 and $222,000, respectively. The Company used a discount rate of 6.5% to the determine the lease liability. For fiscal 2021, the Company had operating cost of approximately $178,000. In addition, there was $132,000 paid for amounts included in the measurement of operating cash flows from operating leases as a result of lease incentives and previous pre-paid rent that has been included as an adjustment to the right-of-use asset at lease inception. Maturities of operating lease liabilities associated with the Company’s operating lease as of January 31, 2021 are as follows for payments due based upon the Company’s fiscal year:

2021	$	204,000
2022		210,000
2023		35,000
Total Lease Payments		449,000
Less present value adjustment		(29,000	)
Present value of lease liabilities	$	420,000

Upon signing the new lease in March 2020, the Company abandoned its shared office space in Atlanta and recorded an expense and related liability of $105,000 for the minimum remaining payments required under the agreement with the landlord. The associated expense is recorded in “Loss on exit of membership agreement” in the accompanying statements of operations and is recorded in “accrued expenses” in the accompanying balance sheet. The membership agreement did not qualify as a lease as the owner had substantive substitution rights.

During fiscal year 2019, we had one operating lease related to our New York office sublease, which expired in November 2019. 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 a $472,000 loss on exit of the operating lease in fiscal 2018. The Company sub-leased the office space for $24,000 per month until the lease expired on November 30, 2019. The Company used a discount rate of 8% to determine the lease liability. In fiscal 2019, the Company had operating cost and operating cash flows associated with the New York lease of $189,000, offset by operating lease income of $240,000.

Rent and leasing expense for facilities and equipment was $212,000 and $174,000 for fiscal years 2020 and 2019, respectively. Substantially all of the Company’s rent expense for fiscal year 2020 is related to the operating lease of the new office space in Alpharetta, Georgia. Substantially all of the Company’s rent expense for fiscal year 2019 is related to the membership agreement with WeWork (a shared office space located in Atlanta, Georgia) which is not considered a lease.

Debt

12 Months Ended

Jan. 31, 2021

Debt Disclosure [Abstract]

Debt

NOTE 5 — DEBT

Term Loan and Line of Credit with Wells Fargo

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%, plus, after the effective date of the amendment to the Credit Agreement entered into as of September 11, 2019, a “paid in kind” rate, or PIK Rate, of 2.75%. Amendments to the Credit Agreement reduced the Company’s capacity on the existing revolving credit from $5,000,000 to $1,500,000 and extended the original term loan and line of credit maturity date to August 21, 2020. The senior term loan principal balance was payable in quarterly installments, which started in March 2015 and would continue through the maturity date, with the full remaining unpaid principal balance due at maturity. Financing costs associated with the new credit facility were being amortized over its term on a straight-line basis, which is not materially different from the effective interest method.

The Credit Agreement included 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 prohibited the Company from paying dividends on the common and preferred stock.

In connection with entering into the Loan and Security Agreement with Bridge Bank as discussed below, the Company terminated the Credit Agreement, as amended from time to time, effective December 11, 2019, and repaid all outstanding amounts due thereunder.

Term Loan and Revolving Credit Facility with Bridge Bank

On December 11, 2019, the Company entered into a new Loan and Security Agreement (the “Loan and Security Agreement”) with Bridge Bank, a division of Western Alliance Bank, consisting of a $4,000,000 term loan and a $2,000,000 revolving credit facility. The proceeds from the term loan were used to repay all outstanding balances under its existing term loan with Wells Fargo Bank, N.A.. Amounts outstanding under the new term loan shall bear interest at a per annum rate equal to the higher of (a) the Prime Rate (as published in The Wall Street Journal) plus 1.50% or (b) 6.50%. Under the terms of the Loan and Security Agreement the Company shall make interest-only payments through the twelve-month anniversary date after which the Company shall repay the new term loan in thirty-six equal and consecutive installments of principal, plus monthly payments of accrued interest. The term loan and revolving credit facility provide support for working capital, capital expenditures and other general corporate purposes, including permitted acquisitions. The outstanding term loan is secured by substantially all of our assets. Financing costs associated with the Loan and Security Agreement are being amortized over its term on a straight-line basis, which is not materially different from the effective interest method.

The new revolving credit facility has a maturity date of twenty-four months and advances shall bear interest at a per annum rate equal to the higher of (a) the Prime Rate (as published in The Wall Street Journal) plus 1.25% or (b) 6.25%. The revolving credit facility can be advanced based upon 80% of eligible accounts receivable, as defined in the Loan and Security Agreement. See Note 15 – Subsequent Events for a description of the amended recurring revenue line effective March 2, 2021.

The Loan and Security Agreement, as amended, includes financial covenants, including requirements that the Company maintain a minimum asset coverage ratio and certain other financial covenants, including requirements that the Company shall not deviate by more than fifteen percent its revenue projections over a trailing three-month basis or the Company’s recurring revenue shall not deviate by more than twenty percent over a cumulative year-to-date basis of its revenue projections. In addition, beginning on December 31, 2019, the Company’s Bank EBITDA, measured on a monthly basis over a trailing three-month period then ended, shall not deviate by the greater of thirty percent its projected Bank EBITDA or $150,000. The agreement initially required the Company to maintain a minimum Asset Coverage Ratio. However, the minimum Asset Coverage Ratio requirement was eliminated as a covenant under an amendment to the Loan and Security Agreement dated April 11, 2020.

The Company was in compliance with the foregoing loan covenants at January 31, 2021. Based upon the borrowing base formula set forth in the Credit Agreement, as of January 31, 2021, the Company had access to the full $2,000,000 revolving line of credit. As of January 31, 2021 and 2020, the Company had no outstanding borrowings under the revolving credit facility.

In connection with entering into the Loan and Security Agreement discussed above, effective December 11, 2019 the Company terminated the Credit Agreement with Wells Fargo Bank, N.A. and repaid all outstanding amounts due thereunder.

In February 2020 the Company prepaid the $4.0 million outstanding term loan with Bridge Bank in full with proceeds from the sale of the ECM Assets, as required under the Loan and Security Agreement. Accordingly, we reclassified the term loan from non-current to current on the consolidated balance sheet as of January 31, 2020.

Term Loan related to “The Coronavirus Aid, Relief, and Economic Security Act”

The Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act, was signed into law on March 17, 2020. Among other things, the CARES Act provided for a business loan program known as the Paycheck Protection Program (“PPP”). Qualifying companies are able to borrow, through the U.S. Small Business Administration (“SBA”), up to two months of payroll expenses. On April 21, 2020, the Company received approximately $2,301,000 through the SBA under the PPP. These funds were utilized by the Company to fund payroll expenses and avoid further staffing reductions during the slowdown resulting from COVID-19.

The PPP loan carries an interest rate of 1.0% per annum. Principal and interest payments are due, beginning on the tenth month from the effective date, sufficient to satisfy the loan on the second anniversary date. However, under certain criteria, the loan may be forgiven. The Company is accruing interest at 1% in the accompanying consolidated financial statements. The future maturities under the loan are $1,534,000, and $767,000 in the next two twelve-month periods from January 31, 2021, respectively.

Outstanding principal balances on debt consisted of the following at:

	January 31, 2021			January 31, 2020
Term loan	$	2,301,000		$	4,000,000
Deferred financing cost		—			(128,000	)
Total		2,301,000			3,872,000
Less: Current portion		(1,534,000	)		(3,872,000	)
Non-current portion of debt	$	767,000		$	—

Goodwill and Intangible Assets

12 Months Ended

Jan. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

NOTE 6 — GOODWILL AND INTANGIBLE ASSETS

Intangible assets consist of the following:

January 31, 2021

Estimated

Accumulated

Useful Life

Gross Assets

Amortization

Net Assets

Finite-lived assets:

Customer relationships

5-10 years

5,397,000

4,773,000

624,000

January 31, 2020

Estimated

Accumulated

Useful Life

Gross Assets

Amortization

Net Assets

Finite-lived assets:

Customer relationships

5-10 years

5,397,000

4,282,000

1,115,000

The Company recognized amortization expense on intangible assets of $491,000 and $554,000 for fiscal years 2020 and 2019, respectively.

Future amortization expense for intangible assets is estimated as follows:

	Annual Amortization Expense
2021	$	455,000
2022		169,000
Total	$	624,000

Income Taxes

12 Months Ended

Jan. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 7 — INCOME TAXES

Income taxes consist of the following:

	Fiscal Year
	2020			2019
Current tax (expense) benefit:
Federal	$	—		$	—
State		(14,000	)		(22,000	)
Total current provision	$	(14,000	)	$	(22,000	)

The income tax benefit differs from the amount computed using the federal statutory income tax rates of 21% for fiscal 2020 and 2019 as follows:

	Fiscal Year
	2020			2019
Federal tax benefit at statutory rate	$	(1,272,000	)	$	(1,649,000	)
State and local tax expense, net of federal		11,000			18,000
Increase in valuation allowance		1,693,000			879,000
Permanent items:
Incentive stock options		—			8,000
Other		5,000			7,000
Reserve for uncertain tax position		35,000			29,000
R&D Credit (Federal)		(174,000	)		(144,000	)
Expiring carryforwards		5,000			463,000
Stock-based compensation		(305,000	)		70,000
Other		16,000			341,000
Income tax expense	$	14,000		$	22,000

The Company provides deferred income taxes for temporary differences between assets and liabilities recognized for financial reporting and income tax purposes. The income tax effects of these temporary differences and credits are as follows:

	January 31,
	2021			2020
Deferred tax assets:
Allowance for doubtful accounts	$	16,000		$	24,000
Deferred revenue		12,000			18,000
Accruals		47,000			45,000
Net operating loss carryforwards		8,651,000			10,063,000
Stock compensation expense		367,000			70,000
Property and equipment		(5,000	)		6,000
R&D credit		1,431,000			1,365,000
Other		7,000			153,000
Total deferred tax assets		10,526,000			11,744,000
Valuation allowance		(9,992,000	)		(11,346,000	)
Net deferred tax assets		534,000			398,000
Deferred tax liabilities:
Finite-lived intangible assets		(534,000	)		(398,000	)
Total deferred tax liabilities		(534,000	)		(398,000	)
Net deferred tax liabilities	$	—		$	—

At January 31, 2021, the Company had U.S. federal net operating loss carry forwards of $37,554,000 and $27,363,000 of these net operating losses expire at various dates through fiscal 2037. The remaining $10,191,000 of these net operating losses can be carried forward indefinitely under the provisions of the Tax Cuts and Jobs Act (TCJA). The TCJA also eliminated the ability to carryback net operating losses. The Company also had state net operating loss carry forwards of $12,519,000 and Federal R&D credit carry forwards of $1,356,000, and Georgia R&D credit carry forwards of $94,000, all of which expire through fiscal 2039.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that all or some portion of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. The Company established a valuation allowance of $9,992,000 and $11,346,000 at January 31, 2021 and 2020, respectively. The decrease in the valuation allowance of $1,354,000 was driven primarily by the utilization of federal net operating loss carry forwards.

The Company and its subsidiary are subject to U.S. federal income tax as well as income taxes in multiple state and local jurisdictions. The Company has concluded all U.S. federal tax matters for years through January 31, 2017. All material state and local income tax matters have been concluded for years through January 31, 2016. The Company is no longer subject to IRS examination for periods prior to the tax year ended January 31, 2017; however, carryforward losses that were generated prior to the tax year ended January 31, 2017 may still be adjusted by the IRS if they are used in a future period.

The Company has recorded a reserve, including interest and penalties, for uncertain tax positions of $339,000 and $304,000 as of January 31, 2021 and 2020, respectively. As of January 31, 2021 and 2020, the Company had no accrued interest and penalties associated with unrecognized tax benefits.

A reconciliation of the beginning and ending amounts of gross unrecognized tax benefits (excluding interest and penalties) is as follows:

	2020		2019
Beginning of fiscal year	$	304,000	$	275,000
Additions for tax positions for the current year		33,000		30,000
Additions for tax positions of prior years		2,000		—
Subtractions for tax positions of prior years		—		(1,000	)
End of fiscal year	$	339,000	$	304,000

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References + Details

Major Customers

12 Months Ended

Jan. 31, 2021

Major Customers

Major Customers

NOTE 8 — MAJOR CUSTOMERS

During fiscal year 2020, no one individual customer accounted for 10% or more of our continuing operations revenue. During fiscal year 2019, the Company had two customers who individually accounted for 10% or more of our continuing operations revenue. These two customers represent an aggregate of 14% and 20% of total continuing operations revenue for fiscal year 2020 and 2019 respectively. Four customers represented 31%, 16%, 14% and 13%, respectively, of continuing operations accounts receivable as of January 31, 2021 and four customers represented 27%, 23%, 15% and 5%, respectively, of continuing operations accounts receivable as of January 31, 2020. Many of our customers are invoiced on an annual basis. As such, while no individual customers constituted 10% or more of the Company’s continuing operations revenue in fiscal 2020, certain invoices for our customers may exceed 10% of the current continuing operations accounts receivable.

Employee Retirement Plan

12 Months Ended

Jan. 31, 2021

Employee Retirement Plan

Employee Retirement Plan

NOTE 9 — EMPLOYEE RETIREMENT PLAN

The Company has established a 401(k) retirement plan that covers all associates. Company contributions to the plan may be made at the discretion of the board of directors. Effective January 1, 2019, the Company’s matched amount is 50% up to the first 4% of compensation deferred by each associate. The total compensation expense for this matching contribution was $164,000 and $231,000 in fiscal 2020 and 2019, respectively.

Employee Stock Purchase Plan

The entire disclosure for retirement benefits.

+ References

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+ Details

Employee Stock Purchase Plan

12 Months Ended

Jan. 31, 2021

Employee Stock Purchase Plan

NOTE 10 — EMPLOYEE STOCK PURCHASE PLAN

Through December 2019, the Company maintained an Employee Stock Purchase Plan under which associates were able to purchase up to 1,000,000 shares of common stock. Under the plan, eligible associates could elect to contribute, through payroll deductions, up to 10% of their base pay to a trust during any plan year, i.e., January 1 through December 31 of the same year. Semi-annually, typically in January and July of each year, the plan issued, for the benefit of the employees, shares of common stock at the lesser of (a) 85% of the fair market value of the common stock on the first day of the vesting period (January 1 or July 1), or (b) 85% of the fair market value of the common stock on the last day of the vesting period (June 30 or December 31 of the same year).

The Company recognized compensation expense of $4,000 for fiscal year 2019 under this plan.

During fiscal 2019, 5,072 shares were purchased at the price of $0.75 per share and 3,238 shares were purchased at the price of $1.18 per share. The cash received for shares purchased from the plan was $8,000 in fiscal 2019.

Effective January 1, 2020, the Company discontinued its Employee Stock Purchase Plan.

Stock-Based Compensation

12 Months Ended

Jan. 31, 2021

Share-based Payment Arrangement [Abstract]

Stock-Based Compensation

NOTE 11 — STOCK-BASED COMPENSATION

Stock Option Plans

The Company’s Third Amended and Restated 2013 Stock Incentive Plan (the “2013 Plan”) replaced the 2005 Incentive Compensation Plan (the “2005 Plan”). The 2005 Plan expired based upon its terms. Accordingly, all the outstanding awards and any unallocated pool of un-issued options under the 2005 Plan were re-characterized to the 2013 Plan. Under these plans, the Company is authorized to issue equity awards (stock options, stock appreciation rights or “SARs”, and restricted stock) to directors and associates of the Company. Under the 2013 Plan, the Company is authorized to issue a number of shares not to exceed 6,223,246. The options granted under the 2013 Plan have terms of ten years or less, and typically vest and become fully exercisable ratably over three years of continuous service to the Company from the date of grant. At January 31, 2021 and 2020, options to purchase 500,830 and 673,603 shares of the Company’s common stock, respectively, had been granted and were outstanding under these plans. There are no SARs outstanding.

Inducement grants are approved by the Company’s compensation committee pursuant to NASDAQ Marketplace Rule 5635(c)(4). The terms of the grants were nearly identical to the terms and conditions of the Company’s stock incentive plans in effect at the time of each inducement grant. For the year ended January 31, 2021, with regard to inducement grants, no stock options were issued, no options expired, no options were forfeited, and no stock options were exercised. For the year ended January 31, 2020, with regard to inducement grants, no stock options were issued, no options expired, 100,000 options were forfeited and no stock options were exercised. As of January 31, 2021 and 2020, there were 125,000 options outstanding, respectively, under inducement grants.

Please see “Restricted Stock” in this Note 11 for information on the restricted shares.

A summary of stock option activity follows:

				Weighted
				Average		Remaining		Aggregate
	Options			Exercise Price		Life in Years		intrinsic value
Outstanding as of January 31, 2020		798,603		$	3.49
Granted		—			—
Exercised		—			—
Expired		(168,773	)		3.66
Forfeited		(4,000	)		1.86
Outstanding as of January 31, 2021		625,830		$	3.45		4.24	$	120,000
Exercisable as of January 31, 2021		610,370		$	3.50		4.14	$	112,000
Vested or expected to vest as of January 31, 2021		621,154		$	3.46		4.21	$	118,000

No options were granted in fiscal 2020. For fiscal 2019, the weighted average grant date fair value of options granted during the year was $0.72. No options were exercised in fiscal 2020 or fiscal 2019.

The fiscal 2020 and 2019 stock-based compensation was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted average assumptions for each fiscal year:

	2020		2019
Expected life		—		6.36 years
Risk-free interest rate		—		2.07	%
Weighted average volatility factor		—		0.57
Dividend yield		—		—
Forfeiture rate		—		29	%

At January 31, 2021, there was $6,100 of unrecognized compensation cost related to non-vested stock-option awards. That cost is expected to be recognized over a remaining weighted average period of 1.15 years. The expense associated with stock option awards was $22,000 and $45,000, respectively, for fiscal 2020 and 2019. Cash received from the exercise of options was $0 in both fiscal 2020 and 2019.

The 2013 Plan contains change in control provisions whereby any outstanding equity awards under the plans subject to vesting, which have not fully vested as of the date of the change in control, shall automatically vest and become immediately exercisable. One of the change in control provisions is deemed to occur if there is a change in beneficial ownership, or authority to vote, directly or indirectly, of securities representing 20% or more of the total of all of the Company’s then-outstanding voting securities, unless through a transaction arranged by or consummated with the prior approval of the Board of Directors. Other change in control provisions relate to mergers and acquisitions or a determination of change in control by the Company’s Board of Directors.

Restricted Stock

The Company is authorized to grant restricted stock awards to associates and directors under the 2013 Plan. The Company has also issued restricted stock as inducement grants to certain new employees. The restrictions on the shares granted generally lapse over a one- to four-year term of continuous employment from the date of grant. On June 17, 2020, our CEO was awarded 150,000 shares of restricted stock that will vest in four substantially equal quarterly installments commencing on the first anniversary of the date of grant. On October 17, 2019, our CEO was awarded 250,000 shares of restricted stock: 50,000 of which vested upon grant, 100,000 shares that vested in four substantially equal quarterly installments commencing on the first anniversary of the date of grant, and 100,000 shares that were subject to performance-based vesting based upon the achievement of certain growth rates of revenue specified in agreement. However, as of July 31, 2020, performance was not achieved resulting in the grants being forfeited. The grant date fair value per share of restricted stock, which is based on the closing price of our common stock on the grant date, is expensed on a straight-line basis as the restriction period lapses. The shares represented by restricted stock awards are considered outstanding at the grant date, as the recipients are entitled to voting rights. A summary of restricted stock award activity for fiscal 2020 and 2019 is presented below:

				Weighted
	Non-vested			Average
	Number of			Grant Date
	Shares			Fair Value
Non-vested balance at January 31, 2019		1,063,866		$	1.27
Granted		912,518			1.26
Vested		(616,806	)		1.29
Forfeited		(556,080	)		1.31
Non-vested balance at January 31, 2020		803,498		$	1.22
Granted		1,158,245			1.07
Vested		(864,128	)		1.18
Forfeited		(166,490	)		1.16
Non-vested balance at January 31, 2021		931,125		$	1.09

At January 31, 2021, there was $603,000 of unrecognized compensation cost related to restricted stock awards. That cost is expected to be recognized over a remaining period of 1.12 year.

The expense associated with restricted stock awards was $1,075,000 and $885,000, respectively, for fiscal 2020 and 2019.

Commitments and Contingencies

12 Months Ended

Jan. 31, 2021

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

NOTE 12 — COMMITMENTS AND CONTINGENCIES

Royalty Liability

On October 25, 2013, we entered into a Software License and Royalty Agreement (the “Royalty Agreement”) with Montefiore Medical Center (“Montefiore”) pursuant to which Montefiore granted us an exclusive, worldwide 15-year license of Montefiore’s proprietary clinical analytics platform solution, Clinical Looking Glass® (“CLG”), now known as our Clinical Analytics solution. In addition, Montefiore assigned to us the existing license agreement with a customer using CLG. As consideration under the Royalty Agreement, we paid Montefiore a one-time initial base royalty fee of $3,000,000. Additionally, we originally committed that Montefiore would receive at least an additional $3,000,000 of on-going royalty payments related to future sublicensing of CLG by us within the first six and one-half years of the license term. On July 1, 2018, we entered into a joint amendment to the Royalty Agreement and the existing Software License and Support Agreement with Montefiore to modify the payment obligations of the parties under both agreements. According to the modified provisions, our obligation to pay on-going royalties under the Royalty Agreement was replaced with the obligation to (i) provide maintenance services for 24 months and waive associated maintenance fees, and (ii) pay $1,000,000 in cash by October 31, 2020. As a result of the commitment to fulfill a portion of our obligation by providing maintenance services at no cost, the royalty liability was significantly reduced, with a corresponding increase to deferred revenues. As of January 31, 2021 and 2020, the Company had $0 and $345,000, respectively, in deferred revenues associated with this modified royalty liability. The fair value of the royalty liability was determined based on the amount payable in cash. As of January 31, 2021 and 2020, the present value of this royalty liability was $0 and $969,000, respectively.

On October 1, 2020, the Company agreed with Montefiore that it would pay, in cash, (i) $500,000 upon signing a settlement and release agreement, and (ii) $490,000 on November 1, 2020. The difference between the $990,000 in cash payment and the $1,000,000 payment obligation was due to the settlement of outstanding costs made on behalf of the Company for Montefiore. The Company executed the settlement and release agreement shortly after October 1, 2020 and made the scheduled payments. The Company retains the exclusive licensing rights for the underlying software through the term of the original agreement (2028).

Consulting Agreement with 180 Consulting

On March 19, 2020 the Company entered into a Master Services Agreement (the “MSA”) with 180 Consulting, LLC (“180 Consulting”), pursuant to which 180 Consulting will provide a variety of consulting services including product management, operational consulting, staff augmentation, internal systems platform integration and software engineering services, among others, through separate executed statements of work (“SOWs”). The Company entered into eight SOWs under the MSA during fiscal 2020. Some of the SOWs include the ability to earn stock at a conversion rate to be calculated 20 days after the execution of the related SOW. 180 Consulting earned a cumulative number of shares in fiscal 2020 totalling 248,425. 180 Consulting has registration rights on all issued securities. As of January 31, 2021, the issued securities had not been registered. During fiscal 2020, the Company paid fees to 180 Consulting totalling $580,000. The MSA includes a termination clause upon a 90-day written notice. While no related person has a direct or indirect material interest in this MSA or the related SOWs, individuals providing services to us under the MSA and the SOWs may share workspace and administrative costs with 121G Consulting (as defined and further discussed in Note 14 – Related Party Transactions).

Litigation

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

Discontinued Operations

12 Months Ended

Jan. 31, 2021

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

NOTE 13 – DISCONTINUED OPERATIONS

On February 24, 2020, the Company consummated the previously announced sale of the Company’s legacy Enterprise Content Management business (the “ECM Assets”) pursuant to that certain Asset Purchase Agreement, dated December 17, 2019, as amended (the “Asset Purchase Agreement”), to Hyland Software, Inc. (the “Purchaser”),

Pursuant to the Asset Purchase Agreement, the Purchaser acquired the ECM Assets and assumed certain liabilities of the Company for a purchase price of $16.0 million, subject to certain adjustments for customer prepayments as set forth in the Asset Purchase Agreement.

At closing, the Company received approximately $5.4 million in net proceeds after (i) repaying the Company’s $4.0 million term loan with Bridge Bank, (ii) adjusting for certain customer prepayments, (iii) recording the escrow funds of $800,000 and (iv) incurring certain transaction costs. The gain on the sale of assets is summarized as follows:

Net Proceeds, including escrowed funds	$	12,088,000
Net tangible assets sold:
Accounts Receivable		(1,130,000	)
Prepaid Expenses		(576,000	)
Deferred Revenues		4,010,000
Net tangible assets sold		2,304,000
Capitalized software development costs		(1,772,000	)
Goodwill		(4,825,000	)
Transaction cost		(1,782,000	)
Gain on sale of discontinued operations	$	6,013,000

The transaction costs were primarily broker cost and cost of legal and accounting to affect the transaction. The Company allocated $4,825,000 in goodwill to the sale of the ECM Assets using a valuation of the ECM Assets and the remaining, go-forward business, to bifurcate its existing goodwill as of February 24, 2020. The amount of goodwill to be included in that carrying amount was based on the relative fair values of the business to be disposed of and the portion of the reporting unit that will be retained using our fair value approach as outlined in Note 2. Further, in accordance ASC 350-20-35-3A, when only a portion of goodwill is allocated to a business to be disposed of, the remaining portion of the goodwill associated with the reporting unit to be retained was tested for impairment and no impairment was recognized.

The Company reclassified the following assets and liabilities for discontinued operations in the accompanying consolidated balance sheets:

	As of
	January 31, 2021		January 31, 2020
Current assets of discontinued operations:
Accounts receivable	$	587,000	$	1,150,000
Contract receivables		-		17,000
Prepaid Assets		-		418,000
Current assets of discontinued operations	$	587,000	$	1,585,000
Long-term assets of discontinued operations:
Property and equipment, net	$	13,000	$	54,000
Capitalized software development cost, net		-		1,816,000
Goodwill		-		4,825,000
Other		-		131,000
Long-term assets of discontinued operations	$	13,000	$	6,826,000
Current liabilities of discontinued operations:
Accounts payable	$	-	$	514,000
Accrued expenses		8,000		142,000
Deferred revenues		587,000		4,397,000
Current liabilities of discontinued operations	$	595,000	$	5,053,000

For fiscal 2020 and 2019, the Company reclassified the following for discontinued operations in the accompanying consolidated statements of operations:

	Fiscal Year
	2020		2019
Revenues:
System sales	$	-	$	98,000
Professional services		-		597,000
Maintenance and support		412,000		5,953,000
Software as a service		138,000		2,242,000
Transition service fees		394,000		-
Total revenues	$	944,000	$	8,890,000

Expenses:
Cost of Sales		294,000		2,129,000
Selling, general and administrative expenses		-		205,000
Research and development		-		865,000
Transition service cost		166,000		-
Deferred financing cost		128,000		-
Transaction costs		-		631,000
Total expenses		588,000		3,830,000

Miscellaneous expense		-		(25,000	)
Income from discontinued operations	$	356,000	$	5,035,000

We entered into an agreement with the Purchaser of the ECM Assets to maintain the current data center through a transition period that was expected to be approximately seven months. The Company has continued to pay the rent and maintain the servers within the data center during the transition services period. These amounts for fiscal 2020 are presented as discontinued operations and will continue to be presented as discontinued operations in future periods throughout fiscal year 2021. In consideration of these transition services, the Company maintained rights to certain customer contracts that provides a revenue stream of approximately $40,000 per month. During the transition period as defined in the Asset Purchase Agreement, the Company will receive approximately $40,000 in revenue per month and have cost of approximately $30,000. The transition service does not have a finite ending date, however, the goal of both the Purchaser and the Company is to complete the transition as quickly as possible. The cost to maintain the data center can be eliminated upon the completion of the transition services as described in the Asset Purchase Agreement. Our on-going cost to maintain the data center includes rent, cost of the servers, certain third-party software arrangements, and depreciation of the servers. The property and equipment on the Company’s balance sheet in discontinued operations is the net book value for the related servers in the data center.

Related Party Transactions

12 Months Ended

Jan. 31, 2021

Related Party Transactions

NOTE 14 - RELATED PARTY TRANSACTIONS

In the second quarter of fiscal year 2019, in connection with the appointment of Wyche T. “Tee” Green, III, Chairman of the Board of the Company and Managing Member of 121G, LLC (“121G”), as interim President and Chief Executive Officer of the Company, we entered into a consulting agreement with 121G Consulting, LLC (“121G Consulting”), to provide an assessment of the Company’s innovation and growth teams and strategies and to develop a set of prioritized recommendations to be consolidated into a strategic plan for the Company’s leadership team. Mr. Green is a member of 121G Consulting, and, accordingly, has a financial interest in that entity. In October 2019, Mr. Green was appointed as President and Chief Executive Officer of the Company on a full-time basis.

For the year ended January 31, 2021 and 2020, fees paid to 121G Consulting totalled $107,000 and $276,000, respectively. For fiscal 2019, $88,000 was included in executive transition cost and $188,000 was included in the Company’s operating cost in the accompanying consolidated statements of operations. As of January 31, 2020, consulting fees payable to 121G Consulting of $40,000 are included in accounts payable in the accompanying consolidated balance sheet. There were no consulting fees payable to 121G Consulting outstanding as of January 31, 2021. Subsequent to Mr. Green joining the Company on a full-time basis, the relationship with 121G Consulting was terminated.

Subsequent Events

12 Months Ended

Jan. 31, 2021

Subsequent Events [Abstract]

Subsequent Events

NOTE 15 — SUBSEQUENT EVENTS

We have evaluated subsequent events occurring after January 31, 2021, and based on our evaluation we did not identify any events that would have required recognition or disclosure in these consolidated financial statements, except for the following:

Capital Raise

On February 25, 2021, the Company entered into an underwriting agreement with Craig-Hallum Capital Group LLC, as the sole managing underwriter, relating to the underwritten public offering of an aggregate of 10,062,500 shares of the Company’s common stock, par value $0.01 per share, which included 1,312,500 shares of common stock sold pursuant to the underwriter’s exercise of an option to purchase additional shares of common stock to cover over-allotments (the “Offering”). The price to the public in the Offering was $1.60 per share of common stock. The gross proceeds to the Company from the Offering were approximately $16.1 million, before deducting underwriting discounts, commissions and estimated offering expenses. The Offering closed on March 2, 2021.

Revolving Line of Credit Modification

On March 2, 2021, the Company entered into an Amended and Restated Loan and Security Agreement, consisting of a $3,000,000 revolving credit facility (the “Amended Security Agreement”). The Amended Security Agreement has a two-year term and includes customary financial covenants including the requirements that the Company achieve certain EBITDA levels and certain recurring revenue levels. The Company shall not deviate by more than twenty percent its recurring revenue projections over a trailing three-month basis. Additionally, the Company’s Bank EBITDA, measured on a monthly basis over a trailing three-month period then ended, shall not deviate by more than 30% or $300,000. The Amended Security Agreement facility shall bear interest at a per annum rate equal to the higher of (a) the Prime Rate (as published in The Wall Street Journal) plus 1.00%, with a “floor” Prime Rate of 4.0%.

Schedule II - Valuation and Qualifying Accounts and Reserves

12 Months Ended

Jan. 31, 2021

SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract]

Schedule II - Valuation and Qualifying Accounts and Reserves

Schedule II

Valuation and Qualifying Accounts and Reserves

Streamline Health Solutions, Inc.

For the two years ended January 31, 2021

			Additions
	Balance at		Charged to			Charged to					Balance at
	Beginning of		Costs and			Other		(1)			End of
Description	Period		Expenses			Accounts		Deductions			Period
	(in thousands)
Year ended January 31, 2021:
Allowance for doubtful accounts	$	96	$	(31	)	$	—	$	—		$	65
Year ended January 31, 2020:
Allowance for doubtful accounts	$	345	$	(201	)	$	—	$	(48	)	$	96

(1)	Uncollectible accounts written off, net of recoveries.

Significant Accounting Policies (Policies)

12 Months Ended

Jan. 31, 2021

Cash and Cash Equivalents

Basis of Presentation

Basis of Presentation

Use of Estimates

Use of Estimates

Reclassifications

Reclassifications

Cash and Cash Equivalents

Non-Cash Items

The Company had the following items that were non-cash items related to the consolidated statements of cash flows:

	Fiscal Year
	2020		2019
Escrowed funds from sale of ECM Assets	$	800,000		—
Right-of Use Assets from operating lease	$	540,000	$	—
Capitalized software purchased with stock (Note 12)		41,000		—

Receivables

Receivables

Allowance for Doubtful Accounts

Allowance for Doubtful Accounts

Bad debt benefit for fiscal years 2020 and 2019 was as follows:

		2020				2019
Bad debt benefit		$	(31,000	)		$	(201,000	)

Concessions Accrual

Concessions Accrual

Property and Equipment

Property and Equipment

Property and equipment are stated at cost. Depreciation is computed using the straight-line method, over the estimated useful lives of the related assets. Estimated useful lives are as follows:

Computer equipment and software		3-4 years
Office equipment		5 years
Office furniture and fixtures		7 years
Leasehold improvements		Term of lease or estimated useful life, whichever is shorter

Depreciation expense for property and equipment in fiscal 2020 and 2019 was $64,000 and $43,000, respectively.

Leases

Leases

As of January 31, 2021 and 2020, the Company had no financing lease obligations.

Debt Issuance Costs

Debt Issuance Costs

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

Capitalized Software Development Costs

Capitalized Software Development Costs

	Fiscal Year
	2020		2019
Amortization expense on internally-developed software included in:
Cost of systems sales	$	501,000	$	964,000
Cost of software as a service		1,148,000		517,000
Cost of audit services		13,000		13,000
Total amortization expense on internally-developed software	$	1,662,000	$	1,494,000

Research and development expense was $2,933,000 and $2,690,000 in fiscal 2020 and 2019, respectively.

Fair Value of Financial Instruments

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.

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 January 31, 2020

Royalty liability (1)

969,000

—

969,000

(1)

Revenue Recognition

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

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

Contract Combination

Systems Sales

Maintenance and Support Services

Software-Based Solution Professional Services

Software as a Service

Audit Services

Disaggregation of Revenue

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

	Year Ended January 31, 2021
	Recurring Revenue		Non-recurring Revenue		Total
Systems sales	$	153,000	$	437,000	$	590,000
Professional services		—		618,000		618,000
Audit services		—		1,891,000		1,891,000
Maintenance and support		4,586,000		—		4,586,000
Software as a service		3,661,000		—		3,661,000
Total revenue:	$	8,400,000	$	2,946,000	$	11,346,000

Contract Receivables and Deferred Revenues

Deferred costs (costs to fulfill a contract and contract acquisition costs)

Concentrations

Concentrations

Goodwill and Intangible Assets

Goodwill and Intangible Assets

	●	significant underperformance relative to historical or projected future operating results;

	●	significant changes in the manner of use of the acquired assets or the strategy for the overall business;

	●	identification of other impaired assets within a reporting unit;

	●	disposition of a significant portion of an operating segment;

	●	significant negative industry or economic trends;

	●	significant decline in the Company’s stock price for a sustained period; and

	●	a decline in the market capitalization relative to the net book value.

Determining whether a triggering event has occurred involves significant judgment by the Company.

Equity Awards

Equity Awards

Income Taxes

Income Taxes

Net Loss Per Common Share

Net Loss Per Common Share

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

	Fiscal Year
	2020			2019
Basic earnings (loss) per share:
Continuing operations
Loss from continuing operations, net of tax	$	(4,799,000	)	$	(6,244,000	)
Add: Redemption of Series A Preferred Stock		—			4,894,000
Net loss from continuing operations	$	(4,799,000	)	$	(1,350,000	)
Basic net loss per share of common stock from continuing operations	$	(0.16	)	$	(0.06	)

Discontinued operations
Gain from discontinued operations, net of tax	$	5,095,000		$	3,381,000
Less: Allocation of earnings to participating securities		—			(281,000	)
Income available to common stockholders from discontinued operations	$	5,095,000		$	3,100,000
Basic net earnings per share of common stock from discontinued operations	$	0.17		$	0.14

Diluted earnings (loss) per share (1):
Continuing operations
Loss available to common stockholders from continuing operations	$	(4,799,000	)	$	(6,244,000	)
Diluted net loss per share of common stock from continuing operations (3)	$	(0.16	)	$	(0.27	)

Discontinued operations
Income available to common stockholders from discontinued operations	$	5,095,000		$	3,381,000
Diluted net earnings per share of common stock from discontinued operations	$	0.17		$	0.13

Net income	$	296,000		$	2,031,000

Weighted average shares outstanding - Basic (2)		30,152,383			22,739,679
Effect of dilutive securities - Stock options, Restricted stock and Series A Convertible Preferred Stock (3)		488,359			2,343,382
Weighted average shares outstanding – Diluted		30,640,742			25,083,061
Basic net income per share of common stock	$	0.01		$	0.08
Diluted net income (loss) per share of common stock	$	0.01		$	(0.14	)

	(1)	Diluted EPS for our common stock was computed using the if-converted method, which yields the same result as the two-class method. The two-class method has not been used in the current period as a result of the redemption of the participating securities.

	(2)	Excludes the effect of unvested restricted shares of common stock, which are considered non-participating securities. As of January 31, 2021 and 2020, there were 931,125 and 803,498 unvested restricted shares of common stock, respectively.

	(3)	Diluted net loss per share excludes the effect of shares that are anti-dilutive. As of January 31, 2021, there were zero outstanding shares of Series A Convertible Preferred Stock, 625,830 outstanding stock options and 931,125 unvested restricted shares of common stock. As of January 31, 2020, there were zero outstanding shares of Series A Convertible Preferred Stock, 798,603 outstanding stock options and 803,498 unvested restricted shares of common stock.

Other Operating Costs

Other Operating Costs

Executive Transition Costs

Rationalization Charges

Transaction Costs

Loss on Exit of Membership Agreement

Loss Contingencies

Loss Contingencies

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Significant Accounting Policies (Tables)

12 Months Ended

Jan. 31, 2021

Schedule of Non-Cash Items Related to Condensed Consolidated Statements of Cash Flow

The Company had the following items that were non-cash items related to the consolidated statements of cash flows:

	Fiscal Year
	2020		2019
Escrowed funds from sale of ECM Assets	$	800,000		—
Right-of Use Assets from operating lease	$	540,000	$	—
Capitalized software purchased with stock (Note 12)		41,000		—

Schedule of Bad Debt Expenses

Bad debt benefit for fiscal years 2020 and 2019 was as follows:

		2020				2019
Bad debt benefit		$	(31,000	)		$	(201,000	)

Schedule of Estimated Useful Life of Property and Equipment

Property and equipment are stated at cost. Depreciation is computed using the straight-line method, over the estimated useful lives of the related assets. Estimated useful lives are as follows:

Computer equipment and software		3-4 years
Office equipment		5 years
Office furniture and fixtures		7 years
Leasehold improvements		Term of lease or estimated useful life, whichever is shorter

Schedule of Amortization Expense For Internally Developed Software

	Fiscal Year
	2020		2019
Amortization expense on internally-developed software included in:
Cost of systems sales	$	501,000	$	964,000
Cost of software as a service		1,148,000		517,000
Cost of audit services		13,000		13,000
Total amortization expense on internally-developed software	$	1,662,000	$	1,494,000

Schedule of Fair Value Assets and Liabilities Measured on 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 January 31, 2020

Royalty liability (1)

969,000

—

969,000

(1)

Schedule of Disaggregation of Revenue

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

	Year Ended January 31, 2021
	Recurring Revenue		Non-recurring Revenue		Total
Systems sales	$	153,000	$	437,000	$	590,000
Professional services		—		618,000		618,000
Audit services		—		1,891,000		1,891,000
Maintenance and support		4,586,000		—		4,586,000
Software as a service		3,661,000		—		3,661,000
Total revenue:	$	8,400,000	$	2,946,000	$	11,346,000

Schedule of Basic and Diluted Net Loss Per Share of Common Stock

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

	Fiscal Year
	2020			2019
Basic earnings (loss) per share:
Continuing operations
Loss from continuing operations, net of tax	$	(4,799,000	)	$	(6,244,000	)
Add: Redemption of Series A Preferred Stock		—			4,894,000
Net loss from continuing operations	$	(4,799,000	)	$	(1,350,000	)
Basic net loss per share of common stock from continuing operations	$	(0.16	)	$	(0.06	)

Discontinued operations
Gain from discontinued operations, net of tax	$	5,095,000		$	3,381,000
Less: Allocation of earnings to participating securities		—			(281,000	)
Income available to common stockholders from discontinued operations	$	5,095,000		$	3,100,000
Basic net earnings per share of common stock from discontinued operations	$	0.17		$	0.14

Diluted earnings (loss) per share (1):
Continuing operations
Loss available to common stockholders from continuing operations	$	(4,799,000	)	$	(6,244,000	)
Diluted net loss per share of common stock from continuing operations (3)	$	(0.16	)	$	(0.27	)

Discontinued operations
Income available to common stockholders from discontinued operations	$	5,095,000		$	3,381,000
Diluted net earnings per share of common stock from discontinued operations	$	0.17		$	0.13

Net income	$	296,000		$	2,031,000

Weighted average shares outstanding - Basic (2)		30,152,383			22,739,679
Effect of dilutive securities - Stock options, Restricted stock and Series A Convertible Preferred Stock (3)		488,359			2,343,382
Weighted average shares outstanding – Diluted		30,640,742			25,083,061
Basic net income per share of common stock	$	0.01		$	0.08
Diluted net income (loss) per share of common stock	$	0.01		$	(0.14	)

	(1)	Diluted EPS for our common stock was computed using the if-converted method, which yields the same result as the two-class method. The two-class method has not been used in the current period as a result of the redemption of the participating securities.

	(2)	Excludes the effect of unvested restricted shares of common stock, which are considered non-participating securities. As of January 31, 2021 and 2020, there were 931,125 and 803,498 unvested restricted shares of common stock, respectively.

	(3)	Diluted net loss per share excludes the effect of shares that are anti-dilutive. As of January 31, 2021, there were zero outstanding shares of Series A Convertible Preferred Stock, 625,830 outstanding stock options and 931,125 unvested restricted shares of common stock. As of January 31, 2020, there were zero outstanding shares of Series A Convertible Preferred Stock, 798,603 outstanding stock options and 803,498 unvested restricted shares of common stock.

Preferred Stock (Tables)

12 Months Ended

Jan. 31, 2021

Stockholders' Equity Note [Abstract]

Schedule of Adjustment to Net Income (Loss) Attributable to Common Stockholders

Balance at January 31, 2019	$	8,686,000
Redemption of Series A Convertible Preferred Stock		(5,791,000	)
Fees paid for redemption of Series A Convertible Preferred Stock		(22,000	)
Previously recognized beneficial conversion feature		2,021,000
Return from the preferred stockholders	$	4,894,000

Operating Leases (Tables)

12 Months Ended

Jan. 31, 2021

Leases [Abstract]

Schedule of Maturities of Operating Lease Liabilities

Maturities of operating lease liabilities associated with the Company’s operating lease as of January 31, 2021 are as follows for payments due based upon the Company’s fiscal year:

2021	$	204,000
2022		210,000
2023		35,000
Total Lease Payments		449,000
Less present value adjustment		(29,000	)
Present value of lease liabilities	$	420,000

Debt (Tables)

12 Months Ended

Jan. 31, 2021

Debt Disclosure [Abstract]

Schedule of Outstanding Debt, Other Than PPP Loan

Outstanding principal balances on debt consisted of the following at:

	January 31, 2021			January 31, 2020
Term loan	$	2,301,000		$	4,000,000
Deferred financing cost		—			(128,000	)
Total		2,301,000			3,872,000
Less: Current portion		(1,534,000	)		(3,872,000	)
Non-current portion of debt	$	767,000		$	—

Goodwill and Intangible Assets (Tables)

12 Months Ended

Jan. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Intangible Assets

Intangible assets consist of the following:

January 31, 2021

Estimated

Accumulated

Useful Life

Gross Assets

Amortization

Net Assets

Finite-lived assets:

Customer relationships

5-10 years

5,397,000

4,773,000

624,000

January 31, 2020

Estimated

Accumulated

Useful Life

Gross Assets

Amortization

Net Assets

Finite-lived assets:

Customer relationships

5-10 years

5,397,000

4,282,000

1,115,000

Schedule of Future Amortization Expense for Intangible Assets

Future amortization expense for intangible assets is estimated as follows:

	Annual Amortization Expense
2021	$	455,000
2022		169,000
Total	$	624,000

Income Taxes (Tables)

12 Months Ended

Jan. 31, 2021

Income Tax Disclosure [Abstract]

Schedule of Components of Income Tax (Expense) Benefit

Income taxes consist of the following:

	Fiscal Year
	2020			2019
Current tax (expense) benefit:
Federal	$	—		$	—
State		(14,000	)		(22,000	)
Total current provision	$	(14,000	)	$	(22,000	)

Schedule of Effective Income Tax Rate Reconciliation

The income tax benefit differs from the amount computed using the federal statutory income tax rates of 21% for fiscal 2020 and 2019 as follows:

	Fiscal Year
	2020			2019
Federal tax benefit at statutory rate	$	(1,272,000	)	$	(1,649,000	)
State and local tax expense, net of federal		11,000			18,000
Increase in valuation allowance		1,693,000			879,000
Permanent items:
Incentive stock options		—			8,000
Other		5,000			7,000
Reserve for uncertain tax position		35,000			29,000
R&D Credit (Federal)		(174,000	)		(144,000	)
Expiring carryforwards		5,000			463,000
Stock-based compensation		(305,000	)		70,000
Other		16,000			341,000
Income tax expense	$	14,000		$	22,000

Schedule of Deferred Tax Assets and Liabilities

	January 31,
	2021			2020
Deferred tax assets:
Allowance for doubtful accounts	$	16,000		$	24,000
Deferred revenue		12,000			18,000
Accruals		47,000			45,000
Net operating loss carryforwards		8,651,000			10,063,000
Stock compensation expense		367,000			70,000
Property and equipment		(5,000	)		6,000
R&D credit		1,431,000			1,365,000
Other		7,000			153,000
Total deferred tax assets		10,526,000			11,744,000
Valuation allowance		(9,992,000	)		(11,346,000	)
Net deferred tax assets		534,000			398,000
Deferred tax liabilities:
Finite-lived intangible assets		(534,000	)		(398,000	)
Total deferred tax liabilities		(534,000	)		(398,000	)
Net deferred tax liabilities	$	—		$	—

Schedule of Gross Unrecognized Tax Benefits

A reconciliation of the beginning and ending amounts of gross unrecognized tax benefits (excluding interest and penalties) is as follows:

	2020		2019
Beginning of fiscal year	$	304,000	$	275,000
Additions for tax positions for the current year		33,000		30,000
Additions for tax positions of prior years		2,000		—
Subtractions for tax positions of prior years		—		(1,000	)
End of fiscal year	$	339,000	$	304,000

Stock-Based Compensation (Tables)

12 Months Ended

Jan. 31, 2021

Share-based Payment Arrangement [Abstract]

Schedule of Stock Option Activity

A summary of stock option activity follows:

				Weighted
				Average		Remaining		Aggregate
	Options			Exercise Price		Life in Years		intrinsic value
Outstanding as of January 31, 2020		798,603		$	3.49
Granted		—			—
Exercised		—			—
Expired		(168,773	)		3.66
Forfeited		(4,000	)		1.86
Outstanding as of January 31, 2021		625,830		$	3.45		4.24	$	120,000
Exercisable as of January 31, 2021		610,370		$	3.50		4.14	$	112,000
Vested or expected to vest as of January 31, 2021		621,154		$	3.46		4.21	$	118,000

Schedule of Weighted-Average Assumptions

The fiscal 2020 and 2019 stock-based compensation was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted average assumptions for each fiscal year:

	2020		2019
Expected life		—		6.36 years
Risk-free interest rate		—		2.07	%
Weighted average volatility factor		—		0.57
Dividend yield		—		—
Forfeiture rate		—		29	%

Schedule of Restricted Stock Award Activity

A summary of restricted stock award activity for fiscal 2020 and 2019 is presented below:

				Weighted
	Non-vested			Average
	Number of			Grant Date
	Shares			Fair Value
Non-vested balance at January 31, 2019		1,063,866		$	1.27
Granted		912,518			1.26
Vested		(616,806	)		1.29
Forfeited		(556,080	)		1.31
Non-vested balance at January 31, 2020		803,498		$	1.22
Granted		1,158,245			1.07
Vested		(864,128	)		1.18
Forfeited		(166,490	)		1.16
Non-vested balance at January 31, 2021		931,125		$	1.09

Discontinued Operations (Tables)

12 Months Ended

Jan. 31, 2021

Discontinued Operations and Disposal Groups [Abstract]

Schedule of Gain on Sale of Assets

The gain on the sale of assets is summarized as follows:

Net Proceeds, including escrowed funds	$	12,088,000
Net tangible assets sold:
Accounts Receivable		(1,130,000	)
Prepaid Expenses		(576,000	)
Deferred Revenues		4,010,000
Net tangible assets sold		2,304,000
Capitalized software development costs		(1,772,000	)
Goodwill		(4,825,000	)
Transaction cost		(1,782,000	)
Gain on sale of discontinued operations	$	6,013,000

Schedule of Discontinued Operations of Consolidated Balance Sheets and Statements of Operations

The Company reclassified the following assets and liabilities for discontinued operations in the accompanying consolidated balance sheets:

	As of
	January 31, 2021		January 31, 2020
Current assets of discontinued operations:
Accounts receivable	$	587,000	$	1,150,000
Contract receivables		-		17,000
Prepaid Assets		-		418,000
Current assets of discontinued operations	$	587,000	$	1,585,000
Long-term assets of discontinued operations:
Property and equipment, net	$	13,000	$	54,000
Capitalized software development cost, net		-		1,816,000
Goodwill		-		4,825,000
Other		-		131,000
Long-term assets of discontinued operations	$	13,000	$	6,826,000
Current liabilities of discontinued operations:
Accounts payable	$	-	$	514,000
Accrued expenses		8,000		142,000
Deferred revenues		587,000		4,397,000
Current liabilities of discontinued operations	$	595,000	$	5,053,000

For fiscal 2020 and 2019, the Company reclassified the following for discontinued operations in the accompanying consolidated statements of operations:

	Fiscal Year
	2020		2019
Revenues:
System sales	$	-	$	98,000
Professional services		-		597,000
Maintenance and support		412,000		5,953,000
Software as a service		138,000		2,242,000
Transition service fees		394,000		-
Total revenues	$	944,000	$	8,890,000

Expenses:
Cost of Sales		294,000		2,129,000
Selling, general and administrative expenses		-		205,000
Research and development		-		865,000
Transition service cost		166,000		-
Deferred financing cost		128,000		-
Transaction costs		-		631,000
Total expenses		588,000		3,830,000

Miscellaneous expense		-		(25,000	)
Income from discontinued operations	$	356,000	$	5,035,000

Tabular disclosure of information related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 360
-SubTopic 10
-Section 50
-Paragraph 3A
-URI http://asc.fasb.org/extlink&oid=109226691&loc=SL51724579-110230

Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=109222650&loc=d3e1474-107760

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 5D
-URI http://asc.fasb.org/extlink&oid=109222650&loc=SL51721677-107760

Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 45
-Paragraph 11
-URI http://asc.fasb.org/extlink&oid=109222160&loc=SL51721533-107759

Reference 5: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 3A
-URI http://asc.fasb.org/extlink&oid=109222650&loc=SL51721659-107760

Reference 6: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
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+ Details

Organization and Description of Business (Details Narrative)	12 Months Ended
	Jan. 31, 2021 Segments
Accounting Policies [Abstract]
Number of operating segments	1

Significant Accounting Policies (Details Narrative) - USD ($)	12 Months Ended
	Jan. 31, 2021	Jan. 31, 2020	Jan. 31, 2019	Feb. 02, 2019
Deferred financing cost		$ 128,000
Total revenue	11,346,000	11,853,000
Allowance for doubtful accounts	65,000	96,000
Concession accrual amount	99,000	44,000
Depreciation expense	64,000	43,000
Right-of-use asset	391,000
Operating lease liability	420,000	174,000
Financing or capital lease obligations
Capitalized software development costs, net of accumulated amortization	3,507,000	7,283,000
Amortization expense	1,662,000	1,494,000
Impairment charge	164,000	354,000
Amortized and abandoned assets	5,437,000
Interest expense	51,000	309,000
Research and development expense	2,933,000	2,690,000	$ 2,690,000
Term loan fair value	2,206,000
Term loan	2,301,000	4,000,000
Term loan reduction amount	95,000
Recognized revenue from deferred revenue	4,026,000
Revenue of remaining performance obligations	$ 17,031,000
Revenue of remaining performance obligations, percent	55.56%
Revenue of remaining performance obligations description	The Company expects to recognize approximately 55.56% over the next 12 months and the remainder thereafter.
Deferred costs, net	$ 168,000	140,000
Deferred costs, accumulated amortization	126,000	284,000
Deferred costs, amortization expense	125,000	227,000
Deferred commissions costs paid and payable	283,000
Amortization expense with deferred sales commissions	206,000	150,000
Compensation expense	1,403,000	934,000
Cost of shares for tax withholding	256,000	99,000
Transition costs		789,000
Rationalization charges		388,000
Legal and accounting cost	230,000
Loss on exit of membership agreement	$ 105,000
Officers and Directors [Member]
Number shares of restricted stock	748,245	862,518
Rationalization charges description	The rationalization plan included a reduction in workforce of approximately twenty (20) employees, or approximately twenty percent (20%) of the Company's total workforce. As a result of the rationalization plan, the Company recorded $388,000 in one-time severance and other employee termination-related costs that was recorded within accrued expenses in fiscal 2019 and was paid in fiscal 2020.
Rationalization charges	$ 388,000
Common Stock [Member]
Number of stock surrendered	(162,095)	(75,487)
Number shares of restricted stock	1,395,917	912,518
Stock Based Awards [Member]
Compensation expense	$ 1,444,000	$ 934,000
Minimum [Member]
Finite-lived purchased intangible assets useful life	1 year
Maximum [Member]
Finite-lived purchased intangible assets useful life	10 years
Software [Member]
Capitalized software development costs, net of accumulated amortization	$ 1,103,000	1,274,000
Internal-Use Software [Member]
Capitalized software development costs, net of accumulated amortization	4,842,000	4,509,000
Capitalized Software Development Cost [Member]
Amortization expense	1,662,000	1,494,000
Interest expense	13,000	191,000
Right of Use Asset [Member]
Right-of-use asset	391,000
Operating lease liability	212,000	174,000
Right of Use Asset [Member] \| Adopted ASC 842 [Member]
Right-of-use asset				$ 175,000
Operating lease liability				$ 464,000
Other Non-current Assets [Member]
Deferred commissions costs paid and payable	666,000	394,000
SaaS Solution [Member]
Total revenue	95,000	41,000
Cost of revenue	$ 111,000	85,000
Revolving Credit Agreement [Member]
Deferred financing cost		$ 47,000

Significant Accounting Policies - Schedule of Non-Cash Items Related to Condensed Consolidated Statements of Cash Flow (Details) - USD ($)	12 Months Ended
	Jan. 31, 2021	Jan. 31, 2020
Accounting Policies [Abstract]
Escrowed funds from sale of ECM Assets	$ 800,000
Right-of Use Assets from operating lease	540,000
Capitalized software purchased with stock (Note 12)	$ 41,000

Significant Accounting Policies - Schedule of Bad Debt Expenses (Details) - USD ($)	12 Months Ended
	Jan. 31, 2021	Jan. 31, 2020
Accounting Policies [Abstract]
Bad debt benefit	$ (31,000)	$ (201,000)

Significant Accounting Policies - Schedule of Estimated Useful Life of Property and Equipment (Details)	12 Months Ended
	Jan. 31, 2021
Computer Equipment and Software [Member] \| Maximum [Member]
Property and equipment, useful lives	3 years
Computer Equipment and Software [Member] \| Minimum [Member]
Property and equipment, useful lives	4 years
Office Equipment [Member]
Property and equipment, useful lives	5 years
Office Furniture and Fixtures [Member]
Property and equipment, useful lives	7 years
Leasehold Improvements [Member]
Property and equipment, extimated useful lives	Term of lease or estimated useful life, whichever is shorter

Significant Accounting Policies - Schedule of Amortization Expense For Internally Developed Software (Details) - USD ($)	12 Months Ended
	Jan. 31, 2021	Jan. 31, 2020
Total amortization expense on internally-developed software	$ 1,662,000	$ 1,494,000
Cost of Systems Sales [Member]
Total amortization expense on internally-developed software	501,000	964,000
Cost of Software Service [Member]
Total amortization expense on internally-developed software	1,148,000	517,000
Cost of Audit Services [Member]
Total amortization expense on internally-developed software	$ 13,000	$ 13,000

Significant Accounting Policies - Schedule of Fair Value Assets and Liabilities Measured on Recurring Basis (Details) - USD ($)

Jan. 31, 2021

Jan. 31, 2020

Quoted Prices in Active Markets (Level 1) [Member]

$ 0

$ 969,000

Significant Other Observable Inputs (Level 2) [Member]

^[1]

Significant Unobservable Inputs (Level 3) [Member]

^[1]

^[1]

$ 969,000

[1]

The fair value of the royalty liability was determined based on discounting the portion of the modified royalty commitment payable in cash. During fiscal 2020 and 2019, the Company recognized a fair value adjustment of $31,000 and $64,000, respectively. In fiscal 2020, the royalty liability was paid in full (refer to Note 12 - Commitments and Contingencies for additional information on our royalty liability). There were no changes to the fair value methods. Fair value adjustments are included within miscellaneous expense in the consolidated statements of operations.

Significant Accounting Policies - Schedule of Fair Value Assets and Liabilities Measured on Recurring Basis (Details) (Parenthetical) - USD ($)	12 Months Ended
	Jan. 31, 2021	Jan. 31, 2020
Accounting Policies [Abstract]
Recognized fair value adjustments	$ 31,000	$ 64,000

Significant Accounting Policies - Schedule of Disaggregation of Revenue (Details) - USD ($)	12 Months Ended
	Jan. 31, 2021	Jan. 31, 2020
Total revenue	$ 11,346,000	$ 11,853,000
Systems Sales [Member]
Total revenue	590,000
Professional Services [Member]
Total revenue	618,000	1,163,000
Audit Services [Member]
Total revenue	1,891,000	1,712,000
Maintenance and Support [Member]
Total revenue	4,586,000	$ 5,356,000
Software as a Service [Member]
Total revenue	3,661,000
Recurring Revenue [Member]
Total revenue	8,400,000
Recurring Revenue [Member] \| Systems Sales [Member]
Total revenue	153,000
Recurring Revenue [Member] \| Professional Services [Member]
Total revenue
Recurring Revenue [Member] \| Audit Services [Member]
Total revenue
Recurring Revenue [Member] \| Maintenance and Support [Member]
Total revenue	4,586,000
Recurring Revenue [Member] \| Software as a Service [Member]
Total revenue	3,661,000
Non-recurring Revenue [Member]
Total revenue	2,946,000
Non-recurring Revenue [Member] \| Systems Sales [Member]
Total revenue	437,000
Non-recurring Revenue [Member] \| Professional Services [Member]
Total revenue	618,000
Non-recurring Revenue [Member] \| Audit Services [Member]
Total revenue	1,891,000
Non-recurring Revenue [Member] \| Maintenance and Support [Member]
Total revenue
Non-recurring Revenue [Member] \| Software as a Service [Member]
Total revenue

Amount, excluding tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value added and excise.

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+ Details

Significant Accounting Policies - Schedule of Basic and Diluted Net Loss Per Share of Common Stock (Details) - USD ($)

12 Months Ended

Jan. 31, 2021

Jan. 31, 2020