Streamline Health Solutions, Inc. 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
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þ |
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended July 31, 2007
or
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o |
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number: 0-28132
STREAMLINE HEALTH SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)
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Delaware
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31-1455414 |
(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.) |
10200 Alliance Road, Suite 200
Cincinnati, Ohio 45242-4716
(Address of principal executive offices) (Zip Code)
(513) 794-7100
(Registrants telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated
filer in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer o Accelerated filer o Non-accelerated filer þ
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). Yes o No þ
Number of shares of Registrants Common Stock ($.01 par value per share) issued and
outstanding, as of September 12, 2007: 9,245,320.
PART I. FINANCIAL INFORMATION
Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
STREAMLINE HEALTH SOLUTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
Assets
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(Unaudited) |
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(Audited) |
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July 31, |
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January 31, |
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2007 |
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2007 |
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Current assets: |
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Cash |
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$ |
509,118 |
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$ |
3,316,614 |
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Accounts receivable, net of allowance for doubtful
accounts of $200,000, respectively |
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1,409,914 |
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2,281,313 |
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Contract receivables |
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1,160,377 |
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1,357,433 |
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Prepaid expenses |
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874,969 |
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545,430 |
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Deferred tax asset |
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625,000 |
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625,000 |
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Total current assets |
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4,579,378 |
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8,125,790 |
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Property and equipment: |
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Computer equipment |
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2,087,047 |
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2,132,853 |
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Computer software |
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993,856 |
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847,328 |
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Office furniture, fixtures and equipment |
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739,393 |
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733,320 |
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Leasehold improvements |
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577,737 |
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568,098 |
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4,398,033 |
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4,281,599 |
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Accumulated depreciation and amortization |
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(2,937,798 |
) |
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(2,704,329 |
) |
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1,460,235 |
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1,577,270 |
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Contract receivables |
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554,888 |
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554,888 |
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Capitalized software development costs, net of accumulated
amortization of $5,879,901 and $5,116,568, respectively |
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3,990,024 |
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3,753,361 |
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Other, including deferred taxes of $1,250,000, respectively |
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1,333,180 |
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1,289,536 |
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$ |
11,917,705 |
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$ |
15,300,845 |
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See Notes to Condensed Consolidated Financial Statements.
3
STREAMLINE HEALTH SOLUTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
Liabilities and Stockholders Equity
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(Unaudited) |
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(Audited) |
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July 31, |
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January 31, |
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2007 |
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2007 |
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Current liabilities: |
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Accounts payable |
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$ |
751,910 |
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$ |
619,362 |
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Accrued compensation |
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460,636 |
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432,142 |
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Accrued other expenses |
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464,304 |
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541,904 |
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Deferred revenues |
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2,756,540 |
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3,693,668 |
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Current portion of capitalized leases |
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91,002 |
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Total current liabilities |
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4,433,390 |
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5,378,078 |
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Long-term debt |
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1,000,000 |
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Capitalized leases |
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56,049 |
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Non-current lease incentives |
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184,504 |
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222,484 |
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Stockholders equity: |
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Convertible redeemable preferred stock, $.01 par value per share
5,000,000 shares authorized |
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Common stock, $.01 par value per share, 25,000,000 shares
authorized, 9,245,320 and 9,211,399 shares issued, respectively |
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92,453 |
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92,114 |
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Capital in excess of par value |
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35,428,301 |
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35,286,238 |
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Accumulated (deficit) |
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(28,220,943 |
) |
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(26,734,118 |
) |
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Total stockholders equity |
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7,299,811 |
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8,644,234 |
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$ |
11,917,705 |
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$ |
15,300,845 |
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See Notes to Condensed Consolidated Financial Statements.
4
STREAMLINE HEALTH SOLUTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three and Six Months Ended July 31,
(Unaudited)
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Three Months |
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Six Months |
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2007 |
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2006 |
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2007 |
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2006 |
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Revenues: |
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Systems sales |
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$ |
101,215 |
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$ |
1,706,646 |
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$ |
864,339 |
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$ |
2,915,308 |
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Services, maintenance and support |
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2,195,530 |
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2,070,082 |
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4,325,019 |
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3,898,349 |
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Application-hosting services |
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906,470 |
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805,978 |
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1,793,257 |
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1,617,472 |
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Total revenues |
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3,203,215 |
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4,582,706 |
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6,982,615 |
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8,431,129 |
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Operating expenses: |
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Cost of systems sales |
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580,315 |
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929,511 |
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1,363,622 |
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1,555,918 |
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Cost of services, maintenance and
support |
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1,043,600 |
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853,663 |
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1,987,188 |
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1,692,335 |
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Cost of application-hosting services |
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279,730 |
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297,146 |
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555,159 |
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577,376 |
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Selling, general and administrative |
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1,404,337 |
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1,502,742 |
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2,821,671 |
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2,917,620 |
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Product research and development |
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949,446 |
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758,687 |
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1,755,901 |
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1,518,366 |
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Total operating expenses |
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4,257,428 |
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4,341,749 |
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8,483,541 |
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8,261,615 |
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Operating income (loss) |
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(1,054,213 |
) |
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240,957 |
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(1,500,926 |
) |
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169,514 |
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Other income (expense): |
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Interest income |
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3,142 |
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19,509 |
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17,232 |
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52,500 |
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Interest expense |
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(8,687 |
) |
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(41,739 |
) |
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(19,376 |
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(83,165 |
) |
Loss on disposal of property and
equipment |
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(11,546 |
) |
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(11,546 |
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Earnings (loss) before taxes |
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(1,071,304 |
) |
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218,727 |
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(1,514,616 |
) |
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138,849 |
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Income taxes |
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(4,000 |
) |
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(4,000 |
) |
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Net earnings (loss) |
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$ |
(1,071,304 |
) |
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$ |
214,727 |
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$ |
(1,514,616 |
) |
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$ |
134,849 |
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Basic net earnings (loss) per common share |
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$ |
(0.12 |
) |
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$ |
0.02 |
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$ |
(0.16 |
) |
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$ |
0.01 |
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Diluted net earnings (loss) per common share |
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$ |
(0.12 |
) |
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$ |
0.02 |
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$ |
(0.16 |
) |
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$ |
0.01 |
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Number of shares used in per common share
computations: |
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Basic |
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9,225,212 |
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9,189,642 |
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9,218,482 |
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9,179,165 |
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Diluted |
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9,225,212 |
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9,684,189 |
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9,218,482 |
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9,755,786 |
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See Notes to Condensed Consolidated Financial Statements.
5
STREAMLINE HEALTH SOLUTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended July 31,
(Unaudited)
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2007 |
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2006 |
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Operating activities: |
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Net (loss) earnings |
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$ |
(1,514,616 |
) |
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$ |
134,849 |
|
Adjustments to reconcile net (loss) earnings to net cash
(used for) operating activities: |
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Depreciation and amortization |
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1,113,719 |
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|
933,171 |
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Share-based compensation expense |
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55,571 |
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|
53,029 |
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Loss on disposal of property and equipment |
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11,546 |
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Cash (used for) provided by assets and liabilities: |
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Accounts and contract receivables |
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1,068,455 |
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(1,756,706 |
) |
Other current assets |
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|
(329,539 |
) |
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|
(209,962 |
) |
Accounts payable and accrued expenses |
|
|
111,233 |
|
|
|
(904,824 |
) |
Deferred revenues |
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(937,128 |
) |
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|
1,147,357 |
|
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Net cash (used for) operating activities |
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(420,759 |
) |
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(603,086 |
) |
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Investing activities: |
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Purchases of property and equipment |
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(383,672 |
) |
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(256,672 |
) |
Proceeds from disposal of property and equipment |
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|
138,775 |
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|
Long-term lease incentive |
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|
(37,980 |
) |
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|
(32,948 |
) |
Capitalization of software development costs |
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(999,996 |
) |
|
|
(799,998 |
) |
Other |
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(43,644 |
) |
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(24,092 |
) |
|
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Net cash (used for) investing activities |
|
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(1,326,517 |
) |
|
|
(1,113,710 |
) |
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Financing activities: |
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Payment of long-term debt |
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(1,000,000 |
) |
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|
(1,000,000 |
) |
Payment of capitalized leases |
|
|
(147,051 |
) |
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|
(41,745 |
) |
Exercise of stock options and employee stock purchase plan |
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|
86,831 |
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|
|
85,318 |
|
|
|
|
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Net cash (used for) financing activities |
|
|
(1,060,220 |
) |
|
|
(956,427 |
) |
|
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|
|
|
|
|
|
|
|
|
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(Decrease) in cash |
|
|
(2,807,496 |
) |
|
|
(2,673,223 |
) |
Cash at beginning of period |
|
|
3,316,614 |
|
|
|
4,634,219 |
|
|
|
|
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Cash at end of period |
|
$ |
509,118 |
|
|
$ |
1,960,996 |
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Supplemental cash flow disclosures: |
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Interest paid |
|
$ |
20,987 |
|
|
$ |
83,165 |
|
|
|
|
|
|
|
|
Income taxes paid |
|
$ |
6,775 |
|
|
$ |
38,300 |
|
|
|
|
|
|
|
|
See Notes to Condensed Consolidated Financial Statements.
6
STREAMLINE HEALTH SOLUTIONS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 BASIS OF PRESENTATION
The accompanying unaudited Condensed Consolidated Financial Statements have been prepared by
Streamline Health Solutions, Inc. (Streamline Health® or the Company) without audit,
in accordance with U.S. generally accepted accounting principles for interim financial information,
pursuant to the rules and regulations applicable to quarterly reports on Form 10-Q of the U. S.
Securities and Exchange Commission. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation of the Condensed Consolidated Financial Statements have been
included. These Condensed Consolidated Financial Statements should be read in conjunction with the
financial statements and notes thereto included in the most recent Streamline Health Solutions,
Inc. Annual Report on Form 10-K, Commission File Number 0-28132. Operating results for the three
and six months ended July 31, 2007, are not necessarily indicative of the results that may be
expected for the fiscal year ending January 31, 2008.
Note 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the Companys significant accounting policies is presented beginning on page 40 of its
fiscal year ending January 31, 2007 Annual Report on Form 10-K. Users of financial information for
interim periods are encouraged to refer to the footnotes contained in the Annual Report when
reviewing interim financial results. There has been no material change in the accounting policies
followed by the Company during the current year.
Note 3 CHANGES IN BALANCE SHEET ACCOUNT BALANCES
The decrease in cash during the first six months results primarily from: the repayment of
$1,000,000 in long-term debt, acquisition of property and equipment in the amount of $383,672,
capitalized software in the amount of $999,996 and the use of cash in the amount of $420,759 for
operations.
The decrease in accounts receivable results from collection of outstanding balances and lower
revenues during the first six months.
Prepaid expenses consist of software and hardware awaiting installation (related to unrecognized
revenue) and prepaid expenses, including commissions. The increase results from prepaid bonuses
and commissions related to deferred revenues.
The increase in accounts payable results primarily from the timing of payments during the second
quarter.
7
The decrease in deferred revenues reflects the amortization of prepaid maintenance payments
received in prior periods.
Note 4
EQUITY AWARDS
During the first six months of the current fiscal year, the Company granted 30,000 options at $4.35
per share. During the same period, 20,000 options were forfeited and 16,500 options were exercised
under all plans during the first six months. The expense relating to the fair value of equity
awards included in the first six of fiscal year 2006 and 2007 operating expenses amounted to
$53,029 and $55,571, respectively.
The assumptions used to calculate the fair value of equity awards granted are evaluated and
revised, as necessary, to reflect current market conditions and prior experience.
Note 5
INCOME TAXES
The Company adopted Financial Accounting Standards Board Interpretation 48, Accounting for
Uncertainty in Income Taxes (FIN 48), at the beginning of fiscal year 2007. FIN 48 requires the
Company to evaluate whether the tax positions taken by the Company will more likely than not be
sustained upon examination by the appropriate taxing authority. It also provides guidance on how a
company should measure the amount of the benefit that that the Company recognizes in its financial
statements. As a result of the implementation of FIN 48, the changes to the Companys reserve for
uncertain tax positions was accounted for as a $27,791 adjustment to increase the beginning balance
of retained earnings on the Companys balance sheet. The Company believes that its income tax
positions and deductions will be sustained on audit and does not anticipate adjustments that will
result in a material change to its financial position during the next twelve months. Therefore, no
reserves for uncertain tax positions have been recorded pursuant to FIN 48 as of January 31, 2007
and July 31, 2007.
The Company and its subsidiary are subject to U.S. Federal income tax as well as income taxes in
multiple state and local jurisdictions. The Company has concluded all U.S. Federal tax matters for
years through January 31, 2003. All material state and local income tax matters have been
concluded for years through January 31, 2002.
The Company has a net operating tax loss carry forward in excess of $29,000,000.
Note 6 EARNINGS PER SHARE
The basic (loss) per common share is calculated using the weighted average number of common shares
outstanding during the period.
The 2007 diluted net (loss) per common share calculation, excludes the effect of the common stock
equivalents (stock options and warrants), as the inclusion thereof would be antidilutive. The
Company had approximately 455,000 equity award shares and 750,000 warrant shares outstanding at
July 31, 2007 that were not included in the diluted net (loss) per share calculation
8
as the inclusion thereof would be antidilutive.
The 2006 diluted net earnings per common share calculation, is based on the weighted average number
of common shares outstanding adjusted for the dilutive effect of the common stock equivalents
(warrants, stock appreciation rights (SAR), stock options and the employee stock purchase plan) of
494,547 shares in the second quarter and 576,621 shares in the first six months of 2006. The
Company had approximately 55,000 stock options and 25,000 SARs outstanding at July 31, 2006 that
were not included in the diluted net earnings per share calculations as the inclusion thereof would
be antidilutive.
Note 7
EMPLOYEE STOCK PURCHASE PLAN.
During the second quarter of 2007 the Company issued 17,421 shares of Common stock at $3.56 per
share in accordance with the Employee Stock Purchase Plan.
Note 8 DEBT
In January 2007, Streamline Health prepaid its then existing term debt and entered into a new three
year $5,000,000 working capital revolving line of credit facility, with an option for two one-year
extensions. The loan is secured by all of the assets of Streamline Health and the loan agreement
restricts Streamline Health from incurring additional indebtedness for borrowed money, including
capitalized leases, etc. without lender consent. The Company is required to meet certain financial
covenants, including minimum level of tangible net worth, minimum working capital, fixed charge
ratio coverage and funded indebtedness to earnings before interest, taxes, depreciation and
amortization ratio (EBITDA). These requirements may limit the borrowing under this credit
agreement. At July 31, 2007, the Company did not meet three financial covenants for borrowing
under the facility: minimum working capital; fixed charge coverage ratio and tangible net worth
covenants. The bank has waived the covenants that the Company was not in compliance with at July
31, 2007 on the condition that the Company and the Lender agree to the terms of a restructuring of
the Companys Note and Guarantee Agreement, on terms satisfactory to the Lender by October 10,
2007. Accordingly, the Company currently has the ability to utilize approximately $1,000,000 of
the line of credit. If the Company and the lender are unable to agree to revised terms by October
10, 2007, the Company would not be able to borrow under then facility, if needed, after October 10,
2007. Interest on this facility ranges from Prime minus 1% to Prime based on the amount borrowed
to EBITDA. The Company pays a commitment fee on the unused portion of the facility of .35%. There
were no amounts borrowed on the line of credit during the first two quarters of the current fiscal
year and no amounts were outstanding at January 31, 2007 or July 31, 2007.
In 1998, Streamline Health issued a $6,000,000 note which was repaid in full in July, 2004. In
connection with the issuance of the note, Streamline Health issued Warrants to purchase 750,000
shares of Common Stock of Streamline Health at $3.87 per share at any time through July 16, 2008.
The Warrants are subject to customary antidilution and registration rights provisions.
9
Note 9
WARRANTIES AND INDENMNITIES
Streamline Health provides for the estimated cost of the product warranties at the time revenue is
recognized. Should products fail to meet certain performance standards for an initial warranty
period, Streamline Healths estimated warranty liability might need to be increased. Streamline
Health bases its warranty estimates on the nature of any performance complaint, the effort
necessary to resolve the issue, customer requirements and any potential concessions, which may be
required to be granted to a customer, which result from performance issues. Streamline Healths
ASPeN application-hosting services guarantees specific up-time and response time performance
standards, which, if not met may result in reduced revenues, as a penalty, for the month in which
the standards are not met. Streamline Healths standard agreements with its customers also usually
include provisions to indemnify them from and against third party claims, liabilities, damages, and
expenses arising out of Streamline Healths operation of its business or any negligent act or
omission of Streamline Health. To date, Streamline Health has always maintained the ASPeN
performance standards and has not been required to make any material penalty payments to customers
or indemnify any customers for any material third party claims. At July 31, 2007 and 2006,
Streamline Health had a warranty reserve in the amount of $250,000. Each contract is reviewed
quarterly with the appropriate Streamline Health Client Manager to determine the need for a
warranty reserve based upon the most currently available information as to the status of the
contract, the customer comments, if any, and the status of any open or unresolved issues with the
customer.
Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
In addition to historical information contained herein, this Quarterly Report on Form 10-Q contains
forward-looking statements. The forward-looking statements contained herein are subject to certain
risks and uncertainties that could cause actual results to differ materially from those reflected
in the forward-looking statements, included herein. These risks and uncertainties include, but are
not limited to, long sales cycles, the expectations and timing of the execution of new licensing
agreements and the related timing of the revenue recognition related thereto, the impact that
increased expenditures on infrastructure and products could have on operations which may not result
in projected increases in revenues, the timing and implementation of new agreements, the impact of
competitive products and pricing, product demand and market acceptance, new product development,
key strategic alliances with vendors that resell Streamline Health products, the potential
cancellation of existing contracts or clients not completing projects in the current backlog, the
ability of Streamline Health to control costs, availability of products obtained from third-party
vendors, the healthcare regulatory environment, healthcare information system budgets, availability
of healthcare information systems trained personnel for implementation of new systems, as well as
maintenance of legacy systems, fluctuations in operating results and other risk factors that might
cause such differences including those discussed herein. Readers are cautioned not to place undue
reliance on these forward-looking statements, which reflect managements analysis only as of the
date hereof. The Registrant undertakes no obligation to publicly revise these forward-looking
statements, to reflect events or circumstances that arise after the date hereof. Readers should
carefully review the risk factors described in other documents Streamline Health files from time to
time with the Securities and Exchange Commission, including Annual Reports of Form 10-K, Quarterly
Reports on Form 10-Q and any Current Reports on Form 8-K.
10
Streamline Healths discussion and analysis of its financial condition and results of operations
are based upon its consolidated financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States. The preparation of these financial
statements requires Streamline Health to make estimates and judgments that affect the reported
amounts of assets, liabilities, revenues, and expenses, and related disclosure of contingent
liabilities. On an ongoing basis, Streamline Health evaluates its estimates, including those
related to product revenues, bad debts, capitalized software development costs, income taxes,
warranty obligations, support contracts, contingencies, and litigation. Streamline Health bases
its estimates on historical experience and on various other assumptions that Streamline Health
believes are reasonable under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities and revenue and expense recognition.
Actual results may differ from these estimates under different assumptions or conditions.
RESULTS OF OPERATIONS
GENERAL
Streamline Health Solutions, Inc. (Streamline Health® or the Company) is a
healthcare information technology company, which is focused on developing and licensing
proprietary software solutions that improve document-centric information flows and complement and
enhance existing transaction-centric hospital healthcare information systems. The Companys
workflow and document management solutions bridge the gap between current, predominantly
paper-based processes and transaction-based healthcare information systems by 1) electronically
capturing document-centric information from disparate sources, 2) electronically directing that
information through vital business processes, and 3) providing access to the information to
authenticated users (such as physicians, nurses, administrative and financial personnel and
payers) across the continuum of care. Streamline Healths systems are designed for enterprise
wide deployment to seamlessly connect disparate departmental systems, or silos of independent
technologies which create Friction PointsTM, in a common interoperable document
management workflow solution.
The Companys workflow-based products and services offer solutions to specific healthcare business
processes within the Health Information Management (HIM) and revenue cycle, such as: remote
coding, abstracting and chart completion, remote physician order processing, pre-admission
registration scanning, insurance verification, secondary billing services, explanation of benefits
processing, release of information processing and other departmental workflow processes.
The Companys products and services also create an integrated document-centric repository of
historical health information that is complementary to, and can be seamlessly bolted on to
existing transaction-centric clinical, financial and management information systems, allowing
healthcare providers to aggressively move toward fully Electronic Medical Record (EMR) processes
while improving service levels and convenience for all stakeholders. These integrated systems
allow providers and administrators to dramatically improve the availability of patient information
while decreasing direct costs associated with document retrieval, work-in-process, chart
completion, document retention and archiving.
11
The Companys software solutions can be provided on a subscription basis via remote
application-hosting services or licensed and installed locally. Streamline Health provides
ASPeNSM, Application Service Provider-based remote hosting services to, The University
Hospital, a member of the Health Alliance of Greater Cincinnati, M.D. Anderson Cancer Center, and
Childrens Medical Center of Columbus, OH, among others. In addition, Streamline Health has
licensed its workflow and document management solutions, which are installed at leading healthcare
providers including Stanford Hospital and Clinics, the Albert Einstein Healthcare Network, Beth
Israel Medical Centers, the University of Pittsburgh Medical Center, Medical University Hospital
Authority of South Carolina, and Memorial Sloan-Kettering Cancer Center, among others.
The Companys applications allow authenticated users, such as physicians, nurses, administrative
and financial personnel, and payers with access to patient healthcare information that exists in
disparate systems across the continuum of care and improve operational efficiencies through
business process re-engineering and automating labor-intensive and demanding paper environments.
Streamline Healths applications and services are complementary to existing clinical and financial
systems, and use document imaging and advanced workflow tools to ensure users can electronically
access both structured (transaction-centric) and unstructured (document-centric) patient data
and all the various forms of clinical and financial healthcare information from a single permanent
and secure repository, including clinicians handwritten notes, laboratory reports, photographs,
insurance cards, etc.
The Companys workflow solutions offer value to all of the constituents in the healthcare delivery
process by enabling them to simultaneously access and utilize Streamline Healths advanced
technological workflow applications to process information, on a real-time basis from virtually
any location, including the Physicians desktop, using web-based technology. Streamline Healths
solutions integrate its own proprietary imaging platform, application workflow modules and image
and web-enabling tools that allow for the seamless merger of back office functionality with
existing Clinical and Financial Information Systems at the desktop.
The Company offers its own document imaging/management infrastructure (Foundation Suite) that is
built for high volume transaction processing and is specifically designed for the healthcare
industry. In addition to providing access to information not previously available at the desktop,
Streamline Healths applications fulfill the administrative and regulatory needs of the Health
Information Management, Patient Financial Services and other hospital departments. Furthermore,
these systems have been specifically designed to integrate with any Clinical Information System.
For example, Streamline Health has integrated its products with selected systems from Siemens
Medical Solutions USA Inc. (Siemens), Cerner Corporation, and IDX Information Systems Corporation
(IDX) (now part of GE Medical see below) applications, thus enabling customers to use our solutions
without the expense of replacing entire software systems to gain the software functionality. By
offering electronic access to all the patient information components of the medical record, this
integration completes one of the most difficult tasks necessary to provide a true Electronic
Medical Record. Streamline Healths systems deliver on-line enterprise wide access to fully
updated patient information, which historically was maintained on a variety of media, including
paper, magnetic disk, optical disk, and microfilm.
12
The Company operates in one segment as a provider of health information technology solutions that
streamline healthcare information flows within a healthcare facility.
Historically, Streamline Health has derived most of its revenues from recurring application-hosting
services, recurring maintenance fees, professional services and system sales involving the
licensing, either directly or through remarketing partners, of its Health Information Management
Workflow and Revenue Cycle Management Workflow solutions to Integrated Healthcare Delivery Networks
(IDN). In a typical transaction, Streamline Health, or its remarketing partners, enter into a
perpetual license or fee-for-service subscription agreement for Streamline Healths software
application suite and may license or sell other third-party software and hardware components to the
IDN. Additionally, Streamline Health provides professional services, including implementation,
training, and product support.
Streamline Health earns its highest margins on proprietary Streamline Health software and
application-hosting services and the lowest margins on third-party hardware and software. Sales to
customers may include different configurations of Streamline Health software, hardware, third party
software, and professional services, resulting in varying margins among contracts. The margins on
professional services revenues fluctuate based upon the negotiated terms of the agreement with each
customer and Streamline Healths ability to fully utilize its professional services, maintenance,
and support services staff.
Beginning in 1998, Streamline Health began offering customers the ability to obtain its workflow
solutions on an application-hosting basis as an Application Service Provider (ASP). Streamline
Health established a hosting data center and installed Streamline Healths suite of workflow
products, called ASPeN (Application Service Provider eHealth Network) within the hosting data
center. Under this arrangement, customers electronically capture information and securely transmit
the data to the hosting data center. The ASPeN services store and manage the data using Streamline
Healths suite of applications, and customers can view, print, fax, and process the information
from anywhere using the Streamline Health web-based applications. Streamline Health charges and
recognizes revenue for these ASPeN services on a per transaction or subscription basis as
information is captured, stored, retrieved and processed.
The decisions by a healthcare provider to replace, substantially modify, or upgrade its information
systems are strategic decisions and often involve a large capital commitment requiring an extended
approval process. Since inception, Streamline Health has experienced extended sales cycles. It is
not uncommon for sales cycles to take six to eighteen months from initial contact to the execution
of an agreement. As a result, the sales cycles can cause significant variations in
quarter-to-quarter operating results. These agreements cover the licensing, implementation and
maintenance of the system, which typically takes place in one or more phases. The licensing
agreements generally provide for the licensing of Streamline Healths proprietary software and
third-party software with a perpetual or term license fee on either an unlimited number
of users (site license) or a specific number of users (concurrent users license) that is adjusted
upward depending on the number of concurrent users using the software. Site-specific
customization, interfaces with existing customer systems and other consulting services are sold on
a fixed fee or a time and materials basis. Alternatively, with Streamline Healths ASP services
solution, the application-hosting services agreements generally provide
13
for utilizing Streamline Healths software and third-party software on a fee per transaction or
recurring subscription basis.
ASPeN services was designed to overcome obstacles in the buying decision such as large capital
commitment, length of implementation, and the scarcity of time for Healthcare information systems
personnel to implement new systems. Streamline Health believes that large IDNs and smaller
healthcare providers are looking for this type of ASP application because of the ease of
implementation and lower entry-level costs. Streamline Health believes its business model is
especially well suited for the medium to small acute care facility marketplace as well as the
ambulatory marketplace and is actively pursuing remarketing agreements, in addition to those
discussed below, with other Healthcare information systems and staff outsourcing providers to
distribute Streamline Healths workflow solutions.
Streamline Healths quarterly operating results have varied in the past and may continue to do so
in the future because of various reasons including: demand for Streamline Healths products and
services, long sales cycles, and extended installation and implementation cycles based on
customers schedules. Sales are often delayed because of customers budgets and competing capital
expenditure needs as well as customers personnel resource constraints.
Delays in anticipated sales or installations may have a significant impact on Streamline Healths
quarterly revenues and operating results, because substantial portions of the operating expenses
are fixed and the revenues are more variable.
UNEVEN PATTERNS OF QUARTERLY OPERATING RESULTS
The Companys revenues from systems sales have varied, and may continue to vary, significantly from
quarter-to-quarter because of the volume and timing of systems sales and delivery. Professional
services revenues also fluctuate from quarter-to-quarter because of the timing of the
implementation services, project management and customized programming provided. Revenues from
maintenance services do not fluctuate significantly from quarter-to-quarter, but have been
increasing, on an annual basis, as the number of customers increase. Revenues from ASP
application-hosting services operations are expected to increase over time as more hospitals
outsource services to Streamline Healths ASP Division, its partners begin to utilize the software,
and existing customers increase the volume of documents stored on the systems and the number of
retrievals increases. The loss of any current client would make it difficult to realize such
increases.
The Companys revenues and operating results may also vary significantly from quarter-to-quarter
because of a number of other factors, many of which are outside the Companys control. These
factors include the relatively high purchase price of a system, unpredictability in the number and
timing of systems sales, length of the sales cycle, delays in the implementation process and
changes in the customers financial condition or budget and the sales activities of the remarketing
partners. As a result, period-to-period comparisons may not be meaningful with respect to the past
operations of the Company nor are they necessarily indicative of the future operations of the
Company.
14
REVENUES
Revenues for the second fiscal quarter ended July 31, 2007, were $3,203,215, compared with
$4,582,706 reported in the comparable quarter of 2006. Revenues for the six months ended July 31,
2007, were $6,982,615, compared with $8,431,129 reported in the comparable prior period in 2006.
The year-to-date decrease was primarily a result of decreased system sales including software
licenses and hardware resulting from the delay in the signing of contracts in negotiations and the
inability to recognize revenue on a significant new contract until such time as the site specific
integration of our standard software required by the customer can be completed, which was offset to
some extent by increased maintenance and support revenues. Traditionally, the first two quarters
are the most challenging because of the seasonality of software licensing revenues, which the
Company has experienced in the past, with a greater portion of the annual revenues recorded in the
later two quarters.
OPERATING EXPENSES
Cost of Systems Sales
The cost of systems sales includes amortization of capitalized software development costs on a
straight-line basis, royalties and the cost of third party software and hardware. Cost of systems
sales as a percentage of systems sales may vary from period-to-period depending on the mix of
hardware and software of the systems or add-on sales delivered. The cost of systems sales as a
percentage of systems sales for the second quarter of fiscal 2007 and 2006 were (573%) and 54%,
respectively. The cost of systems sales as a percentage of systems sales for the first six months
of fiscal 2007 and 2006 were (158%) and 53%, respectively. The increased percentages reflects a
significant decline in software licensing and hardware and third party software component revenues
during the current quarter and year-to-date and increased capitalized software amortization during
the current period when compared to the comparable prior periods.
Cost of Services, Maintenance and Support
The cost of services, maintenance and support includes compensation and benefits for support and
professional services personnel and the cost of third party maintenance contracts. As a percentage
of services, maintenance and support revenues, the cost of such services, maintenance and support
was 48% and 41% for the second quarter of fiscal 2007 and 2006, respectively. As a percentage of
services, maintenance and support revenues, the cost of such services, maintenance and support was
46% and 43% for first six months of fiscal 2007 and 2006, respectively. The increased costs
reflect an increase in providing the support services.
Cost of Application-hosting services
The cost of application-hosting services operations remained approximately the same for the second
quarter and first six months of 2007 when compared to the second quarter and first six months of
2006, as the cost of providing these services is relatively fixed. As a percentage of
application-hosting revenues, the cost of application-hosting was 31% and 37% for the second
quarter of fiscal 2007 and 2006 and 31% and 36% for the first six months of fiscal 2007 and
15
2006, respectively. The decrease in the cost percentage reflects the 11% increase in revenues from
new and existing clients combined with a 3.8% decrease in operating costs.
Selling, General and Administrative
Selling, General and Administrative expenses consist primarily of compensation and related benefits
and reimbursable travel and living expenses related to the Companys sales, marketing and
administrative personnel; advertising and marketing expenses, including trade shows and similar
type sales and marketing expenses; and general corporate expenses, including occupancy costs.
During the second quarter and first six months of fiscal 2007, Selling, General and Administrative
expenses were slightly less than the comparable prior periods.
Product Research and Development
Product research and development expenses consist primarily of compensation and related benefits;
the use of independent contractors for specific development projects; and an allocated portion of
general overhead costs, including occupancy. During the first two quarters, research and
development expenses decreased 16% when compared with the comparable prior period primarily as a
result of increased capitalized software. The Company capitalized, in accordance with Statement of
Financial Accounting Standards No. 86, approximately $500,000 and $400,000 of product research and
development costs in the second quarter and $1,000,000 and $800,000 in the first six months of
fiscal 2007 and 2006, respectively.
Operating profit (loss)
The operating loss for the second quarter of fiscal 2007 was ($1,054,213) compared with an
operating profit of $240,957 in the second quarter of fiscal 2006. The decrease in the operating
profit is the result of the lower systems sales, primarily software licensing revenues and planned
increased operating expenses.
The operating loss for the first six months of fiscal 2007 was ($1,500,926) compared with an
operating profit of $169,514 in the first six months of fiscal 2006. The decrease in the operating
profit is the result of the lower systems sales, primarily software licensing revenues and planned
increased operating expenses.
Interest income consists primarily of interest on invested cash. The decrease in interest income
results from decreased average cash balances.
Interest expense relates primarily to: the long-term debt which was retired during the first
quarter of 2007, interest expense on the capitalized leases and the commitment fee on the revolving
credit facility.
Net Earnings (loss)
The net loss for the Second quarter of fiscal 2007 was ($1,071,304) ($.12 per share) compared with
a net earnings of $214,727 ($.02 per share) in the second quarter of fiscal 2006. The
16
decrease in the net earnings is the result of the decreased systems sales, especially software
licensing revenues, increased operating expenses, offset by lower interest income and expense, net
as noted above.
The net loss for the first six months of fiscal 2007 was ($1,514,616) ($.16 per share) compared
with a net earnings of $134,849 or $.01 per share) in the first six months of fiscal 2006. The
decrease in the net earnings is the result of the decreased systems sales, especially software
licensing revenues, increased operating expenses, lower interest income and offset to some extent
by lower interest expense, net as noted above.
Management continues to believe that the healthcare document imaging and workflow market is going
to be a significant market. Management believes it has made significant investments in the talent
and technology necessary to establish the Company as a leader in this marketplace, and continues to
believe the Company is well positioned to experience significant revenue growth.
Since commencing operations in 1989, the Company has incurred operating losses. Although the
Company achieved profitability in fiscal years 1992, 1993, and 2000 through 2006, the Company
incurred a net (loss) in fiscal years 1994 through 1999. In view of the Companys prior operating
history, there can be no assurance that the Company will be able to achieve consistent
profitability on a quarterly or annual basis or that it will be able to sustain or increase its
revenue growth in future periods. Based upon the expenses associated with current and planned
staffing levels, profitability is dependent upon increasing revenues.
LIQUIDITY AND CAPITAL RESOURCES
During the last five fiscal years, Streamline Health has funded its operations, working capital
needs, and capital expenditures primarily from a combination of cash generated by operations, a
$3,500,000 term loan in 2004 and a revolving credit facility entered into in January 2007.
Streamline Healths liquidity is dependent upon numerous factors to include: the timing and amount
of revenues and collection of contractual amounts from customers, amounts invested in research and
development, capital expenditures, and the level of operating expenses, all of which can vary
significantly from quarter-to-quarter.
Streamline Healths customers typically have been well-established hospitals or medical facilities
or major HIS companies that resell Streamline Health products which have good credit histories and
payments have been received within normal time frames for the industry. However, some healthcare
organizations have experienced significant operating losses as a result of limits on third-party
reimbursements from insurance companies and governmental entities. Agreements with customers often
involve significant amounts and contract terms typically require customers to make progress
payments.
Streamline Health has no significant obligations for capital resources, other than the
noncancelable operating leases of approximately $1,061,000 payable over the next four years.
Capital expenditures for property and equipment in 2007 are not expected to exceed $500,000.
17
During the three prior fiscal years, Streamline Health has made significant investments for capital
expenditures, increased its sales and marketing, product research and development and its support
and consulting expenses, and made significant debt reductions. This resulted in significant net
cash outlays over the last three fiscal years. Although Streamline Health reduced staffing levels
and related expenses during 2003 and 2004, the stringent expense controls and reduced staffing,
caused by the necessity to retire the long-term debt, hampered the growth of revenues in fiscal
year 2003 and 2004. Accordingly, to continue to achieve increasing revenues and profitability it
was necessary for the Company to significantly increase the sales and marketing expenses in fiscal
2005, 2006 and 2007. The Company believes that this strategic initiative to expand sales and
marketing should produce improved results later in 2007 and beyond as the expanded sales and
marketing efforts begin to produce results. However, there can be no assurance Streamline Health
will be able to do so. At July 31, 2007, Streamline Health had cash on hand of $509,118.
Streamline Health carefully monitors operating expenses. As a result of the current levels of
revenues and operating loss, for the foreseeable future, Streamline Health will need to continually
assess its revenue prospects compared to its then current expenditure levels. If it does not
appear likely that revenues will increase, it may be necessary to reduce operating expenses or
raise cash through additional borrowings, the sale of assets, or issue additional equity, or a
combination thereof. Certain of these actions will require current lender approval. However,
there can be no assurance Streamline Health will be successful in any of these efforts. If it is
necessary to significantly reduce operating expenses, this could have an adverse effect on future
operating performance.
Streamline Health believes that its present cash position, combined with cash generation currently
anticipated from operations and the available credit facility, will be sufficient to meet
anticipated cash requirements for the short term. However, continued expansion of the Company will
require additional resources. The Company may need to incur additional debt, obtain an additional
infusion of capital, or a combination of both, depending on the extent of the expansion of the
Company and future revenues. However, there can be no assurance Streamline Health will be able to
do so.
To date, inflation has not had a material impact on Streamline Healths revenues or expenses.
SIGNED AGREEMENTS BACKLOG
Streamline Health, or its remarketing partners, enter into master agreements with customers to
specify the scope of the system to be installed and services to be provided, the agreed upon
aggregate price and the timetable for implementation. The master agreement typically provides that
the Company, or its remarketing partner, will deliver the system in phases pursuant to the
customers purchase orders, thereby allowing the customer flexibility in the timing of its receipt
of systems and to make adjustments that may arise based upon changes in technology or changes in
customer needs. The master agreement also allows the customer to request additional components as
the installation progresses, which additions are then separately negotiated as to price and terms.
Historically, customers have ultimately purchased systems and services in addition to those
originally contemplated by the master agreement. Although there can be no assurance that
18
customers will continue in the future to expand their systems and purchase additional licenses and
services, Streamline Health believes, based on its past experience, that its customers will expand
their existing systems.
At July 31, 2007, Streamline Health has master agreements, purchase orders or royalty reports from
remarketing partners for systems and related services which have not been delivered, installed and
accepted which, if fully performed, will generate future revenues of $15,805,426 as follows:
|
|
|
|
|
Streamline Health Software Licenses |
|
$ |
1,360,196 |
|
Custom Software |
|
|
317,238 |
|
Hardware and Third Party Software |
|
|
980,058 |
|
Professional Services |
|
|
4,903,871 |
|
Application Hosting Services |
|
|
4,002,995 |
|
Recurring Maintenance |
|
|
4,241,068 |
|
The related products and services are expected to be delivered over the next two to three years.
Streamline Healths master agreements also generally provide for an initial maintenance period and
give the customer the right to subscribe for maintenance and support services on a monthly,
quarterly, or annual basis. Maintenance and support revenues for fiscal years 2006, 2005 and 2004
were approximately $5,617,000, $5,104,000 and $5,220,000, respectively. Maintenance and support
revenues are expected to increase in 2007.
The commencement of revenue recognition varies depending on the size and complexity of the system;
the implementation schedule requested by the customer and usage by customers of the
application-hosting services. Therefore, Streamline Health is unable to predict accurately the
revenue it expects to achieve in any particular period. Streamline Healths master agreements
generally provide that the customer may terminate its agreement upon a material breach by
Streamline Health, or may delay certain aspects of the installation. There can be no assurance
that a customer will not cancel all or any portion of a master agreement or delay installations.
Streamline Healths largest application hosting client has informed us that it is in the process of
internally developing its own software application using a third party tool kit, which software the
client intends to use in place of our ASP services. We believe that the clients ability to
develop substitute software that would have the same robust functionality as Streamline Healths
current ASP offering will be a major software development undertaking. Therefore, we are unable to
determine if or when this client will discontinue the use of our ASP services. Our current
agreement with this client is scheduled to expire on March 31, 2008, and we have mutually agreed to
extend that agreement on a month to month basis for up to an additional year ending March 31, 2009.
The potential lost revenues from this client, approximately $1.7 million annually, a termination or
installation delay of one or more phases of any other significant contract, and/or Streamline
Healths failure to procure additional ASP revenues or Software licensing revenues, could have a
material adverse financial impact on Streamline Healths business, financial condition, and
19
results of operations. We believe that Streamline Health will be able to mitigate these potential
risks by obtaining additional ASP clients and/or Software license revenues in the future.
Item 3 Quantitative and Qualitative Disclosures about Market Risk
For quantitative and qualitative disclosures about market risk, see Item 7A, Quantitative and
Qualitative Disclosures About Market Risk, of the annual report on Form 10-K for the fiscal year
ending January 31, 2007. The Company exposures to market risk have not changed materially since
January 31, 2007.
Item 4. Controls and Procedures
Streamline Health maintains disclosure controls and procedures that are designed to ensure that
there is reasonable assurance that the information required to be disclosed in Streamline Healths
Exchange Act reports is recorded, processed, summarized and reported within the time periods
specified in the SECs rules and forms, and that such information is accumulated and communicated
to Streamline Healths management, including its Chief Executive Officer and Chief Financial
Officer, as appropriate, to allow timely decisions regarding required disclosure based on the
definition of disclosure controls and procedures in Exchange Act Rules 13a-15(e) and 15d-14(e).
In designing and evaluating the disclosure controls and procedures, management recognizes that any
controls and procedures, no matter how well designed and operated, can provide only reasonable
assurance of achieving the desired control objectives, and management necessarily was required to
apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
As of the end of the period covered by this report, an evaluation was performed under the
supervision and with the participation of Streamline Healths senior management, including the
Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and
operation of Streamline Healths disclosure controls and procedures to provide reasonable assurance
of achieving the desired objectives of the disclosure controls and procedures. Based on that
evaluation, Streamline Healths management, including the Chief Executive and Chief Financial
Officer, concluded that there is reasonable assurance that Streamline Healths disclosure controls
and procedures were effective as of the end of the period covered by this report and there have
been no material changes in Streamline Healths internal control or in the other controls during
the six months ended July 31, 2007 that could materially affect, or is reasonably likely to
materially affect, internal controls over financial reporting.
Part II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
Streamline Health is, from time-to-time, a party to various legal proceedings and claims, which
arise, in the ordinary course of business. Streamline Health is not aware of any legal matters
that will have a material adverse effect on Streamline Healths consolidated results of operations
or consolidated financial position.
20
Item 1A Risk Factors
In addition to the other information set forth in this report, you should carefully consider the
risk factors discussed in Part I, Item 1A, Risk Factors in the annual report on Form 10-K for the
fiscal year ending January 31, 2007. The risk factors have not materially changed since January
31, 2007. The risk factors described in the Annual Report on Form 10-K are not the only risks
facing the Company. In addition, risks and uncertainties not currently known to the Company or
that the Company currently deems to be immaterial also may materially adversely affect the Company,
its financial condition and/or operating results.
Item 3. DEFAULTS UPON SENIOR SECURITIES
The Company is not in default under its existing Loan Agreement.
Item 6. EXHIBITS
(a) Exhibits
|
3.1 |
|
Certificate of Incorporation of Streamline Health Solutions, Inc. (*) |
|
|
3.2 |
|
Bylaws of Streamline Health Solutions, Inc. (*) |
|
|
4 |
|
Revolving Note (*) |
|
|
11 |
|
Computation of Earnings (Loss) Per Common Share |
|
|
31.1 |
|
Certification of Chief Executive Officer pursuant to Rule 13a -14(a) and
Rule 15d 14(a) of the Securities Exchange Act, as Amended |
|
|
31.2 |
|
Certification of Chief Financial Officer pursuant to Rule 13a -14(a) and
Rule 15d 14(a) of the Securities Exchange Act, as Amended |
|
|
32.1 |
|
Certification of the Chief Executive Officer Pursuant to
18 U.S.C. 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002 |
|
|
32.2 |
|
Certification of the Chief Financial Officer Pursuant to
18 U.S.C. 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002 |
|
|
|
(*) |
|
Incorporated herein by reference from, the Registrants SEC filings. |
|
|
|
(See INDEX TO EXHIBITS) |
21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
|
|
|
|
STREAMLINE HEALTH SOLUTIONS, INC.
|
|
DATE: September 5, 2007 |
By: |
/s/ William A. Geers
|
|
|
|
William A. Geers |
|
|
|
Chief Operating Officer |
|
|
|
|
|
DATE: September 5, 2007 |
By: |
/s/ Paul W. Bridge, Jr.
|
|
|
|
Paul W. Bridge, Jr. |
|
|
|
Chief Financial Officer and Treasurer |
|
22
INDEX TO EXHIBITS
|
|
|
Exhibit No. |
|
Exhibit |
3.1(a)
|
|
Certificate of Incorporation of Streamline Health Solutions,
Inc. f/k/a/ LanVision Systems, Inc. Previously filed with the
Commission and incorporated herein by reference from, the
Registrants (LanVision System, Inc.) Registration Statement
on Form S-1, File Number 333-01494, as filed with the
Commission on April 15, 1996. |
|
|
|
3.1(b)
|
|
Certificate of Incorporation of Streamline Health Solutions,
Inc. f/k/a LanVision Systems, Inc., amendment No. 1 Previously
filed with the Commission and incorporated herein by reference
from Exhibit 3.1(b) of the Registrants Form 10-Q, as filed
with the Commission on September 8, 2006. |
|
|
|
3.2
|
|
Bylaws of Streamline Health Solutions, Inc. Previously filed
with the Commission and incorporated herein by reference from
Exhibit 3.2 of the Registrants Form 10-Q, as filed with the
Commission on June 5, 2007. |
|
|
|
4
|
|
Revolving Note, and associated documents, dated January 20,
2007, between Streamline Health, Inc. (a wholly owned
subsidiary of the Registrant) and the Fifth Third Bank.
(Previously filed with the Commission, and incorporated herein
by reference from, Exhibit 10 of the Registrants Form 8-K, as
filed with the commission on January 25, 2007.) |
|
|
|
11
|
|
Computation of Earnings (Loss) Per Common Share |
23
|
|
|
Exhibit No. |
|
Exhibit |
31.1
|
|
Certification of Chief Executive Officer pursuant to Rule 13a
- -14(a) and
Rule 15d 14(a) of the Securities Exchange Act, as Amended |
|
|
|
31.2
|
|
Certification of Chief Financial Officer pursuant to Rule 13a
- -14(a) and
Rule 15d 14(a) of the Securities Exchange Act, as Amended |
|
|
|
32.1
|
|
Certification of the Chief Executive Officer Pursuant to
18 U.S.C. 1350, as adopted pursuant to section 906 of the
Sarbanes-Oxley Act of 2002 |
|
|
|
32.2
|
|
Certification of the Chief Financial Officer Pursuant to
18 U.S.C. 1350, as adopted pursuant to section 906 of the
Sarbanes-Oxley Act of 2002 |
24
EX-11
Exhibit 11
STREAMLINE HEALTH SOLUTIONS, INC.
Computation of earnings (loss) per share
For the three and six months ended July 31, 2007 and 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months |
|
|
Six Months |
|
|
|
2007 |
|
|
2006 |
|
|
2007 |
|
|
2006 |
|
Net earnings (loss) |
|
$ |
(1,071,304 |
) |
|
$ |
214,727 |
|
|
$ |
(1,514,616 |
) |
|
$ |
134,849 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average shares outstanding |
|
|
9,225,212 |
|
|
|
9,189,642 |
|
|
|
9,218,482 |
|
|
|
9,179,165 |
|
Stock options & purchase
plan: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total options & purchase
plan shares |
|
|
|
|
|
|
412,931 |
|
|
|
|
|
|
|
431,296 |
|
Warrants assumed converted |
|
|
|
|
|
|
750,000 |
|
|
|
|
|
|
|
750,000 |
|
Assumed treasury stock
buyback |
|
|
|
|
|
|
(668,384 |
) |
|
|
|
|
|
|
(604,675 |
) |
Convertible redeemable
preferred stock assumed
converted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of shares used in per
common share computation |
|
|
9,225,212 |
|
|
|
9,684,189 |
|
|
|
9,218,482 |
|
|
|
9,755,786 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net earnings ( loss )
per share of common stock |
|
$ |
(0.12 |
) |
|
$ |
0.02 |
|
|
$ |
(0.16 |
) |
|
$ |
0.01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net earnings ( loss )
per share of common stock |
|
$ |
(0.12 |
) |
|
$ |
0.02 |
|
|
$ |
(0.16 |
) |
|
$ |
0.01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25
EX-31.1
Exhibit 31.1
STREAMLINE HEALTH SOLUTIONS, INC.
Certification of Chief Executive Officer pursuant to Rule 13a -14(a) and
Rule 15d 14(a) of the Securities Exchange Act, as Amended
I, J. Brian Patsy, certify that:
|
1. |
|
I have reviewed this quarterly report on Form 10-Q of Streamline Health Solutions,
Inc.; |
|
|
2. |
|
Based on my knowledge, this report does not contain any untrue statements of a material
fact or omit to state a material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not misleading with respect to the
period covered by this quarterly report; |
|
|
3. |
|
Based on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods
presented in this report; |
|
|
4. |
|
The registrants other certifying officers and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a
15(e) and 15d 15(e)), for the registrant and internal control over financial reporting
(as defined in Exchange Act Rules 13a 15(f) and 15d 15(f)) for the registrant and have: |
|
a) |
|
Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared; |
|
|
b) |
|
Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with
generally accepted accounting principals; |
|
|
c) |
|
Evaluated the effectiveness of the registrants disclosure controls and
procedures |
26
|
|
|
and presented in this report our conclusions about the effectiveness of the
disclosure controls, as of the end of the period covered by this report based on
such evaluation; and |
|
|
d) |
|
Disclosed in this report any change in the registrants internal control
over financial reporting that occurred during the registrants most recent fiscal
quarter that has materially affected, or is reasonably likely to materially affect,
the registrants internal control over financial reporting; and |
|
5. |
|
The registrants other certifying officer and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the registrants
auditors and the audit committee of the registrants board of directors: |
|
a) |
|
All significant deficiencies and material weaknesses in the design or
operation of internal controls over financial reporting which are reasonably likely
to adversely affect the registrants ability to record, process, summarize and
report financial information; and |
|
|
b) |
|
Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls over
financial reporting. |
|
|
|
|
|
|
|
|
September 12, 2007 |
/s/ J. Brian Patsy
|
|
|
Chief Executive Officer and President |
|
|
|
|
27
EX-31.2
EXHIBIT 31.2
STREAMLINE HEALTH SOLUTIONS, INC.
Certification of Chief Financial Officer pursuant to Rule 13a -14(a) and
Rule 15d 14(a) of the Securities Exchange Act, as Amended
I, Paul W. Bridge, Jr., certify that:
|
1. |
|
I have reviewed this quarterly report on Form 10-Q of Streamline Health Solutions,
Inc.; |
|
|
2. |
|
Based on my knowledge, this report does not contain any untrue statements of a material
fact or omit to state a material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not misleading with respect to the
period covered by this quarterly report; |
|
|
3. |
|
Based on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods
presented in this report; |
|
|
4. |
|
The registrants other certifying officers and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a
15(e) and 15d 15(e)), for the registrant and internal control over financial reporting
(as defined in Exchange Act Rules 13a 15(f) and 15d 15(f)) for the registrant and have: |
|
a. |
|
Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared; |
|
|
b. |
|
Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with
generally accepted accounting principals; |
|
|
c. |
|
Evaluated the effectiveness of the registrants disclosure controls and
procedures and presented in this report our conclusions about the effectiveness of
the |
28
|
|
|
disclosure controls, as of the end of the period covered by this report based on
such evaluation; and |
|
|
d. |
|
Disclosed in this report any change in the registrants internal control
over financial reporting that occurred during the registrants most recent fiscal
quarter that has materially affected, or is reasonably likely to materially affect,
the registrants internal control over financial reporting; and |
|
5. |
|
The registrants other certifying officer and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the registrants
auditors and the audit committee of the registrants board of directors: |
|
a. |
|
All significant deficiencies and material weaknesses in the design or
operation of internal controls over financial reporting which are reasonably likely
to adversely affect the registrants ability to record, process, summarize and
report financial information; and |
|
|
b. |
|
Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls over
financial reporting. |
|
|
|
|
|
|
|
|
September 12, 2007 |
/s/ Paul W. Bridge, Jr.
|
|
|
Chief Financial Officer and Treasurer |
|
|
|
|
29
EX-32.1
EXHIBIT 32.1
STREAMLINE HEALTH SOLUTIONS, INC.
Certification of the Chief Executive Officer Pursuant to
18 U.S.C. 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002
I, J. Brian Patsy, Chairman of the Board, Chief Executive Officer and President of Streamline
Health Solutions, Inc. (the Company), certify, pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, 18 U.S.C. Section 1350, that:
|
(1) |
|
The Quarterly Report on Form 10-Q of the Company for the quarter ended July 31, 2007
(the Report) fully complies with the requirements of section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (15 U.S.C. 78m); and |
|
|
(2) |
|
The information contained in the Report fairly presents, in all material respects, the
financial condition, and results of operations of the Company. |
September 12, 2007
/s/ J. Brian Patsy
Chairman of the Board,
Chief Executive Officer and
President
A signed original of this written statement required by Section 906 has been provided to the
Company and will be retained by the Company and furnished to the Securities and Exchange Commission
or its staff upon request.
30
EX-32.2
EXHIBIT 32.2
STREAMLINE HEALTH SOLUTIONS, INC.
Certification of the Chief Financial Officer Pursuant to
18 U.S.C. 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002
I, Paul W. Bridge, Jr., Chief Financial Officer of Streamline Health Solutions, Inc. (the
Company), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section
1350, that:
|
(3) |
|
The Quarterly Report on Form 10-Q of the Company for the quarter ended July 31, 2007
(the Report) fully complies with the requirements of section 13(a) or 15 (d) of the
Securities Exchange Act of 1934 (15 U.S.C. 78m); and |
|
|
(4) |
|
The information contained in the Report fairly presents, in all material respects, the
financial condition, and results of operations of the Company. |
September 12, 2007
/s/ Paul W. Bridge, Jr.
Chief Financial Officer
A signed original of this written statement required by Section 906 has been provided to the
Company and will be retained by the Company and furnished to the Securities and Exchange Commission
or its staff upon request.
31