0001493152-22-025383 | 10-Q | XBRL Viewer | Streamline Health Solutions INC

Cost of software licenses

$ 5,992,000

$ 2,868,000

$ 11,927,000

$ 5,819,000

Operating expenses:

92,000

143,000

193,000

279,000

Cost of professional services

1,034,000

261,000

2,160,000

475,000

Cost of audit services

456,000

376,000

895,000

765,000

Cost of maintenance and support

90,000

80,000

136,000

166,000

Cost of software as a service

1,532,000

578,000

3,029,000

1,188,000

Selling, general and administrative expense

3,934,000

2,515,000

8,435,000

5,068,000

Research and development

1,461,000

964,000

2,773,000

1,941,000

Acquisition-related costs

49,000

336,000

139,000

777,000

Total operating expenses

8,648,000

5,253,000

17,760,000

10,659,000

Operating loss

(2,656,000)

(2,385,000)

(5,833,000)

(4,840,000)

Other (expense) income:

Interest expense

(189,000)

(9,000)

(321,000)

(22,000)

Other

(425,000)

(8,000)

108,000

6,000

Forgiveness of PPP loan and accrued interest

2,327,000

Loss from continuing operations before income taxes

(3,270,000)

(75,000)

(6,046,000)

(2,529,000)

Income tax (expense) benefit

(2,000)

4,000

(13,000)

(5,000)

Loss from continuing operations

(3,272,000)

(71,000)

(6,059,000)

(2,534,000)

Income from discontinued operations:

Income from discontinued operations

11,000

332,000

Income from discontinued operations, net of tax

11,000

332,000

Net loss

$ (3,272,000)

$ (60,000)

$ (6,059,000)

$ (2,202,000)

Basic Earnings Per Share:

Continuing operations

$ (0.07)

$ (0.13)

$ (0.06)

Discontinued operations

0.01

Net loss per share

$ (0.07)

$ (0.13)

$ (0.05)

Weighted average number of common shares – basic

^[1]

47,231,296

41,288,709

47,129,879

39,393,333

Diluted Earnings Per Share:

Weighted average number of common shares – diluted

47,410,949

41,737,231

47,348,455

39,960,998

Software Licenses [Member]

Revenue:

Professional Services [Member]

$ 52,000

$ 123,000

$ 135,000

Revenue:

1,038,000

30,000

2,282,000

108,000

Audit Services [Member]

Revenue:

Maintenance and Support [Member]

667,000

443,000

1,346,000

947,000

Revenue:

Software Service [Member]

1,118,000

1,087,000

2,228,000

2,144,000

Revenue:

Organization, Consolidation and Presentation of Financial Statements [Abstract]

$ 3,117,000

$ 1,308,000

$ 5,948,000

$ 2,485,000

[1]	Includes the effect of vested and excludes the effect of unvested restricted shares of common stock, which are considered non-participating securities. As of July 31, 2022 and 2021, there were 1,564,031 and 1,015,950 unvested restricted shares of common stock outstanding, respectively.

Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Total
Beginning balance, value at Jan. 31, 2021	$ 316,000	$ 96,290,000	$ (79,117,000)	$ 17,489,000
Beginning balance, shares at Jan. 31, 2021	31,597,975
Restricted stock issued	$ 7,000	(7,000)
Restricted stock issued, shares	740,752
Surrender of shares	$ (1,000)	(160,000)		(161,000)
Surrender of shares, shares	(78,562)
Share-based compensation		565,000		565,000
Net loss			(2,142,000)	(2,142,000)
Issuance of Common Stock	$ 101,000	15,999,000		16,100,000
Issuance of Common Stock, shares	10,062,500
Offering Expenses		(1,293,000)		(1,293,000)
Ending balance, value at Apr. 30, 2021	$ 423,000	111,394,000	(81,259,000)	30,558,000
Ending balance, shares at Apr. 30, 2021	42,322,665
Beginning balance, value at Jan. 31, 2021	$ 316,000	96,290,000	(79,117,000)	17,489,000
Beginning balance, shares at Jan. 31, 2021	31,597,975
Net loss				(2,202,000)
Ending balance, value at Jul. 31, 2021	$ 424,000	111,795,000	(81,319,000)	30,900,000
Ending balance, shares at Jul. 31, 2021	42,355,876
Beginning balance, value at Apr. 30, 2021	$ 423,000	111,394,000	(81,259,000)	30,558,000
Beginning balance, shares at Apr. 30, 2021	42,322,665
Restricted stock issued	$ 1,000	(1,000)
Restricted stock issued, shares	112,500
Restricted stock forfeited
Restricted stock forfeited, shares	(10,000)
Surrender of shares		(130,000)		(130,000)
Surrender of shares, shares	(69,289)
Share-based compensation		557,000		557,000
Net loss			(60,000)	(60,000)
Offering Expenses		(25,000)		(25,000)
Ending balance, value at Jul. 31, 2021	$ 424,000	111,795,000	(81,319,000)	30,900,000
Ending balance, shares at Jul. 31, 2021	42,355,876
Beginning balance, value at Jan. 31, 2022	$ 478,000	119,225,000	(86,659,000)	34,044,000
Beginning balance, shares at Jan. 31, 2022	47,840,950
Restricted stock issued	$ 4,000	(4,000)
Restricted stock issued, shares	408,031
Restricted stock forfeited
Restricted stock forfeited, shares	(63,900)
Surrender of shares	$ (1,000)	(140,000)		(141,000)
Surrender of shares, shares	(95,701)
Share-based compensation		326,000		326,000
Net loss			(2,787,000)	(2,787,000)
Ending balance, value at Apr. 30, 2022	$ 481,000	119,407,000	(88,446,000)	31,442,000
Ending balance, shares at Apr. 30, 2022	48,089,380
Beginning balance, value at Jan. 31, 2022	$ 478,000	119,225,000	(86,659,000)	34,044,000
Beginning balance, shares at Jan. 31, 2022	47,840,950
Net loss				(6,059,000)
Ending balance, value at Jul. 31, 2022	$ 488,000	119,737,000	(91,718,000)	28,507,000
Ending balance, shares at Jul. 31, 2022	48,801,181
Beginning balance, value at Apr. 30, 2022	$ 481,000	119,407,000	(88,446,000)	31,442,000
Beginning balance, shares at Apr. 30, 2022	48,089,380
Restricted stock issued	$ 7,000	(7,000)
Restricted stock issued, shares	726,801
Restricted stock forfeited
Restricted stock forfeited, shares	(20,000)
Share-based compensation		331,000		331,000
Net loss			(3,272,000)	(3,272,000)
Exercise of Stock Options		6,000		6,000
Exercise of Stock Options, shares	5,000
Ending balance, value at Jul. 31, 2022	$ 488,000	$ 119,737,000	$ (91,718,000)	$ 28,507,000
Ending balance, shares at Jul. 31, 2022	48,801,181

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jul. 31, 2022	Jul. 31, 2021
Statement of Cash Flows [Abstract]
Net Loss	$ (6,059,000)	$ (2,202,000)
LESS: Income from discontinued operations, net of tax		(332,000)
Loss from continuing operations	(6,059,000)	(2,534,000)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	27,000	37,000
Amortization of capitalized software development costs	847,000	984,000
Amortization of intangible assets	1,056,000	231,000
Amortization of other deferred costs	229,000	242,000
Change in fair value of acquisition earnout liability	(25,000)
Amortization of deferred financing costs	40,000
Share-based compensation expense	657,000	1,122,000
Provision (benefit) for accounts receivable allowance	21,000	(1,000)
Forgiveness of PPP loan and accrued interest		(2,327,000)
Changes in assets and liabilities:
Accounts and contract receivables	329,000	243,000
Other assets	(742,000)	(622,000)
Accounts payable	(109,000)	91,000
Accrued expenses and other liabilities	364,000	352,000
Deferred revenue	414,000	645,000
Net cash used in operating activities	(2,951,000)	(1,537,000)
Net cash provided by operating activities – discontinued operations		436,000
Cash flows from investing activities:
Proceeds from sale of ECM Assets		800,000
Purchases of property and equipment	(10,000)	(3,000)
Capitalization of software development costs	(871,000)	(706,000)
Net cash (used in) provided by investing activities	(881,000)	91,000
Cash flows from financing activities:
Proceeds from issuance of common stock		16,100,000
Payments for costs directly attributable to the issuance of common stock		(1,318,000)
Payments related to settlement of employee share-based awards	(141,000)	(291,000)
Payment for deferred financing costs		(38,000)
Other	6,000	(5,000)
Net cash (used in) provided by financing activities	(135,000)	14,448,000
Net (decrease) increase in cash and cash equivalents	(3,967,000)	13,438,000
Cash and cash equivalents at beginning of period	9,885,000	2,409,000
Cash and cash equivalents at end of period	$ 5,918,000	$ 15,847,000

BASIS OF PRESENTATION

6 Months Ended

Jul. 31, 2022

BASIS OF PRESENTATION

NOTE 1 — BASIS OF PRESENTATION

Streamline Health Solutions, Inc. and each of its wholly-owned subsidiaries, Streamline Health, LLC, Avelead Consulting, LLC, Streamline Consulting Solutions, LLC and Streamline Pay & Benefits, LLC, (collectively, unless the context requires otherwise, “we,” “us,” “our,” “Streamline,” or the “Company”), operate in one segment as a provider of healthcare information technology solutions and associated services. The Company provides these capabilities through the licensing of its Coding & CDI, eValuator coding analysis platform, RevID, and other workflow software applications and the use of such applications by software as a service (“SaaS”). The Company also provides audit and coding services to help customers optimize their internal clinical documentation and coding functions, as well as implementation and consulting services to complement its software solutions. The Company’s software and services enable hospitals and integrated healthcare delivery systems in the United States and Canada to capture, store, manage, route, retrieve and process patient clinical, financial and other healthcare provider information related to the patient revenue cycle.

The accompanying unaudited condensed consolidated financial statements have been prepared by us pursuant to the rules and regulations applicable to quarterly reports on Form 10-Q of the U.S. Securities and Exchange Commission (the “SEC”). Certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to those rules and regulations, although we believe that the disclosures made are adequate to make the information not misleading. The condensed consolidated financial statements include the accounts of Streamline Health Solutions, Inc. and each of its wholly-owned subsidiaries. In the opinion of the Company’s management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the condensed consolidated financial statements have been included. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s most recent annual report on Form 10-K. Operating results for the three and six months ended July 31, 2022 are not necessarily indicative of the results that may be expected for the fiscal year ending January 31, 2023.

Two or more operating segments may be aggregated into a single operating segment if they are considered to be similar. Operating segments are considered to be similar if they can be expected to have essentially the same economic characteristics and future prospects. Using the aggregation guidance, the Company determined that it has one operating segment due to the similar economic characteristics of the Company’s products, product development, distribution, regulatory environment and customer base as a provider of computer software-based solutions and services for acute-care healthcare providers. The Company has two reporting units for evaluation of intangible assets. These two reporting units are the legacy Streamline products and Avelead Consulting, LLC. Refer to “Note 3 – Business Combination and Divestiture”.

All amounts in the condensed consolidated financial statements, notes and tables have been rounded to the nearest thousand dollars, except share and per share amounts, unless otherwise indicated. All references to a fiscal year refer to the fiscal year commencing February 1 in that calendar year and ending on January 31 of the following calendar year.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jul. 31, 2022

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Our significant accounting policies are presented in “Note 2 – Significant Accounting Policies” in the fiscal year 2021 Annual Report on Form 10-K. Users of financial information for interim periods are encouraged to refer to the notes to the consolidated financial statements contained in the Annual Report on Form 10-K when reviewing interim financial results.

Use of Estimates

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

Fair Value of Financial Instruments

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

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

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

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

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value based on the short-term maturity of these instruments. Cash and cash equivalents are classified as Level 1. There were no transfers of assets or liabilities between Levels 1, 2, or 3 during the six months ended July 31, 2022 and 2021.

The table below provides information on the fair value of our liabilities:

		Total Fair		Quoted Prices in Active Markets		Significant Other Observable Inputs		Significant Unobservable Inputs
		Value		(Level 1)		(Level 2)		(Level 3)
At January 31, 2022
Acquisition earnout liability (1)	(1)	$	8,833,000	$	–	$	–	$	8,833,000
At July 31, 2022
Acquisition earnout liability (1)	(1)	$	8,808,000	$	–	$	–	$	8,808,000

(1)

The fair value of the acquisition earnout liability is based upon a probability-weighted discounted cash flow that was completed at the date of acquisition and updated as of July 31, 2022. The change in the fair value of the acquisition earnout liability increased $475,000 for the three months ended July, 31, 2022, and decreased $25,000 for the six months ended July 31, 2022. The change in the fair value is recognized in “other expense” in the accompanying condensed consolidated statement of operations.

The fair value of the Company’s term loan under its Second Amended and Restated Loan and Security Agreement was determined through an analysis of the interest rate spread from the date of closing the loan (August 2021) to the date of the most recent balance sheets, July 31, 2022 and January 31, 2022. The term loan bears interest at a per annum rate equal to the Prime Rate (as published in The Wall Street Journal) plus 1.5%, with a Prime “floor” rate of 3.25%. The prime rate is variable and, thus accommodates changes in the market interest rate. However, the interest rate spread (the 1.5% added to the Prime Rate) is fixed. We estimated the impact of the changes in the interest rate spread by analogizing the effect of the change in the Corporate bond rates, reduced for any changes in the market interest rate. This provided us with an estimated change to the interest rate spread of approximately 0.5% from the date we entered the debt agreement to the end of the second quarter, July 31, 2022 and end of the fiscal year, January 31, 2022. The discount to the value of the debt as of July 31, 2022 and January 31, 2022 was estimated to be $9,839,000 and $9,798,000, or a discount to book value of $161,000 and $202,000, respectively. Long-term debt is classified as Level 2.

Revenue Recognition

We derive revenue from the sale of internally-developed software, either by licensing for local installation or by a SaaS delivery model, through the Company’s direct sales force or through third-party resellers. Licensed, locally-installed customers on a perpetual model utilize the Company’s support and maintenance services for a separate fee, whereas term-based locally installed license fees and SaaS fees include support and maintenance. We also derive revenue from professional services that support the implementation, configuration, training and optimization of the applications, as well as audit services and consulting services.

We recognize revenue in accordance with Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers, 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 recognize revenue (Step 5 below) in accordance with that core principle after applying the following steps:

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

	●	Step 2: Identify the performance obligations in the contract

	●	Step 3: Determine the transaction price

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

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

Contracts may contain more than one performance obligation. Performance obligations are the unit of accounting for revenue recognition and generally represent the distinct goods or services that are promised to the customer. Revenue is recognized net of any taxes collected from customers and subsequently remitted to governmental authorities.

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

The determined transaction price is allocated based on the standalone selling price of the performance obligations in the contract. Significant judgment is required to determine the standalone selling price (“SSP”) for each performance obligation, the amount allocated to each performance obligation and whether it depicts the amount that the Company expects to receive in exchange for the related product and/or service. The Company recognizes revenue for implementation for certain of its eValuator SaaS solution over the contract term, as it has been determined that those implementation services are not a distinct performance obligation. Services for other SaaS and Software solutions such as CDI, RevID and Compare, have been determined as a distinct performance obligation. For these agreements, the Company estimates SSP of its software licenses using the residual approach when the software license is sold with other services and observable SSPs exist for the other services. The Company estimates the SSP for maintenance, professional services, software as a service and audit services based on observable standalone sales.

Contract Combination

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

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

Software Licenses

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

Maintenance and Support Services

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

Software-Based Solution Professional Services

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

Software as a Service

SaaS-based contracts include a right to use of the Company’s platform and support which represent a single promise to provide continuous access to its software solutions. Implementation services for the Company’s eValuator product are included as part of the single promise for its respective contracts. The Company recognizes revenue for implementation of the eValuator product over the contract term as it is determined that the implementation on eValuator is not a distinct performance obligation. Implementation services for other SaaS products are deemed to be separate performance obligations.

Audit Services

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

Disaggregation of Revenue

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

SCHEDULE OF DISAGGREGATION OF REVENUE

	July 31, 2022		July 31, 2021		July 31, 2022		July 31, 2021
	Three Months Ended				Six Months Ended
	July 31, 2022		July 31, 2021		July 31, 2022		July 31, 2021
Recurring revenue	$	4,235,000	$	2,395,000	$	8,176,000	$	4,629,000
Non-recurring revenue		1,757,000		473,000		3,751,000		1,190,000
Total revenue:	$	5,992,000	$	2,868,000	$	11,927,000	$	5,819,000

The Company includes revenue categories of (i) maintenance and support and (ii) software as a service as recurring revenue. The Company includes revenue categories of (i) software licenses, (ii) professional services, and (iii) audit services as non-recurring revenue.

Business Combinations

Acquisitions have been accounted for as business combinations, using the acquisition method and, accordingly, the results of operations of the acquired businesses have been included in the condensed consolidated financial statements since their dates of acquisition. The assets and liabilities assumed of these businesses were recorded in the financial statements at their respective estimated fair values as of the acquisition date. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the assets acquired and the liabilities assumed. While the Company uses its best estimates and assumptions as a part of the purchase price allocation process to accurately value the assets acquired, including intangible assets, and the liabilities assumed at the acquisition date, the Company’s estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the fair values of the assets acquired and the liabilities assumed, with a corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or the liabilities assumed, whichever comes first, any subsequent adjustments are reflected in our consolidated statements of operations.

Contract Receivables and Deferred Revenues

The Company receives payments from customers based upon contractual billing schedules. Contract receivables include amounts related to the Company’s contractual right to consideration for completed performance obligations not yet invoiced. Deferred revenue includes payments received in advance of performance under the contract. The Company’s contract receivables and deferred revenue are reported on an individual contract basis at the end of each reporting period. Contract receivables are classified as current or noncurrent based on the timing of when we expect to bill the customer. Deferred revenue is classified as current or noncurrent based on the timing of when we expect to recognize revenue. In the six months ended July 31, 2022, the Company recognized approximately $3,690,000 in revenue from deferred revenues outstanding as of January 31, 2022. Revenue allocated to remaining performance obligations was $21,833,000 as of July 31, 2022, of which the Company expects to recognize approximately 68% over the next 12 months and the remainder thereafter.

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

The Company defers the direct costs, which include salaries and benefits, for professional services related to SaaS contracts as a cost to fulfill a contract. These deferred costs will be amortized on a straight-line basis over the period of expected benefit which is the contractual term. As of July 31, 2022 and January 31, 2022, the Company had deferred costs of $112,000 and $125,000, respectively, net of accumulated amortization of $134,000 and $93,000, respectively. Amortization expense of these costs was $21,000 and $28,000 for the three months ended July 31, 2022 and 2021, respectively, and $40,000 and $67,000 for the six months ended July 31, 2022 and 2021, respectively, and is included in various costs of revenue in the condensed consolidated statements of operations.

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

As of July 31, 2022 and January 31, 2022, deferred commission costs paid and payable, which are included on the consolidated balance sheets within other non-current assets totaled $1,026,000 and $806,000, respectively, net of accumulated amortization of $597,000 and $408,000, respectively. For the three months ended July 31, 2022 and 2021, $95,000 and $90,000, respectively, and for the six months ended July 31, 2022 and 2021, $186,000 and $160,000, respectively, in amortization expense associated with deferred sales commissions was included in selling, general and administrative expenses in the condensed consolidated statements of operations. There were no impairment losses for these capitalized costs for these periods.

Equity Awards

The Company accounts for share-based payments based on the grant-date fair value of the awards with compensation cost recognized as expense over the requisite service period, and forfeitures are recognized as incurred. For awards to non-employees, the Company recognizes compensation expense in the same manner as if the entity had paid cash for the goods or services. The Company incurred total compensation expense related to share-based awards of $331,000 and $557,000 for the three months ended July 31, 2022 and 2021, respectively, and $657,000 and $1,122,000 in the six months ended July 31, 2022 and 2021, respectively.

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

The Company issues restricted stock awards in the form of Company common stock. The fair value of these awards is based on the market close price per share on the grant date. The Company expenses the compensation cost of these awards as the restriction period lapses, which is typically a one- to four-year service period.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and for tax credit and loss carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. In assessing net deferred tax assets, the Company considers whether it is more likely than not that some or all of the deferred tax assets will not be realized. The Company establishes a valuation allowance when it is more likely than not that all or a portion of deferred tax assets will not be realized. Refer to Note 6 – Income Taxes for further details.

The Company provides for uncertain tax positions and the related interest and penalties based upon management’s assessment of whether certain tax positions are more likely than not to be sustained upon examination by tax authorities. At July 31, 2022, the Company believes it has appropriately accounted for any uncertain tax positions.

Net Loss Per Common Share

The Company presents basic and diluted earnings per share (“EPS”) data for the Company’s common stock.

The Company’s unvested restricted stock awards are considered non-participating securities because holders are not entitled to non-forfeitable rights to dividends or dividend equivalents during the vesting term. Diluted EPS for the Company’s common stock is computed using the treasury stock method.

The following is the calculation of the basic and diluted net earnings (loss) per share of common stock for the three and six months ended July 31, 2022 and 2021:

	July 31, 2022			July 31,2021			July 31, 2022			July 31, 2021
	Three Months Ended						Six Months Ended
	July 31, 2022			July 31,2021			July 31, 2022			July 31, 2021
Basic earnings (loss) per share:
Continuing operations
Loss from continuing operations, net of tax	$	(3,272,000	)	$	(71,000	)	$	(6,059,000	)	$	(2,534,000	)
Basic net loss per share of common stock from continuing operations	$	(0.07	)	$	—			(0.13	)		(0.06	)

Discontinued operations
Income available to common stockholders from discontinued operations	$	—		$	11,000			—			332,000
Basic net earnings per share of common stock from discontinued operations	$	—		$	—		$	—		$	0.01

Diluted earnings (loss) per share:
Continuing operations
Loss available to common stockholders from continuing operations	$	(3,272,000	)	$	(71,000	)		(6,059,000	)		(2,534,000	)
Diluted net loss per share of common stock from continuing operations	$	(0.07	)	$	—			(0.13	)		(0.06	)

Discontinued operations
Income available to common stockholders from discontinued operations	$	—		$	11,000			—			332,000
Diluted net earnings per share of common stock from discontinued operations	$	—		$	—		$	—		$	0.01

Net loss	$	(3,272,000	)	$	(60,000	)	$	(6,059,000	)	$	(2,202,000	)
Weighted average shares outstanding - Basic (1)		47,231,296			41,288,709			47,129,879			39,393,333
Effect of dilutive securities - Stock options and Restricted stock (2)		179,653			448,522			218,576			567,665
Weighted average shares outstanding – Diluted		47,410,949			41,737,231			47,348,455			39,960,998
Basic net loss per share of common stock	$	(0.07	)	$	—		$	(0.13	)	$	(0.05	)
Diluted net loss per share of common stock	$	(0.07	)	$	—		$	(0.13	)	$	(0.05	)

(1)	Includes the effect of vested and excludes the effect of unvested restricted shares of common stock, which are considered non-participating securities. As of July 31, 2022 and 2021, there were 1,564,031 and 1,015,950 unvested restricted shares of common stock outstanding, respectively.

(2)	Diluted net loss per share excludes the effect of shares that are anti-dilutive. For the three and six months ended July 31, 2022, diluted earnings per share excludes 684,125 outstanding stock options and 1,564,031 unvested restricted shares of common stock. For the three and six months ended July 31, 2021, diluted earnings per share excludes 573,630 outstanding stock options and 1,015,950 unvested restricted shares of common stock.

Other Operating Costs

Acquisition-related Costs

SCHEDULE OF ACQUISITION RELATED COSTS

	July 31, 2022		July 31, 2021		July 31, 2022		July 31, 2021
	Three Months ended				Six Months ended
	July 31, 2022		July 31, 2021		July 31, 2022		July 31, 2021
Professional fees	$	49,000	$	336,000	$	139,000	$	427,000
Executive bonuses		—		—		—		350,000
Total acquisition-related costs	$	49,000	$	336,000	$	139,000	$	777,000

For the three months ended July 31, 2022 and 2021, the Company incurred certain acquisition-related costs related to the acquisition of Avelead totaling $49,000 and $336,000, respectively, consisting primarily of fees for professional services.

Non-Cash Items

For the three and six months ended July 31, 2021, the Company recorded the forgiveness of the PPP loan and accrued interest, totaling $2,327,000, as non-cash items related to the condensed consolidated statements of cash flow.

Accounting Pronouncements Recently Adopted

In July 2021, the FASB issued ASU 2021-05, Lessors - Certain Leases with Variable Lease Payments to ASC Topic 842, Leases (“ASC 842”) (“ASU 2021-05”). ASU 2021-05 provides additional ASC 842 classification guidance as it relates to a lessor’s accounting for certain leases with variable lease payments. ASU 2021-05 requires a lessor to classify a lease with variable payments that do not depend on an index or rate as an operating lease if either a sales-type lease or direct financing lease classification would trigger a day-one loss. ASU 2021-05 became effective for the Company on February 1, 2022. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements or disclosures.

Recent Accounting Pronouncements Not Yet Adopted

In November 2019, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), 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. The Company does not anticipate that the adoption of this ASU will have a material impact on the Company’s consolidated financial statements.

BUSINESS COMBINATION AND DIVESTITURE

6 Months Ended

Jul. 31, 2022

Business Combination and Asset Acquisition [Abstract]

BUSINESS COMBINATION AND DIVESTITURE

NOTE 3 — BUSINESS COMBINATION AND DIVESTITURE

Avelead Acquisition

The Company acquired all of the equity interests of Avelead Consulting, LLC (“Avelead”) as part of the Company’s strategic expansion into the acute-care health care revenue cycle management industry on August 16, 2021 (the “Transaction”). The acquisition was completed on August 16, 2021.

The aggregate consideration for the purchase of Avelead was approximately $29.7 million (at fair value) consisting of (i) $12.4 million in cash, net of cash acquired, (ii) $0.1 million in holdback, which was paid to sellers during the fourth quarter of fiscal 2021, (iii) $6.5 million in common stock, and (iv) approximately $10.7 million in contingent consideration (see below). The Company issued 5,021,972 shares of its restricted common stock (the “Acquisition Restricted Common Stock”). The Acquisition Restricted Common Stock has a fair value as of the closing date of the acquisition of $6.5 million. Additionally, the Company contracted two types of contingent consideration; the first is referred to herein as “SaaS Contingent Consideration” and the second is referred to herein as “Renewal Contingent Consideration.” The SaaS Contingent Consideration and Renewal Contingent Consideration had an aggregate value of approximately $10.7 million as of the date of closing. The owners of Avelead are also referred to herein as “Sellers” and are enumerated in the UPA (as defined below).

The Company acquired all of the equity interests of Avelead, effective August 16, 2021, pursuant to a Unit Purchase Agreement (hereafter referred to as the “UPA”). The UPA stated that the purchase price for Avelead at closing included a cash payment of $11.9 million. Additionally, the Company paid $285,000 of the Sellers’ closing costs, and $285,000 related to the working capital adjustment as defined in the UPA. Finally, at closing, the Company issued the Acquisition Restricted Common Stock with a fair value of approximately $6.5 million, based on a 30-day average of the closing price of the Company’s common stock prior to the closing date. The SaaS Contingent Consideration and the Renewal Contingent Consideration described in more detail below were included in the UPA as potential future consideration for the Transaction. These are reflected on the Company’s balance sheet as “Acquisition earnout liability.”

The Company acquired Avelead on a cash-free and debt-free basis. The Transaction was structured as a purchase of units (equity), however, Avelead was taxed as a partnership. Accordingly, the Company realized a step-up in the tax basis of the assets acquired and the goodwill is tax deductible. The gross deferred tax assets and liabilities will be consolidated, and the gross deferred tax assets have a full valuation allowance.

The contingent consideration is comprised of “SaaS Contingent Consideration” and “Renewal Contingent Consideration” which are described in more detail as follows:

●

The SaaS Contingent Consideration is calculated based upon Avelead’s recurring SaaS revenue recognized during the first and second year following the acquisition. The Company will pay the SaaS Contingent Consideration as follows: (i) 50% in cash and (ii) 50% in shares of Company common stock valued at the time the earnout is paid subject to a collar, as described below.

●	The first year of SaaS Contingent Consideration is calculated as 75% of Avelead’s recognized SaaS revenue from September 1, 2021 to August 31, 2022. The first-year payment is subject to a deduction of $665,000 spread equally between the cash and common stock portion of the earnout consideration. The first year earnout will be paid on or about October 15, 2022, subject to a dispute and resolution period. Assuming that Avelead is within 80% of its forecasted SaaS revenue in the first year earnout¹, the Company agreed to a floor and ceiling on the value of the Company’s restricted common stock issued as consideration for the earnout. That collar has a floor of $3.50 per share and a ceiling of $5.50 per share for the first year earnout.

●	The second year of SaaS Contingent Consideration is calculated as 40% of Avelead’s recognized SaaS revenue from September 1, 2022 to August 31, 2023. The second year earnout will be paid on or about October 15, 2023, subject to a dispute and resolution period. Assuming that Avelead is within 80% of its forecasted SaaS revenue in the second year earnout¹, the Company agreed to a floor and ceiling on the Company’s restricted common stock issued as consideration for the earnout. That collar has a floor of $4.50 per share and a ceiling of $6.50 per share for the second year earnout.

●

The Renewal Contingent Consideration is tied directly to a successful renewal of a specific customer of Avelead. To meet the definition of a renewal, Avelead must achieve a minimum threshold of contracted revenue in an updated, annual, renewed contract with the specified customer. The renewal occurs on or about June 1, 2022 and June 1, 2023. The Company will remit the Renewal Contingent Consideration on or about each of October 15, 2022 and 2023, respectively. The Renewal Contingent Consideration is payable in shares of Company restricted common stock valued as of the date of Closing. Accordingly, upon achieving the Renewal Contingent Consideration, the Company will issue 627,747 shares of restricted common stock on or about each of October 15, 2022 and October 15, 2023, subject to a dispute and resolution period. The Renewal Contingent Consideration is either earned or not earned based upon the renewal of the specified customer at the minimum amount of contracted revenue. There is no pro-ration of the underlying Renewal Contingent Consideration.

¹	If Avelead does not achieve 80% of its forecasted revenue, the price per share will revert back to the Company’s market price based upon a 30-day average.

The components of the total consideration as of the acquisition date are as follows:

(in thousands)
Components of total consideration, net of cash acquired:
Cash	$	11,900
Cash, seller expenses		285
Cash, estimated net working capital adjustment		285
Restricted Common Stock		6,554
Acquisition earnout liabilities		10,684	(a)
Total consideration	$	29,708

(a)

Acquisition earnout liabilities represents the net present value and risk adjusted probability of the required future payments underlying the Company’s SaaS Contingent Consideration and Renewal Contingent Consideration as described above. Due to the dates that the Company is required to measure, report and agree on the calculations, $4,734,000 is shown as a short-term liability and $4,074,000 is shown as a long-term liability as of July 31, 2022.

The acquisition earnout liability is re-measured at fair value on a recurring basis and the change to the liability is recorded as a valuation adjustment recorded through “other expenses or income” in the accompanying condensed consolidated statements of operations. The change in the fair value recorded for the six months ended July 31, 2022 was $25,000. A range of possible outcomes is not available under the specific valuation method that was used in determining fair value of the acquisition earnout liability.

The Company is presenting the allocation of the total consideration to net tangible and intangible assets as of the date of the closing of Avelead as follows:

(in thousands)
Net tangible assets (liabilities):
Accounts receivable	$	1,246
Unbilled revenue		200
Prepaid expenses		178
Fixed assets		37
Accounts payable		(490	)
Accrued expenses		(397	)
Deferred revenues		(863	)
Net tangible assets (liabilities)		(89	)
Goodwill		12,377
Customer Relationships (SaaS)		8,370
Customer Relationships (Consulting)		1,330
Internally Developed Software		6,380
Trademarks and Tradenames		1,340
Net assets acquired and liabilities assumed	$	29,708

The intangible assets recorded as a result of the Avelead acquisition, and their related estimated useful lives are as follows:

		Estimated Useful Lives
Goodwill		Indefinite
Customer Relationships (SaaS)		10 years
Customer Relationships (Consulting)		8 years
Internally Developed Software		9 years
Trademarks and Tradenames		15 years

The Company’s pro forma revenues and loss from continuing operations for the three and six months ended July 31, 2021, assuming Avelead was acquired on February 1, 2021, are as follows. The unaudited pro forma information is not necessarily indicative of the results of operations that the Company would have reported had the acquisition occurred at the beginning of these periods nor is it indicative of future results. The unaudited pro forma financial information does not reflect the impact of future events that may occur after the acquisition, including, but not limited to, anticipated costs savings from synergies or other operational improvements.

	Three Months ended July 31, 2021						Six Months ended July 31, 2021
	Actual			Pro Forma			Actual			Pro Forma
Revenues	$	2,868,000		$	5,039,000		$	5,819,000		$	10,521,000
Loss from continuing operations	$	(71,000	)	$	(1,082,000	)	$	(2,534,000	)	$	(3,696,000	)

Included in the accompanying unaudited pro forma statement of operations for the three months ended July 31, 2021 are $2,171,000 of Avelead revenue and $(1,011,000) of loss from continuing operations. For the three months ended July 31, 2022, Avelead contributed $2,478,000 to the Company’s consolidated revenues and $(770,000) to the Company’s consolidated loss from continuing operations. For the six months ended July 31, 2021, included are $4,702,000 of Avelead revenue and $(1,162,000), of loss from continuing operations. For the six months ended July 31, 2022, Avelead contributed $5,039,000 to the Company’s consolidated revenues and $(1,314,000) to the Company’s consolidated loss from continuing operations.

The Company entered into one employment agreement and one separation agreement with each of the two Sellers. Included in the transaction costs related to the Avelead acquisition is the cost of a two-year separation agreement with one Seller, fully expensed at the closing of the transaction. See Note 2 – Summary of Significant Accounting Policies. The employment agreement is a two-year employment agreement that entitles the Seller to a six-month separation pay in the case of termination without cause. The expense for the employment agreement is recognized ratably over the service period customary with other employment agreements within selling, general, and administrative expense.

The Company granted options to purchase 583,333 shares of the Company’s common stock to the Sellers at the closing of the Transaction. These options have a strike price of $1.53 per share, the closing stock price on the trading date immediately preceding the closing. 500,000 options were awarded to one Seller that will vest, monthly, over a three (3) year service period. The remaining 83,333 options were awarded to another Seller and vested immediately upon issuance. The Company utilized the Black-Scholes method to determine the grant-date fair value of these options. The 83,333 options were not exercised prior to their expiration date of November 15, 2021. The 500,000 options have a grant-date fair value of approximately $395,000 and are expensed over the vesting period within selling, general, and administrative expense.

Additionally, the Company granted 100,000 restricted stock awards (RSAs) to certain Avelead employees as of the closing date.

ECM Assets Divestiture

On February 24, 2020, the Company sold a portion of its business (the “ECM Assets”). The Company is reporting the results of operations and cash flows, and related balance sheet items associated with the ECM Assets in discontinued operations in the accompanying condensed consolidated statements of operations, cash flows and balance sheets for the current and comparative prior periods. Refer to Note 9 – Discontinued Operations for details of the Company’s discontinued operations.

OPERATING LEASES

6 Months Ended

Jul. 31, 2022

Operating Leases

OPERATING LEASES

NOTE 4 — OPERATING LEASES

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

Alpharetta Office Lease

On October 1, 2021, the Company entered into an agreement with a third-party to sublease its office space in Alpharetta, Georgia, (the “Sublease Agreement”). The sublease term is for 18 months which coincides with the Company’s underlying lease (see below). The Company expects to receive $292,000 from the sublessee over the term of the sublease. The sublease did not relieve the Company of its original obligation under the lease, and therefore the Company did not adjust the operating lease right-of-use asset and related liability. For the three and six months ended July 31, 2022, the Company recorded $48,000 and $96,000, respectively, as other income related to the sublease.

The Company entered into a lease for office space in Alpharetta, Georgia, on March 1, 2020. The lease terminates on March 31, 2023. At inception, the Company recorded a right-of use asset of $540,000, and related current and long-term operating lease obligation in the accompanying consolidated balance sheet. As of July 31, 2022, operating lease right-of use assets totaled $127,000, and the associated lease liability is included in current liabilities of $138,000. The Company used a discount rate of 6.5% to the determine the lease liability. For the three and six months ended July 31, 2022 and 2021, the Company had lease operating costs of approximately $48,000 and $97,000, respectively, for each period.

Maturities of operating lease liabilities associated with the Company’s operating lease as of July 31, 2022 are as follows for payments due based upon the Company’s fiscal year:


2022	$	106,000
2023		35,000
Total lease payments		141,000
Less present value adjustment		(3,000	)
Present value of lease liabilities	$	138,000

Suwanee Office Lease

Upon acquiring Avelead on August 16, 2021 (refer to Note 3 – Business Combination and Divestiture), the Company assumed an operating lease agreement for the corporate office space of Avelead. The lessor is an entity controlled by one of the Sellers that is employed by the Company The 36-month term lease commenced March 1, 2019 and expired on February 28, 2022. In February 2022, the Company renewed the lease for twelve months with monthly payments totaling $71,984 over the term of the lease. There is no renewal clause contained in the current lease. For the three and six months ended July 31, 2022, the Company recorded rent expense of $18,000 and $37,000, respectively.

DEBT

6 Months Ended

Jul. 31, 2022

Debt Disclosure [Abstract]

DEBT

NOTE 5 — DEBT

Term Loan Agreement and Discontinuance of Revolving Credit Facility

On August 26, 2021, the Company and its subsidiaries entered into the Second Amended and Restated Loan and Security Agreement with Bridge Bank, a division of Western Alliance Bank. Pursuant to the Second Amended and Restated Loan and Security Agreement, Bridge Bank agreed to provide the Company and its subsidiaries with a new term loan facility in the maximum principal amount of $10,000,000. Amounts outstanding under the term loan of the Second Amended and Restated Loan and Security Agreement bear interest at a per annum rate equal to the Prime Rate (as published in The Wall Street Journal) plus 1.5%, with a Prime “floor” rate of 3.25%. Pursuant to the Second Amended and Restated Loan and Security Agreement, the Company discontinued the existing $3,000,000 revolving credit facility with Bridge Bank. At the time of the discontinuance, there was no outstanding balance on the revolving credit facility.

The Second Amended and Restated Loan and Security Agreement has a five-year term, and the maximum principal amount was advanced in a single-cash advance on or about the closing date. Interest accrued under the Second Amended Loan and Security Agreement is due monthly, and the Company shall make monthly interest-only payments through the one-year anniversary of the closing date. From the first anniversary of the closing date through the maturity date, the Company shall make monthly payments of principal and interest that increase over the term of the agreement. The Second Amended and Restated Loan and Security Agreement requires principal repayments on the anniversary date of the closing of the debt agreement of $500,000 in the second year, $1,000,000 in the third year, $2,000,000 in the fourth year, and $3,000,000 in the fifth year, respectively, with the remaining outstanding principal balance and all accrued but unpaid interest due in full on the maturity date. The Second Amended and Restated Loan and Security Agreement may also require early repayments if certain conditions are met. The Second Amended and Restated Loan and Security Agreement is secured by substantially all of the assets of the Company, its subsidiaries, and certain of its affiliates.

The Company recorded $130,000 in deferred financing costs related to the Second Amended and Restated Loan and Security Agreement. These deferred financing costs are being amortized over the term of the loan. The Company will also incur $200,000 in financing costs at the earlier of the term date of the loan, or pre-payment. These costs are being accreted, through interest expense, to the full value of the $200,000 over the term of the loan.

The Second Amended and Restated Loan and Security Agreement includes customary financial covenants as follows:

	a.	Minimum Cash. Borrowers shall, at all times, maintain unrestricted cash of Borrowers at Bank in an amount not less than (i) on the Closing Date and for the first eleven (11) months immediately following the Closing Date, Five Million Dollars ($5,000,000) and (ii) at all times thereafter, Three Million Dollars ($3,000,000).

	b.	Maximum Debt to ARR Ratio. Borrowers’ Maximum Debt to ARR Ratio, measured on a quarterly basis as of the last day of each fiscal quarter, shall not be greater than the amount set forth under the heading “Maximum Debt to ARR Ratio” as of, and for each of the dates appearing adjacent to such “Maximum Debt to ARR Ratio”.

SCHEDULE OF MAXIMUM DEBT TO ARR RATIO

Quarter Ending			Maximum Debt to ARR Ratio
October 31, 2021			0.80 to 1.00
January 31, 2022			0.75 to 1.00
April 30, 2022			0.65 to 1.00
July 31, 2022			0.55 to 1.00
October 31, 2022			0.50 to 1.00
January 31, 2023			0.45 to 1.00

Maximum Debt to Adjusted EBITDA Ratio. Commencing with the quarter ending April 30, 2023, Borrowers’ Maximum Debt to Adjusted EBITDA Ratio, measured on a quarterly basis as of the last day of each fiscal quarter for the trailing four (4) quarter period then ended, shall not be greater than the amount set forth under the heading “Maximum Debt to Adjusted EBITDA Ratio” as of, and for each of the dates appearing adjacent to such “Maximum Debt to Adjusted EBITDA Ratio”.

Quarter Ending			Maximum Debt to Adjusted EBITDA Ratio
April 30, 2023			11.30 to 1.00
July 31, 2023			4.15 to 1.00
October 31, 2023			2.50 to 1.00
January 31, 2024 and on the last day of each quarter thereafter			2.00 to 1.00

Fixed Charge Coverage Ratio. Commencing with the quarter ending April 30, 2023, Borrowers shall maintain a Fixed Charge Coverage Ratio of not less than 1.20 to 1.00, measured on a quarterly basis as of the last day of each fiscal quarter for the trailing four (4) quarter period then ended.

The Second Amended and Restated Loan and Security Agreement also includes customary negative covenants, subject to exceptions, which limit transfers, capital expenditures, indebtedness, certain liens, investments, acquisitions, dispositions of assets, restricted payments and the business activities of the Company, as well as customary representations and warranties, affirmative covenants and events of default, including cross defaults and a change of control default. The line of credit also is subject to customary prepayment requirements. For the quarter ended July 31, 2022, the Company had a debt to ARR ratio of 0.59 to 1 and, therefore, was not in compliance with the maximum debt to ARR ratio covenant of the Second Amended and Restated Loan and Security Agreement. Subsequent to the Company’s quarter end, Western Alliance Bank provided a waiver of non-compliance for the debt to ARR ratio covenant for the period quarter July 31, 2022. For the quarter ended July 31, 2022, the Company was in compliance with all other covenants set forth in the Second Amended and Restated Loan and Security Agreement.

Term Loan and Revolving Credit Facility with Bridge Bank

On March 2, 2021, the Company entered into an Amended and Restated Loan and Security Agreement, which replaced and superseded the Loan and Security Agreement, consisting of a $3,000,000 revolving credit facility (the “Amended Loan and Security Agreement”). This revolving credit facility was replaced with the Second Amended and Restated Security Agreement (above) that was put in place on August 26, 2021. Accordingly, the Company wrote-off $43,000 of deferred financing costs from this loan as a loss on extinguishment of debt in the accompanying condensed consolidated statement of operations. The Second Amended and Restated Loan Security Agreement had a two-year term and included customary financial covenants including the requirements that the Company achieve certain EBITDA levels and certain recurring revenue levels. The Company could 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, could not deviate by more than 30% or $300,000. The Amended Loan and Security Agreement facility bore interest at a per annum rate equal to the higher of (a) the Prime Rate (as published in The Wall Street Journal) plus 1.00%, with a “floor” Prime Rate of 4.0%. The Amended Loan and Security agreement was secured by substantially all of our assets.

Outstanding principal balances on debt related to the new term loan agreement that the Company entered into on August 16, 2021 with Bridge Bank consisted of the following at:

	July 31, 2022			January 31, 2022
Term loan	$	10,000,000		$	10,000,000
Financing cost payable		45,000			21,000
Deferred financing cost		(101,000	)		(117,000	)
Total		9,944,000			9,904,000
Less: Current portion		(500,000	)		(250,000	)
Non-current portion of debt	$	9,444,000		$	9,654,000

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1B
-Subparagraph (i)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

INCOME TAXES

6 Months Ended

Jul. 31, 2022

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 6 — INCOME TAXES

Income taxes consist of the following:

SCHEDULE OF INCOME TAXES

	2022			2021
	July 31
	2022			2021
Current tax expense:
Federal	$	(8,000	)	$	—
State		(5,000	)		(5,000	)
Total current tax provision	$	(13,000	)	$	(5,000	)

At January 31, 2022, the Company had U.S. federal net operating loss carry forwards of $46,250,000. The Company also had state net operating loss carry forwards of $21,318,000 and Federal R&D credit carry forwards of $1,575,000 and Georgia R&D credit carry forwards of $94,000, all of which expire through fiscal 2041.

The effective income tax rate on continuing operations of approximately 21% differs from our combined federal and state statutory rate of 25.15% primarily due to the full valuation allowance the Company currently maintains on its net deferred tax asset.

The Company has recorded $318,000 and $315,000 in reserves for uncertain tax positions as of July 31, 2022 and January 31, 2022, respectively.

The Company and its subsidiaries are subject to U.S. federal income tax as well as income taxes in multiple state and local jurisdictions. The Company has concluded all U.S. federal tax matters for years through January 31, 2018. All material state and local income tax matters have been concluded for years through January 31, 2017. The Company is no longer subject to IRS examination for periods prior to the tax year ended January 31, 2018; however, carryforward losses that were generated prior to the tax year ended January 31, 2018 may still be adjusted by the IRS if they are used in a future period.

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.

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EQUITY

6 Months Ended

Jul. 31, 2022

Equity [Abstract]

EQUITY

NOTE 7 — EQUITY

Capital Raise

On February 25, 2021, the Company entered into an underwriting agreement with Craig-Hallum Capital Group LLC, as the sole managing underwriter, relating to the underwritten public offering of an aggregate of 10,062,500 shares of the Company’s common stock, par value $0.01 per share, which included 1,312,500 shares of common stock sold pursuant to the underwriter’s exercise of an option to purchase additional shares of common stock to cover over-allotments (the “Offering”). The price to the public in the Offering was $1.60 per share of common stock. The gross proceeds to the Company from the Offering were approximately $16,100,000, before deducting underwriting discounts, commissions, and estimated offering expenses. The Offering closed on March 2, 2021.

Registration of Shares Issued to 180 Consulting

On May 3, 2021, the Company filed a Registration Statement on Form S-3 (Registration No. 333-255723), which was subsequently amended on June 23, 2021, for purposes of registering for resale 248,424 shares of common stock issued to 180 Consulting, LLC (“180 Consulting”). The Registration Statement was declared effective by the SEC on July 14, 2021.

On June 22, 2022, the Company filed a Registration Statement on Form S-3 (Registration No. 333-265773) for purposes of registering for resale 272,653 shares of common stock issued to 180 Consulting, LLC. The Registration Statement was declared effective by the SEC on July 1, 2022.

Authorized Shares Increase

On May 24, 2021, the Company amended its Certificate of Incorporation to increase the total number of authorized shares of the Company’s common stock from 45,000,000 shares to 65,000,000 shares (the “Charter Amendment”). The Charter Amendment was previously approved by the board of directors (the “Board”) of the Company, subsequently approved by the Company’s stockholders at the 2021 Annual Meeting of Stockholders of the Company, held on May 20, 2021 (the “2021 Annual Meeting”), and ratified by the Company’s stockholders on July 29, 2021 at the Special Meeting (as defined and described in further detail below).

At the 2021 Annual Meeting, the Company’s stockholders approved an amendment to the Streamline Health Solutions, Inc. Third Amended and Restated 2013 Stock Incentive Plan to increase the number of shares of the Company’s common stock authorized for issuance thereunder by 2,000,000 shares, from 6,223,246 shares to 8,223,246 shares (the “Third Amended 2013 Plan Amendment”).

As described in the Company’s definitive proxy statement on Schedule 14A filed with the SEC on July 6, 2021, because there may have been uncertainty regarding the validity or effectiveness of the prior approval of the Charter Amendment, the authorized shares increase effected thereby and the Third Amended 2013 Plan Amendment at the 2021 Annual Meeting, the board of directors of the Company asked the Company’s stockholders to ratify the approval, filing and effectiveness of the Charter Amendment and the approval and effectiveness of the Third Amended 2013 Plan Amendment at a special meeting of the stockholders held on July 29, 2021 in order to eliminate such uncertainty (the “Special Meeting”). At the Special Meeting, the Company’s stockholders ratified the approval, filing and effectiveness of the Charter Amendment and the approval and effectiveness of the Third Amended 2013 Plan Amendment.

At the Annual Meeting of Stockholders held on June 7, 2022, the Company’s stockholders approved an amendment to the Streamline Health Solutions, Inc. Third Amended and Restated 2013 Stock Incentive Plan to increase the number of shares of the Company’s common stock authorized for issuance thereunder by 2,000,000 shares, from 8,223,246 shares to 10,223,246 shares. The Company’s stockholders also approved an amendment to the Company’s Certificate of Incorporation, as amended, to increase the total number of authorized shares of the Company’s common stock from 65,000,000 shares to 85,000,000 shares.

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

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Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jul. 31, 2022

COMMITMENTS AND CONTINGENCIES

NOTE 8 — COMMITMENTS AND CONTINGENCIES

Consulting Agreement with 180 Consulting

On March 19, 2020 the Company entered into a Master Services Agreement (the “MSA”) with 180 Consulting, pursuant to which 180 Consulting has provided and will continue to provide a variety of consulting services in support of eValuator products including product management, operational consulting, staff augmentation, internal systems platform integration and software engineering services, among others, through separate executed statements of work (“SOWs”). The Company has entered into eleven SOWs under the MSA. Some of the SOWs include the ability to earn stock at a conversion rate to be calculated 20 days after the execution of the related SOW. 180 Consulting earned a cumulative number of shares through July 31, 2022 totaling 630,983, and 109,906 shares for the six months ended July 31, 2022. The Company paid fees of $770,000 and $716,000, respectively, for services rendered by 180 Consulting during the six months ended July 31, 2022 and 2021. In addition, on February 22, 2022, the Company issued to 180 Consulting an aggregate of 78,031 shares as compensation for services previously rendered during the three months ended January 31, 2022. Also on June 15, 2022, the Company issued 56,070 shares as compensation for services previously rendered during the three months ended April 30, 2022. Such shares were issued in a private placement in reliance on the exemption from registration available under Section 4(a)(2) of the Securities Act, including Regulation D promulgated thereunder. The MSA includes a termination clause upon a 90-day written notice. While no related party has a direct or indirect material interest in this MSA or the related SOWs, individuals providing services to us under the MSA and the SOWs may share workspace and administrative costs with 121G Consulting (as defined and further discussed in Note 14 – Related Party Transactions in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2022).

On September 20, 2021, the Company entered into an additional Master Services Agreement with 180 Consulting to provide a variety of consulting services including product management, operational consulting, staff augmentation, internal systems platform integration and software engineering services, among others, to the Company in support of the Avelead products acquired through separate executed SOW’s. As of July 31, 2022, the Company has entered into two SOWs under the Avelead MSA. For services rendered by 180 Consulting during the three-month period ending July 31, 2022, the Company incurred fees totaling $260,000.

DISCONTINUED OPERATIONS

6 Months Ended

Jul. 31, 2022

Discontinued Operations and Disposal Groups [Abstract]

DISCONTINUED OPERATIONS

NOTE 9 – DISCONTINUED OPERATIONS

On February 24, 2020, the Company consummated the sale of the Company’s legacy Enterprise Content Management business (the “ECM Assets”).

For the three and six months ended July 31, 2021, the Company recorded the following into discontinued operations in the accompanying condensed consolidated statements of operations:

	Three Months Ended July 31, 2021		Six Months Ended July 31, 2021
Revenues:
Transition service fees	$	43,000	$	396,000
Total revenues		43,000		396.000

Expenses:
Cost of Sales		2,000		4,000
Transition service cost		30,000		60,000
Total expenses		32,000		64,000

Income from discontinued operations	$	11,000	$	332,000

The Company entered into an agreement with the Purchaser of the ECM Assets to maintain the current data center through a transition period. The transition services did not have a finite ending date at the signing of the agreement. However, the transition services were completed in the third quarter of fiscal 2021.

RELATED PARTY TRANSACTIONS

6 Months Ended

Jul. 31, 2022

RELATED PARTY TRANSACTIONS

NOTE 10 - RELATED PARTY TRANSACTIONS

Refer to Note 3 – Business Combination and Divestiture. The Company acquired Avelead on August 16, 2021. In addition, the Company assumed a consulting agreement with AscendTek, LLC (“AscendTek”), a software development and system design company. AscendTek is owned by one of the Sellers of Avelead. The Company entered into a separation agreement with this Seller of Avelead on closing of the Avelead acquisition. For the three and six months ended July 31, 2022, the Company incurred approximately $16,000 and $32,000, respectively, in research and development services provided by AscendTek. Additionally, we assumed a lease for corporate office space from a Seller that is now employed by the Company. This lease term ended February 2022 but was renewed for a term of 12 months (refer to Note 4 – Operating Leases).

SUBSEQUENT EVENTS

6 Months Ended

Jul. 31, 2022

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 11 — SUBSEQUENT EVENTS

We have evaluated subsequent events occurring after July 31, 2022, and based on our evaluation, except as set forth below, we did not identify any events that would have required recognition or disclosure in these condensed consolidated financial statements.

On August 31, 2022, the Company filed a Registration Statement on Form S-3 (Registration No. 333-267187) with the Securities and Exhange Commission (the “Commission”). The prospectus is part of a registration statement on Form S-3 that the Company filed with the Commission using a “shelf” registration process. Under this shelf registration process, we may, from time to time, offer and/or sell the securities referenced in this prospectus in one or more offerings for a maximum aggregate offering price not to exceed $25,000,000, subject to any applicable limits prescribed by General Instruction I.B.6 of Form S-3.

Subsequent to the Company’s quarter end, Western Alliance Bank provided a waiver of non-compliance for the debt to ARR ratio covenant for the period quarter July 31, 2022. For the quarter ended July 31, 2022, the Company was in compliance with all other covenants set forth in the Second Amended and Restated Loan and Security Agreement.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Jul. 31, 2022

Accounting Policies [Abstract]

Use of Estimates

Use of Estimates

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 the fair value of our liabilities:

		Total Fair		Quoted Prices in Active Markets		Significant Other Observable Inputs		Significant Unobservable Inputs
		Value		(Level 1)		(Level 2)		(Level 3)
At January 31, 2022
Acquisition earnout liability (1)	(1)	$	8,833,000	$	–	$	–	$	8,833,000
At July 31, 2022
Acquisition earnout liability (1)	(1)	$	8,808,000	$	–	$	–	$	8,808,000

(1)

Revenue Recognition

Revenue Recognition

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

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

	●	Step 2: Identify the performance obligations in the contract

	●	Step 3: Determine the transaction price

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

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

Contract Combination

Software Licenses

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:

SCHEDULE OF DISAGGREGATION OF REVENUE

	July 31, 2022		July 31, 2021		July 31, 2022		July 31, 2021
	Three Months Ended				Six Months Ended
	July 31, 2022		July 31, 2021		July 31, 2022		July 31, 2021
Recurring revenue	$	4,235,000	$	2,395,000	$	8,176,000	$	4,629,000
Non-recurring revenue		1,757,000		473,000		3,751,000		1,190,000
Total revenue:	$	5,992,000	$	2,868,000	$	11,927,000	$	5,819,000

Business Combinations

Contract Receivables and Deferred Revenues

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

Equity Awards

Equity Awards

Income Taxes

Income Taxes

Net Loss Per Common Share

Net Loss Per Common Share

The Company presents basic and diluted earnings per share (“EPS”) data for the Company’s common stock.

The following is the calculation of the basic and diluted net earnings (loss) per share of common stock for the three and six months ended July 31, 2022 and 2021:

	July 31, 2022			July 31,2021			July 31, 2022			July 31, 2021
	Three Months Ended						Six Months Ended
	July 31, 2022			July 31,2021			July 31, 2022			July 31, 2021
Basic earnings (loss) per share:
Continuing operations
Loss from continuing operations, net of tax	$	(3,272,000	)	$	(71,000	)	$	(6,059,000	)	$	(2,534,000	)
Basic net loss per share of common stock from continuing operations	$	(0.07	)	$	—			(0.13	)		(0.06	)

Discontinued operations
Income available to common stockholders from discontinued operations	$	—		$	11,000			—			332,000
Basic net earnings per share of common stock from discontinued operations	$	—		$	—		$	—		$	0.01

Diluted earnings (loss) per share:
Continuing operations
Loss available to common stockholders from continuing operations	$	(3,272,000	)	$	(71,000	)		(6,059,000	)		(2,534,000	)
Diluted net loss per share of common stock from continuing operations	$	(0.07	)	$	—			(0.13	)		(0.06	)

Discontinued operations
Income available to common stockholders from discontinued operations	$	—		$	11,000			—			332,000
Diluted net earnings per share of common stock from discontinued operations	$	—		$	—		$	—		$	0.01

Net loss	$	(3,272,000	)	$	(60,000	)	$	(6,059,000	)	$	(2,202,000	)
Weighted average shares outstanding - Basic (1)		47,231,296			41,288,709			47,129,879			39,393,333
Effect of dilutive securities - Stock options and Restricted stock (2)		179,653			448,522			218,576			567,665
Weighted average shares outstanding – Diluted		47,410,949			41,737,231			47,348,455			39,960,998
Basic net loss per share of common stock	$	(0.07	)	$	—		$	(0.13	)	$	(0.05	)
Diluted net loss per share of common stock	$	(0.07	)	$	—		$	(0.13	)	$	(0.05	)

(1)	Includes the effect of vested and excludes the effect of unvested restricted shares of common stock, which are considered non-participating securities. As of July 31, 2022 and 2021, there were 1,564,031 and 1,015,950 unvested restricted shares of common stock outstanding, respectively.

(2)	Diluted net loss per share excludes the effect of shares that are anti-dilutive. For the three and six months ended July 31, 2022, diluted earnings per share excludes 684,125 outstanding stock options and 1,564,031 unvested restricted shares of common stock. For the three and six months ended July 31, 2021, diluted earnings per share excludes 573,630 outstanding stock options and 1,015,950 unvested restricted shares of common stock.

Other Operating Costs

Other Operating Costs

Acquisition-related Costs

SCHEDULE OF ACQUISITION RELATED COSTS

	July 31, 2022		July 31, 2021		July 31, 2022		July 31, 2021
	Three Months ended				Six Months ended
	July 31, 2022		July 31, 2021		July 31, 2022		July 31, 2021
Professional fees	$	49,000	$	336,000	$	139,000	$	427,000
Executive bonuses		—		—		—		350,000
Total acquisition-related costs	$	49,000	$	336,000	$	139,000	$	777,000

Non-Cash Items

Non-Cash Items

Accounting Pronouncements Recently Adopted

Accounting Pronouncements Recently Adopted

Recent Accounting Pronouncements Not Yet Adopted

Recent Accounting Pronouncements Not Yet Adopted

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

6 Months Ended

Jul. 31, 2022

Accounting Policies [Abstract]

SCHEDULE OF FAIR VALUE ASSETS AND LIABILITIES MEASURED ON RECURRING BASIS

The table below provides information on the fair value of our liabilities:

		Total Fair		Quoted Prices in Active Markets		Significant Other Observable Inputs		Significant Unobservable Inputs
		Value		(Level 1)		(Level 2)		(Level 3)
At January 31, 2022
Acquisition earnout liability (1)	(1)	$	8,833,000	$	–	$	–	$	8,833,000
At July 31, 2022
Acquisition earnout liability (1)	(1)	$	8,808,000	$	–	$	–	$	8,808,000

(1)

SCHEDULE OF DISAGGREGATION OF REVENUE

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

SCHEDULE OF DISAGGREGATION OF REVENUE

	July 31, 2022		July 31, 2021		July 31, 2022		July 31, 2021
	Three Months Ended				Six Months Ended
	July 31, 2022		July 31, 2021		July 31, 2022		July 31, 2021
Recurring revenue	$	4,235,000	$	2,395,000	$	8,176,000	$	4,629,000
Non-recurring revenue		1,757,000		473,000		3,751,000		1,190,000
Total revenue:	$	5,992,000	$	2,868,000	$	11,927,000	$	5,819,000

SCHEDULE OF BASIC AND DILUTED NET LOSS PER SHARE OF COMMON STOCK

The following is the calculation of the basic and diluted net earnings (loss) per share of common stock for the three and six months ended July 31, 2022 and 2021:

	July 31, 2022			July 31,2021			July 31, 2022			July 31, 2021
	Three Months Ended						Six Months Ended
	July 31, 2022			July 31,2021			July 31, 2022			July 31, 2021
Basic earnings (loss) per share:
Continuing operations
Loss from continuing operations, net of tax	$	(3,272,000	)	$	(71,000	)	$	(6,059,000	)	$	(2,534,000	)
Basic net loss per share of common stock from continuing operations	$	(0.07	)	$	—			(0.13	)		(0.06	)

Discontinued operations
Income available to common stockholders from discontinued operations	$	—		$	11,000			—			332,000
Basic net earnings per share of common stock from discontinued operations	$	—		$	—		$	—		$	0.01

Diluted earnings (loss) per share:
Continuing operations
Loss available to common stockholders from continuing operations	$	(3,272,000	)	$	(71,000	)		(6,059,000	)		(2,534,000	)
Diluted net loss per share of common stock from continuing operations	$	(0.07	)	$	—			(0.13	)		(0.06	)

Discontinued operations
Income available to common stockholders from discontinued operations	$	—		$	11,000			—			332,000
Diluted net earnings per share of common stock from discontinued operations	$	—		$	—		$	—		$	0.01

Net loss	$	(3,272,000	)	$	(60,000	)	$	(6,059,000	)	$	(2,202,000	)
Weighted average shares outstanding - Basic (1)		47,231,296			41,288,709			47,129,879			39,393,333
Effect of dilutive securities - Stock options and Restricted stock (2)		179,653			448,522			218,576			567,665
Weighted average shares outstanding – Diluted		47,410,949			41,737,231			47,348,455			39,960,998
Basic net loss per share of common stock	$	(0.07	)	$	—		$	(0.13	)	$	(0.05	)
Diluted net loss per share of common stock	$	(0.07	)	$	—		$	(0.13	)	$	(0.05	)

(1)	Includes the effect of vested and excludes the effect of unvested restricted shares of common stock, which are considered non-participating securities. As of July 31, 2022 and 2021, there were 1,564,031 and 1,015,950 unvested restricted shares of common stock outstanding, respectively.

(2)	Diluted net loss per share excludes the effect of shares that are anti-dilutive. For the three and six months ended July 31, 2022, diluted earnings per share excludes 684,125 outstanding stock options and 1,564,031 unvested restricted shares of common stock. For the three and six months ended July 31, 2021, diluted earnings per share excludes 573,630 outstanding stock options and 1,015,950 unvested restricted shares of common stock.

SCHEDULE OF ACQUISITION RELATED COSTS

SCHEDULE OF ACQUISITION RELATED COSTS

	July 31, 2022		July 31, 2021		July 31, 2022		July 31, 2021
	Three Months ended				Six Months ended
	July 31, 2022		July 31, 2021		July 31, 2022		July 31, 2021
Professional fees	$	49,000	$	336,000	$	139,000	$	427,000
Executive bonuses		—		—		—		350,000
Total acquisition-related costs	$	49,000	$	336,000	$	139,000	$	777,000

Business Combination and Asset Acquisition [Abstract]

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

+ References + Details

BUSINESS COMBINATION AND DIVESTITURE (Tables)

6 Months Ended

Jul. 31, 2022

SCHEDULE OF COMPONENTS OF TOTAL CONSIDERATION

The components of the total consideration as of the acquisition date are as follows:

(in thousands)
Components of total consideration, net of cash acquired:
Cash	$	11,900
Cash, seller expenses		285
Cash, estimated net working capital adjustment		285
Restricted Common Stock		6,554
Acquisition earnout liabilities		10,684	(a)
Total consideration	$	29,708

(a)

SCHEDULE OF ALLOCATION OF THE TOTAL CONSIDERATION

The Company is presenting the allocation of the total consideration to net tangible and intangible assets as of the date of the closing of Avelead as follows:

(in thousands)
Net tangible assets (liabilities):
Accounts receivable	$	1,246
Unbilled revenue		200
Prepaid expenses		178
Fixed assets		37
Accounts payable		(490	)
Accrued expenses		(397	)
Deferred revenues		(863	)
Net tangible assets (liabilities)		(89	)
Goodwill		12,377
Customer Relationships (SaaS)		8,370
Customer Relationships (Consulting)		1,330
Internally Developed Software		6,380
Trademarks and Tradenames		1,340
Net assets acquired and liabilities assumed	$	29,708

SCHEDULE OF INTANGIBLE ASSETS ESTIMATED USEFUL LIVES

The intangible assets recorded as a result of the Avelead acquisition, and their related estimated useful lives are as follows:

		Estimated Useful Lives
Goodwill		Indefinite
Customer Relationships (SaaS)		10 years
Customer Relationships (Consulting)		8 years
Internally Developed Software		9 years
Trademarks and Tradenames		15 years

SCHEDULE OF PRO FORMA REVENUE AND NET EARNINGS

	Three Months ended July 31, 2021						Six Months ended July 31, 2021
	Actual			Pro Forma			Actual			Pro Forma
Revenues	$	2,868,000		$	5,039,000		$	5,819,000		$	10,521,000
Loss from continuing operations	$	(71,000	)	$	(1,082,000	)	$	(2,534,000	)	$	(3,696,000	)

OPERATING LEASES (Tables)

6 Months Ended

Jul. 31, 2022

Operating Leases

SCHEDULE OF MATURITIES OF OPERATING LEASE LIABILITIES

Maturities of operating lease liabilities associated with the Company’s operating lease as of July 31, 2022 are as follows for payments due based upon the Company’s fiscal year:


2022	$	106,000
2023		35,000
Total lease payments		141,000
Less present value adjustment		(3,000	)
Present value of lease liabilities	$	138,000

DEBT (Tables)

6 Months Ended

Jul. 31, 2022

Debt Disclosure [Abstract]

SCHEDULE OF MAXIMUM DEBT TO ARR RATIO

Quarter Ending			Maximum Debt to ARR Ratio
October 31, 2021			0.80 to 1.00
January 31, 2022			0.75 to 1.00
April 30, 2022			0.65 to 1.00
July 31, 2022			0.55 to 1.00
October 31, 2022			0.50 to 1.00
January 31, 2023			0.45 to 1.00

SCHEDULE OF MAXIMUM DEBT TO ADJUSTED EBITDA RATIO

Quarter Ending			Maximum Debt to Adjusted EBITDA Ratio
April 30, 2023			11.30 to 1.00
July 31, 2023			4.15 to 1.00
October 31, 2023			2.50 to 1.00
January 31, 2024 and on the last day of each quarter thereafter			2.00 to 1.00

SCHEDULE OF OUTSTANDING DEBT, OTHER THAN PPP LOAN

Outstanding principal balances on debt related to the new term loan agreement that the Company entered into on August 16, 2021 with Bridge Bank consisted of the following at:

	July 31, 2022			January 31, 2022
Term loan	$	10,000,000		$	10,000,000
Financing cost payable		45,000			21,000
Deferred financing cost		(101,000	)		(117,000	)
Total		9,944,000			9,904,000
Less: Current portion		(500,000	)		(250,000	)
Non-current portion of debt	$	9,444,000		$	9,654,000

INCOME TAXES (Tables)

6 Months Ended

Jul. 31, 2022

Income Tax Disclosure [Abstract]

SCHEDULE OF INCOME TAXES

Income taxes consist of the following:

SCHEDULE OF INCOME TAXES

	2022			2021
	July 31
	2022			2021
Current tax expense:
Federal	$	(8,000	)	$	—
State		(5,000	)		(5,000	)
Total current tax provision	$	(13,000	)	$	(5,000	)

DISCONTINUED OPERATIONS (Tables)

6 Months Ended

Jul. 31, 2022

Discontinued Operations and Disposal Groups [Abstract]

SCHEDULE OF DISCONTINUED OPERATIONS OF CONSOLIDATED STATEMENTS OF OPERATIONS

For the three and six months ended July 31, 2021, the Company recorded the following into discontinued operations in the accompanying condensed consolidated statements of operations:

	Three Months Ended July 31, 2021		Six Months Ended July 31, 2021
Revenues:
Transition service fees	$	43,000	$	396,000
Total revenues		43,000		396.000

Expenses:
Cost of Sales		2,000		4,000
Transition service cost		30,000		60,000
Total expenses		32,000		64,000

Income from discontinued operations	$	11,000	$	332,000

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.

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SCHEDULE OF FAIR VALUE ASSETS AND LIABILITIES MEASURED ON RECURRING BASIS (Details) - USD ($)

Jul. 31, 2022

Jan. 31, 2022

Acquisition earn out liability fair value, observable inputs

^[1]

$ 8,808,000

$ 8,833,000

Fair Value, Inputs, Level 1 [Member]

Acquisition earn out liability fair value, observable inputs

^[1]

Fair Value, Inputs, Level 2 [Member]

Acquisition earn out liability fair value, observable inputs

^[1]

Fair Value, Inputs, Level 3 [Member]

Acquisition earn out liability fair value, observable inputs

^[1]

$ 8,808,000

$ 8,833,000

[1]

SCHEDULE OF FAIR VALUE ASSETS AND LIABILITIES MEASURED ON RECURRING BASIS (Details) (Parenthetical) - USD ($)	3 Months Ended	6 Months Ended
	Jul. 31, 2022	Jul. 31, 2022
Restructuring Cost and Reserve [Line Items]
Acquisition earnout liability		$ 25,000
Avelead Consulting LLC [Member]
Restructuring Cost and Reserve [Line Items]
Acquisition earnout liability	$ 475,000	$ 25,000

SCHEDULE OF DISAGGREGATION OF REVENUE (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jul. 31, 2022	Jul. 31, 2021	Jul. 31, 2022	Jul. 31, 2021
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total revenue:	$ 5,992,000	$ 2,868,000	$ 11,927,000	$ 5,819,000
Fair Value, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total revenue:	4,235,000	2,395,000	8,176,000	4,629,000
Fair Value, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total revenue:	$ 1,757,000	$ 473,000	$ 3,751,000	$ 1,190,000

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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Loss from continuing operations, net of tax

SCHEDULE OF BASIC AND DILUTED NET LOSS PER SHARE OF COMMON STOCK (Details) - USD ($)

3 Months Ended

6 Months Ended

Jul. 31, 2022

Apr. 30, 2022

Jul. 31, 2021

Apr. 30, 2021

Jul. 31, 2022

Jul. 31, 2021

Continuing operations

$ (3,272,000)

$ (71,000)

$ (6,059,000)

$ (2,534,000)

Basic net loss per share of common stock from continuing operations

$ (0.07)

$ (0.13)

$ (0.06)

Discontinued operations

Income available to common stockholders from discontinued operations

$ 11,000

$ 332,000

Basic net earnings per share of common stock from discontinued operations

$ 0.01

Continuing operations

Loss available to common stockholders from continuing operations

$ (3,272,000)

$ (71,000)

$ (6,059,000)

$ (2,534,000)

Diluted net loss per share of common stock from continuing operations

$ (0.07)

$ (0.13)

$ (0.06)

Discontinued operations

Income available to common stockholders from discontinued operations

$ 11,000

$ 332,000

Diluted net earnings per share of common stock from discontinued operations

$ 0.01

Net loss

$ (3,272,000)

$ (2,787,000)

$ (60,000)

$ (2,142,000)

$ (6,059,000)

$ (2,202,000)

Weighted average shares outstanding - Basic

^[1]

47,231,296

41,288,709

47,129,879

39,393,333

Effect of dilutive securities - Stock options and Restricted stock

^[2]

179,653

448,522

218,576

567,665

Weighted average shares outstanding – Diluted

47,410,949

41,737,231

47,348,455

39,960,998

Basic net loss per share of common stock

$ (0.07)

$ (0.13)

$ (0.05)

Diluted net loss per share of common stock

$ (0.07)

$ (0.13)

$ (0.05)

[1]

Includes the effect of vested and excludes the effect of unvested restricted shares of common stock, which are considered non-participating securities. As of July 31, 2022 and 2021, there were 1,564,031 and 1,015,950 unvested restricted shares of common stock outstanding, respectively.

[2]

Diluted net loss per share excludes the effect of shares that are anti-dilutive. For the three and six months ended July 31, 2022, diluted earnings per share excludes 684,125 outstanding stock options and 1,564,031 unvested restricted shares of common stock. For the three and six months ended July 31, 2021, diluted earnings per share excludes 573,630 outstanding stock options and 1,015,950 unvested restricted shares of common stock.

SCHEDULE OF BASIC AND DILUTED NET LOSS PER SHARE OF COMMON STOCK (Details) (Parenthetical) - shares	3 Months Ended		6 Months Ended
	Jul. 31, 2022	Jul. 31, 2021	Jul. 31, 2022	Jul. 31, 2021
Unvested Restricted Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Diluted earnings per share			1,564,031	1,015,950
Share-Based Payment Arrangement, Option [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Diluted earnings per share	684,125	573,630

SCHEDULE OF ACQUISITION RELATED COSTS (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jul. 31, 2022	Jul. 31, 2021	Jul. 31, 2022	Jul. 31, 2021
Accounting Policies [Abstract]
Professional fees	$ 49,000	$ 336,000	$ 139,000	$ 427,000
Executive bonuses				350,000
Total acquisition-related costs	$ 49,000	$ 336,000	$ 139,000	$ 777,000

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jul. 31, 2022	Jul. 31, 2021	Jul. 31, 2022	Jul. 31, 2021	Jan. 31, 2022
Deferred revenue					$ 3,690,000
Revenue remaining performance obligation	$ 21,833,000		$ 21,833,000
Deferred costs	112,000		112,000		125,000
Accumulated amortization of deferred costs	134,000		134,000		93,000
Amortization expenses deferred costs	21,000	$ 28,000	40,000	$ 67,000
Accumulated amortization	597,000		597,000		408,000
Compensation expense related to share-based award			657,000	1,122,000
Acquisition related costs	49,000	336,000	139,000	777,000
Forgiveness of Ppp loan and accrued interest		2,327,000		2,327,000
Equity Award [Member]
Compensation expense related to share-based award	331,000	557,000	657,000	1,122,000
Selling, General and Administrative Expenses [Member]
Deferred sales commissions	95,000	$ 90,000	186,000	$ 160,000
Other Noncurrent Assets [Member]
Deferred commission costs	$ 1,026,000		$ 1,026,000		$ 806,000
Second Amended And Restated Loan And Security Agreement [Member]
Variable rate, description			The term loan bears interest at a per annum rate equal to the Prime Rate (as published in The Wall Street Journal) plus 1.5%, with a Prime “floor” rate of 3.25%. The prime rate is variable and, thus accommodates changes in the market interest rate. However, the interest rate spread (the 1.5% added to the Prime Rate) is fixed. We estimated the impact of the changes in the interest rate spread by analogizing the effect of the change in the Corporate bond rates, reduced for any changes in the market interest rate
Interest rate	0.50%		0.50%		0.50%
Debt discount	$ 9,839,000		$ 9,839,000		$ 9,798,000
Discount on book value	$ 161,000		$ 161,000		$ 202,000

SCHEDULE OF COMPONENTS OF TOTAL CONSIDERATION (Details) - Avelead Consulting LLC [Member]

Aug. 16, 2021

USD ($)

Business Acquisition [Line Items]

Cash

$ 12,400,000

Total consideration

29,700,000

Unit Purchase Agreement [Member]

Business Acquisition [Line Items]

Cash

11,900,000

Cash, seller expenses

285,000

Cash, estimated net working capital adjustment

285,000

Restricted Common Stock

6,554,000

Acquisition earnout liabilities

10,684,000

^[1]

Total consideration

$ 29,708,000

[1]

SCHEDULE OF COMPONENTS OF TOTAL CONSIDERATION (Details) (Parenthetical) - USD ($)	6 Months Ended
	Jul. 31, 2022	Jan. 31, 2022
Business Combination and Asset Acquisition [Abstract]
Short-term liability	$ 4,734,000	$ 4,672,000
Long-term liability	4,074,000	$ 4,161,000
Acquisition earnout liability change in valuation	$ 25,000

SCHEDULE OF ALLOCATION OF THE TOTAL CONSIDERATION (Details) - USD ($)	Jul. 31, 2022	Jan. 31, 2022	Aug. 16, 2021
Net tangible assets (liabilities):
Goodwill	$ 23,089,000	$ 23,089,000
Avelead Consulting LLC [Member]
Net tangible assets (liabilities):
Accounts receivable			$ 1,246,000
Unbilled revenue			200,000
Prepaid expenses			178,000
Fixed assets			37,000
Accounts payable			(490,000)
Accrued expenses			(397,000)
Deferred revenues			(863,000)
Net tangible assets (liabilities)			(89,000)
Goodwill			12,377,000
Customer Relationships (SaaS)			8,370,000
Customer Relationships (Consulting)			1,330,000
Internally Developed Software			6,380,000
Trademarks and Tradenames			1,340,000
Net assets acquired and liabilities assumed			$ 29,708,000

SCHEDULE OF INTANGIBLE ASSETS ESTIMATED USEFUL LIVES (Details)	Aug. 16, 2021
Acquired Finite-Lived Intangible Assets [Line Items]
Estimated useful lives, goodwill	Indefinite
Customer Relationships [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Estimated useful life, intangible assets	10 years
Customer Relationships Consulting [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Estimated useful life, intangible assets	8 years
Computer Software, Intangible Asset [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Estimated useful life, intangible assets	9 years
Trademarks and Trade Names [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Estimated useful life, intangible assets	15 years

SCHEDULE OF PRO FORMA REVENUE AND NET EARNINGS (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jul. 31, 2022	Jul. 31, 2021	Jul. 31, 2022	Jul. 31, 2021
Business Combination and Asset Acquisition [Abstract]
Revenues		$ 2,868,000		$ 5,819,000
Revenues		5,039,000		10,521,000
Loss from continuing operations	$ (3,272,000)	(71,000)	$ (6,059,000)	(2,534,000)
Loss from continuing operations		$ (1,082,000)		$ (3,696,000)

Amount after tax of income (loss) from continuing operations attributable to the parent.

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Amount of revenue recognized from goods sold, services rendered, insurance premiums, or other activities that constitute an earning process. Includes, but is not limited to, investment and interest income before deduction of interest expense when recognized as a component of revenue, and sales and trading gain (loss).

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BUSINESS COMBINATION AND DIVESTITURE (Details Narrative) - USD ($)		3 Months Ended		6 Months Ended
	Aug. 16, 2021	Jul. 31, 2022	Jul. 31, 2021	Jul. 31, 2022	Jul. 31, 2021
Business Acquisition [Line Items]
Business acquisition, pro forma revenue			$ 5,039,000		$ 10,521,000
Business acquisition, pro forma income loss from continuing operations, net of tax			(1,082,000)		(3,696,000)
Avelead Revenue [Member]
Business Acquisition [Line Items]
Business acquisition, pro forma income loss from continuing operations, net of tax		$ 2,478,000	1,011,000	$ 5,039,000	1,162,000
Avelead Consulting LLC [Member]
Business Acquisition [Line Items]
Business combination, consideration transferred	$ 29,700,000
Payments to acquire businesses, net of cash acquired	12,400,000
Business combination consideration holdback	100,000
Business acquisition, equity interest issued or issuable, value assigned	6,500,000
Business combination, contingent consideration, liability	$ 10,700,000
Business acquisition, pro forma revenue		$ 770,000	$ 2,171,000	$ 1,314,000	$ 4,702,000
Number of stock options granted	583,333
Share based compensation arrangement by share based payment award, options, outstanding, weighted average exercise price	$ 1.53
Avelead Consulting LLC [Member] \| Share-Based Payment Arrangement, Tranche One [Member]
Business Acquisition [Line Items]
Number of stock options granted	500,000
Share based compensation arrangement by share based payment award, award vesting period	3 years
Share based compensation arrangement by share based payment award, options, outstanding, intrinsic value	$ 395,000
Avelead Consulting LLC [Member] \| Share-Based Payment Arrangement, Tranche Two [Member]
Business Acquisition [Line Items]
Number of stock options granted	83,333
Avelead Consulting LLC [Member] \| Unit Purchase Agreement [Member]
Business Acquisition [Line Items]
Business combination, consideration transferred	$ 29,708,000
Payments to acquire businesses, net of cash acquired	11,900,000
Payments to acquire businesses seller expenses	285,000
Working capital	$ 285,000
Payment of SaaS contingent consideration in cash, percentage	50.00%
Payment of SaaS contingent consideration in cash, percentage	50.00%
First year payment of SaaS contingent consideration, description	The first year of SaaS Contingent Consideration is calculated as 75% of Avelead’s recognized SaaS revenue from September 1, 2021 to August 31, 2022. The first-year payment is subject to a deduction of $665,000 spread equally between the cash and common stock portion of the earnout consideration. The first year earnout will be paid on or about October 15, 2022, subject to a dispute and resolution period. Assuming that Avelead is within 80% of its forecasted SaaS revenue in the first year earnout1, the Company agreed to a floor and ceiling on the value of the Company’s restricted common stock issued as consideration for the earnout. That collar has a floor of $3.50 per share and a ceiling of $5.50 per share for the first year earnout
Second year Payment of SaaS contingent consideration, description	The second year of SaaS Contingent Consideration is calculated as 40% of Avelead’s recognized SaaS revenue from September 1, 2022 to August 31, 2023. The second year earnout will be paid on or about October 15, 2023, subject to a dispute and resolution period. Assuming that Avelead is within 80% of its forecasted SaaS revenue in the second year earnout1, the Company agreed to a floor and ceiling on the Company’s restricted common stock issued as consideration for the earnout. That collar has a floor of $4.50 per share and a ceiling of $6.50 per share for the second year earnout
Renewal contingent consideration, description	The Renewal Contingent Consideration is tied directly to a successful renewal of a specific customer of Avelead. To meet the definition of a renewal, Avelead must achieve a minimum threshold of contracted revenue in an updated, annual, renewed contract with the specified customer. The renewal occurs on or about June 1, 2022 and June 1, 2023. The Company will remit the Renewal Contingent Consideration on or about each of October 15, 2022 and 2023, respectively. The Renewal Contingent Consideration is payable in shares of Company restricted common stock valued as of the date of Closing. Accordingly, upon achieving the Renewal Contingent Consideration, the Company will issue 627,747 shares of restricted common stock on or about each of October 15, 2022 and October 15, 2023, subject to a dispute and resolution period. The Renewal Contingent Consideration is either earned or not earned based upon the renewal of the specified customer at the minimum amount of contracted revenue. There is no pro-ration of the underlying Renewal Contingent Consideration
Forecasted revenue description	If Avelead does not achieve 80% of its forecasted revenue, the price per share will revert back to the Company’s market price based upon a 30-day average
Avelead Consulting LLC [Member] \| Acquisition Restricted Common Stock [Member]
Business Acquisition [Line Items]
Business acquisition, equity interest issued or issuable, number of shares	5,021,972
Business acquisition equity fair value	$ 6,500,000
Business combination description	Additionally, the Company contracted two types of contingent consideration; the first is referred to herein as “SaaS Contingent Consideration” and the second is referred to herein as “Renewal Contingent Consideration.” The SaaS Contingent Consideration and Renewal Contingent Consideration had an aggregate value of approximately $10.7 million as of the date of closing.
Avelead Consulting LLC [Member] \| Acquisition Restricted Common Stock [Member] \| Unit Purchase Agreement [Member]
Business Acquisition [Line Items]
Business acquisition equity fair value	$ 6,500,000
Avelead Consulting LLC [Member] \| Restricted Stock Units (RSUs) [Member]
Business Acquisition [Line Items]
Number of stock options granted	100,000

SCHEDULE OF MATURITIES OF OPERATING LEASE LIABILITIES (Details)	Jul. 31, 2022 USD ($)
Operating Leases
2022	$ 106,000
2023	35,000
Total lease payments	141,000
Less present value adjustment	(3,000)
Present value of lease liabilities	$ 138,000

OPERATING LEASES (Details Narrative) - USD ($)			1 Months Ended	3 Months Ended	6 Months Ended
OPERATING LEASES (Details Narrative) - USD ($)	Oct. 02, 2021	Aug. 16, 2021	Feb. 28, 2022	Jul. 31, 2022	Jul. 31, 2022	Jan. 31, 2022	Oct. 31, 2021
Sublease income				$ 48,000	$ 96,000
Operating lease, right-of-use asset				127,000	127,000	$ 218,000
Current portion of operating lease obligation				138,000	138,000
Operating lease, cost				$ 48,000	$ 97,000
Right of Use Asset [Member]
Lessee, operating lease, discount rate				6.50%	6.50%
At inception [Member]
Operating lease, right-of-use asset							$ 540,000
Sublease Agreement [Member]
Sublease, term	18 months
Sublease income	$ 292,000
Suwanee Office Lease [Member]
Lease expiration date		Feb. 28, 2022
Operating lease, payments			$ 71,984
Payments for rent				$ 18,000	$ 37,000

SCHEDULE OF MAXIMUM DEBT TO ARR RATIO (Details)	Jul. 31, 2022
Minimum [Member]
Debt Instrument [Line Items]
Maximum Debt to ARR Ratio	0.59%
Maximum [Member]
Debt Instrument [Line Items]
Maximum Debt to ARR Ratio	1.00%
October 31, 2021 [Member] \| Minimum [Member]
Debt Instrument [Line Items]
Maximum Debt to ARR Ratio	0.80%
October 31, 2021 [Member] \| Maximum [Member]
Debt Instrument [Line Items]
Maximum Debt to ARR Ratio	1.00%
January 31, 2022 [Member] \| Minimum [Member]
Debt Instrument [Line Items]
Maximum Debt to ARR Ratio	0.75%
January 31, 2022 [Member] \| Maximum [Member]
Debt Instrument [Line Items]
Maximum Debt to ARR Ratio	1.00%
April 30, 2022 [Member] \| Minimum [Member]
Debt Instrument [Line Items]
Maximum Debt to ARR Ratio	0.65%
April 30, 2022 [Member] \| Maximum [Member]
Debt Instrument [Line Items]
Maximum Debt to ARR Ratio	1.00%
July 31, 2022 [Member] \| Minimum [Member]
Debt Instrument [Line Items]
Maximum Debt to ARR Ratio	0.55%
July 31, 2022 [Member] \| Maximum [Member]
Debt Instrument [Line Items]
Maximum Debt to ARR Ratio	1.00%
October 31, 2022 [Member] \| Minimum [Member]
Debt Instrument [Line Items]
Maximum Debt to ARR Ratio	0.50%
October 31, 2022 [Member] \| Maximum [Member]
Debt Instrument [Line Items]
Maximum Debt to ARR Ratio	1.00%
January 31, 2023 [Member] \| Minimum [Member]
Debt Instrument [Line Items]
Maximum Debt to ARR Ratio	0.45%
January 31, 2023 [Member] \| Maximum [Member]
Debt Instrument [Line Items]
Maximum Debt to ARR Ratio	1.00%

SCHEDULE OF MAXIMUM DEBT TO ADJUSTED EBITDA RATIO (Details)	Jul. 31, 2022
April 30, 2023 [Member] \| Minimum [Member]
Debt Instrument [Line Items]
Maximum Debt to Adjusted EBITDA Ratio	11.30%
April 30, 2023 [Member] \| Maximum [Member]
Debt Instrument [Line Items]
Maximum Debt to Adjusted EBITDA Ratio	1.00%
July 31, 2023 [Member] \| Minimum [Member]
Debt Instrument [Line Items]
Maximum Debt to Adjusted EBITDA Ratio	4.15%
July 31, 2023 [Member] \| Maximum [Member]
Debt Instrument [Line Items]
Maximum Debt to Adjusted EBITDA Ratio	1.00%
October 31, 2023 [Member] \| Minimum [Member]
Debt Instrument [Line Items]
Maximum Debt to Adjusted EBITDA Ratio	2.50%
October 31, 2023 [Member] \| Maximum [Member]
Debt Instrument [Line Items]
Maximum Debt to Adjusted EBITDA Ratio	1.00%
January 31, 2024 and on the last day of each quarter thereafter [Member] \| Minimum [Member]
Debt Instrument [Line Items]
Maximum Debt to Adjusted EBITDA Ratio	2.00%
January 31, 2024 and on the last day of each quarter thereafter [Member] \| Maximum [Member]
Debt Instrument [Line Items]
Maximum Debt to Adjusted EBITDA Ratio	1.00%

SCHEDULE OF OUTSTANDING DEBT, OTHER THAN PPP LOAN (Details) - USD ($)	Jul. 31, 2022	Jan. 31, 2022
Debt Disclosure [Abstract]
Term loan	$ 10,000,000	$ 10,000,000
Financing cost payable	45,000	21,000
Deferred financing cost	(101,000)	(117,000)
Total	9,944,000	9,904,000
Current portion	(500,000)	(250,000)
Non-current portion of debt	$ 9,444,000	$ 9,654,000

Amount, excluding unamortized premium (discount) and debt issuance cost, of long-term debt. Excludes lease obligation.

+ References + Details

DEBT (Details Narrative) - USD ($)	Aug. 26, 2021	Mar. 02, 2021	Jul. 31, 2022
Maximum [Member]
Line of Credit Facility [Line Items]
Maximum debt to ARR ratio			1.00%
Minimum [Member]
Line of Credit Facility [Line Items]
Maximum debt to ARR ratio			0.59%
Base Rate [Member]
Line of Credit Facility [Line Items]
Debt instrument, basis spread on variable rate	1.50%
Debt instrument, interest rate, stated percentage	3.25%
Bridge Bank [Member] \| Revolving Credit Facility [Member]
Line of Credit Facility [Line Items]
Extinguishment of debt, amount	$ 3,000,000
Security Agreement [Member] \| Bridge Bank [Member]
Line of Credit Facility [Line Items]
Line of credit facility, maximum borrowing capacity	10,000,000
Long term debt, maturity, year two	500,000
Long term debt, maturity, year three	1,000,000
Long term debt, maturity, year four	2,000,000
Long term debt, maturity, year five	3,000,000
Loan and Security Agreement [Member]
Line of Credit Facility [Line Items]
Deferred offering costs	130,000
Amortization of debt issuance costs	200,000
Accretion expense	$ 200,000
Debt financial covenants, description	Borrowers shall, at all times, maintain unrestricted cash of Borrowers at Bank in an amount not less than (i) on the Closing Date and for the first eleven (11) months immediately following the Closing Date, Five Million Dollars ($5,000,000) and (ii) at all times thereafter, Three Million Dollars ($3,000,000)
Loan and Security Agreement [Member] \| Maximum [Member]
Line of Credit Facility [Line Items]
Fixed charge coverage ratio			1.20%
Loan and Security Agreement [Member] \| Minimum [Member]
Line of Credit Facility [Line Items]
Fixed charge coverage ratio			1.00%
Amended and Restated Loan and Security Agreement [Member] \| Revolving Credit Facility [Member]
Line of Credit Facility [Line Items]
Line of credit facility, maximum borrowing capacity		$ 3,000,000
Loss on extinguishment of debt		$ 43,000
Line of credit facility, description		Additionally, the Company’s Bank EBITDA, measured on a monthly basis over a trailing three-month period then ended, could not deviate by more than 30% or $300,000. The Amended Loan and Security Agreement facility bore 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 OF INCOME TAXES (Details) - USD ($)	6 Months Ended
SCHEDULE OF INCOME TAXES (Details) - USD ($)	Jul. 31, 2022	Jul. 31, 2021
Current tax expense:
Federal	$ (8,000)
State	(5,000)	(5,000)
Total current tax provision	$ (13,000)	$ (5,000)

INCOME TAXES (Details Narrative) - USD ($)	6 Months Ended
INCOME TAXES (Details Narrative) - USD ($)	Jul. 31, 2022	Jan. 31, 2022
Operating Loss Carryforwards [Line Items]
Operating loss carry forwards		$ 46,250,000
Effective income tax rate reconciliation, percent	21.00%
Federal statutory income tax rates	25.15%
Uncertain tax positions	$ 318,000	315,000
Income tax description	The Company and its subsidiaries are subject to U.S. federal income tax as well as income taxes in multiple state and local jurisdictions. The Company has concluded all U.S. federal tax matters for years through January 31, 2018. All material state and local income tax matters have been concluded for years through January 31, 2017. The Company is no longer subject to IRS examination for periods prior to the tax year ended January 31, 2018; however, carryforward losses that were generated prior to the tax year ended January 31, 2018 may still be adjusted by the IRS if they are used in a future period
State [Member]
Operating Loss Carryforwards [Line Items]
Operating loss carry forwards		21,318,000
Federal RD [Member]
Operating Loss Carryforwards [Line Items]
Operating loss carry forwards		1,575,000
Georgia RD [Member]
Operating Loss Carryforwards [Line Items]
Operating loss carry forwards		$ 94,000

EQUITY (Details Narrative) - USD ($)			6 Months Ended
EQUITY (Details Narrative) - USD ($)	Jun. 07, 2022	Feb. 25, 2021	Jul. 31, 2022	Jul. 31, 2021	Jun. 22, 2022	May 24, 2021	May 23, 2021	May 03, 2021
Subsidiary, Sale of Stock [Line Items]
Proceeds from issuance of common stock				$ 16,100,000
Common stock, shares authorized						65,000,000	45,000,000
Number of additional shares authorized to issue	2,000,000		2,000,000
Minimum [Member]
Subsidiary, Sale of Stock [Line Items]
Common stock, shares authorized	65,000,000
Maximum [Member]
Subsidiary, Sale of Stock [Line Items]
Common stock, shares authorized	85,000,000
2013 Incentive Compensation Plan [Member] \| Stock Options [Member] \| Minimum [Member]
Subsidiary, Sale of Stock [Line Items]
Number of additional shares authorized to issue	8,223,246		6,223,246
2013 Incentive Compensation Plan [Member] \| Stock Options [Member] \| Maximum [Member]
Subsidiary, Sale of Stock [Line Items]
Number of additional shares authorized to issue	10,223,246		8,223,246
180 Consulting LLC [Member]
Subsidiary, Sale of Stock [Line Items]
Common stock issued for resale					272,653			248,424
Underwriting Agreement [Member] \| Craig-Hallum Capital Group LLC [Member]
Subsidiary, Sale of Stock [Line Items]
Stock issued during period, shares, new issues		10,062,500
Common stock, par or stated value per share		$ 0.01
Shares issued, price per share		$ 1.60
Proceeds from issuance of common stock		$ 16,100,000
Underwriting Agreement [Member] \| Craig-Hallum Capital Group LLC [Member] \| Over-Allotment Option [Member]
Subsidiary, Sale of Stock [Line Items]
Sale of stock, number of shares issued in transaction		1,312,500

COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($)			3 Months Ended		6 Months Ended
	Jun. 15, 2022	Feb. 22, 2022	Jul. 31, 2022	Jul. 31, 2021	Jul. 31, 2022	Jul. 31, 2021
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Stock Issued During Period, Shares, Issued for Services					109,906
Professional fees			$ 49,000	$ 336,000	$ 139,000	$ 427,000
Master Services Agreement [Member] \| 180 Consulting LLC [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Stock Issued During Period, Shares, Issued for Services					630,983
Professional fees					$ 770,000	$ 716,000
Shares issued for the compensation services	56,070	78,031
Avelead Master Services Agreement [Member] \| 180 Consulting LLC [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Professional fees					$ 260,000

SCHEDULE OF DISCONTINUED OPERATIONS OF CONSOLIDATED STATEMENTS OF OPERATIONS (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jul. 31, 2022	Jul. 31, 2021	Jul. 31, 2022	Jul. 31, 2021
Total revenues		$ 43,000		$ 396.000
Expenses: Cost of sales		2,000		4,000
Expenses: Transition service cost		30,000		60,000
Total expenses		32,000		64,000
Income from discontinued operations		11,000		332,000
Transition Service Fees [Member]
Total revenues		$ 43,000		$ 396,000