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, 2008
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,
a non-accelerated filer, or a smaller reporting company.
See the definitions of large
accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):
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Large accelerated filer
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Accelerated filer o |
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Non-accelerated filer o
(Do not check if a smaller reporting company) |
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Smaller reporting company
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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 ($.01 par value per share) issued and
outstanding, as of September 1, 2008: 9,302,782.
PART I. FINANCIAL INFORMATION
Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
STREAMLINE HEALTH SOLUTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
Assets
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(Unaudited) |
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(Audited) |
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July 31, |
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January 31, |
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2008 |
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2008 |
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Current assets: |
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Cash |
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$ |
372,692 |
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$ |
2,189,010 |
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Accounts receivable, net of allowance for
doubtful accounts of $100,000, respectively |
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1,771,787 |
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2,832,852 |
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Contract receivables |
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1,505,094 |
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1,833,842 |
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Prepaid hardware and third party software for
future delivery |
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720,711 |
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484,247 |
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Prepaid other, including prepaid customer
maintenance contracts |
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775,845 |
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501,803 |
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Deferred tax asset |
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185,000 |
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185,000 |
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Total current assets |
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5,331,129 |
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8,026,754 |
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Property and equipment: |
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Computer equipment |
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2,568,820 |
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2,235,104 |
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Computer software |
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1,197,147 |
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1,086,691 |
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Office furniture, fixtures and equipment |
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736,441 |
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731,346 |
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Leasehold improvements |
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574,257 |
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574,257 |
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5,076,665 |
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4,627,398 |
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Accumulated depreciation and amortization |
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(3,509,923 |
) |
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(3,153,675 |
) |
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1,566,742 |
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1,473,723 |
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Capitalized software development costs, net of
accumulated amortization of $7,681,901 and $6,643,235,
respectively |
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5,251,027 |
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4,878,694 |
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Other, including deferred taxes of
$1,690,000, respectively |
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1,744,776 |
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1,720,114 |
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$ |
13,893,674 |
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$ |
16,099,285 |
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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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2008 |
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2008 |
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Current liabilities: |
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Accounts payable |
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$ |
1,137,717 |
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$ |
1,518,682 |
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Accrued compensation |
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439,477 |
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536,599 |
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Accrued other expenses |
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469,289 |
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521,210 |
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Deferred revenues |
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4,654,930 |
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5,183,333 |
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Total current liabilities |
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6,701,413 |
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7,759,824 |
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Non-current lease incentives |
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97,683 |
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146,525 |
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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, $.01 par value per share,
25,000,000 shares
authorized, 9,302,782 and 9,260,320
shares issued, respectively |
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93,028 |
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92,603 |
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Capital in excess of par value |
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35,687,051 |
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35,542,222 |
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Accumulated (deficit) |
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(28,685,501 |
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(27,441,889 |
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Total stockholders equity |
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7,094,578 |
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8,192,936 |
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$ |
13,893,674 |
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$ |
16,099,285 |
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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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2008 |
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2007 |
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2008 |
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2007 |
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Revenues: |
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Systems sales |
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$ |
1,285,528 |
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$ |
101,215 |
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$ |
1,595,019 |
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$ |
864,339 |
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Services, maintenance and support |
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2,644,140 |
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2,195,530 |
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5,046,906 |
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4,325,019 |
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Application-hosting services |
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906,933 |
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906,470 |
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1,798,426 |
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1,793,257 |
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Total revenues |
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4,836,601 |
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3,203,215 |
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8,440,351 |
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6,982,615 |
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Operating expenses: |
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Cost of systems sales |
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921,174 |
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580,315 |
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1,672,145 |
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1,363,622 |
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Cost of services, maintenance and support |
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1,139,443 |
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1,043,600 |
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2,198,591 |
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1,987,188 |
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Cost of application-hosting services |
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309,048 |
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279,730 |
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597,239 |
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555,159 |
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Selling, general and administrative |
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1,883,071 |
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1,404,337 |
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3,482,494 |
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2,821,671 |
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Product research and development |
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1,011,114 |
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949,446 |
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1,730,369 |
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1,755,901 |
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Total operating expenses |
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5,263,850 |
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4,257,428 |
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9,680,838 |
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8,483,541 |
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Operating (loss) |
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(427,249 |
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(1,054,213 |
) |
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(1,240,487 |
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(1,500,926 |
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Other income (expense): |
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Interest income |
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2,205 |
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3,142 |
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7,759 |
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17,232 |
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Interest expense |
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(447 |
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(8,687 |
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(885 |
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(19,376 |
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Loss on disposal of property and
equipment
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(11,546 |
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(11,546 |
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(Loss) before taxes |
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(425,491 |
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(1,071,304 |
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(1,233,613 |
) |
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(1,514,616 |
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Income taxes |
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(3,500 |
) |
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(10,000 |
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Net (loss) |
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$ |
(428,991 |
) |
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$ |
(1,071,304 |
) |
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$ |
(1,243,613 |
) |
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$ |
(1,514,616 |
) |
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Basic net (loss) per common share |
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$ |
(0.05 |
) |
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$ |
(0.12 |
) |
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$ |
(0.13 |
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$ |
(0.16 |
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Diluted net (loss) per common share
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$ |
(0.05 |
) |
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$ |
(0.12 |
) |
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$ |
(0.13 |
) |
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$ |
(0.16 |
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Number of shares used in per common share
computations: |
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Basic |
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9,275,335 |
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9,225,212 |
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9,267,910 |
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9,218,482 |
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Diluted |
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9,275,335 |
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9,225,212 |
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9,267,910 |
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9,218,482 |
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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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2008 |
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2007 |
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Operating activities: |
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Net (loss) |
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$ |
(1,243,613 |
) |
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$ |
(1,514,616 |
) |
Adjustments to reconcile net (loss) to net cash
provided by (used for) operating activities: |
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Depreciation and amortization |
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1,394,915 |
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1,113,719 |
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Share-based compensation expense |
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80,811 |
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55,571 |
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Loss on disposal of property and equipment |
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11,546 |
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Cash provided by (used for) assets and liabilities: |
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Accounts and contract receivables |
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1,389,813 |
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1,068,455 |
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Other current assets |
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(510,506 |
) |
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(329,539 |
) |
Accounts payable and accrued expenses |
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(530,007 |
) |
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111,233 |
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Deferred revenues |
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(528,403 |
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(937,128 |
) |
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Net cash provided by (used for) operating activities |
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53,010 |
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(420,759 |
) |
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Investing activities: |
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Purchases of property and equipment |
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(449,267 |
) |
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(383,672 |
) |
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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(48,842 |
) |
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(37,980 |
) |
Capitalization of software development costs |
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(1,411,000 |
) |
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(999,996 |
) |
Other |
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(24,662 |
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(43,644 |
) |
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Net cash (used for) investing activities |
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(1,933,771 |
) |
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(1,326,517 |
) |
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Financing activities: |
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Payment of long-term debt |
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(1,000,000 |
) |
Payment of capitalized leases |
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(147,051 |
) |
Exercise of stock options and employee stock purchase plan |
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64,443 |
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86,831 |
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Net cash provided by (used for) financing activities |
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64,443 |
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(1,060,220 |
) |
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(Decrease) in cash |
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(1,816,318 |
) |
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(2,807,496 |
) |
Cash at beginning of period |
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2,189,010 |
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3,316,614 |
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Cash at end of period |
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$ |
372,692 |
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$ |
509,118 |
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Supplemental cash flow disclosures: |
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Interest paid |
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$ |
885 |
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$ |
20,987 |
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Income taxes paid |
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$ |
8,740 |
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$ |
6,775 |
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|
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 accounting principles generally accepted in the United States 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, 2008, are not necessarily indicative
of the results that may be expected for the fiscal year ending January 31, 2009.
Note 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the Companys significant accounting policies is presented beginning on page 43 of its
fiscal year 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 fiscal year 2008.
Note 3 CHANGES IN BALANCE SHEET ACCOUNT BALANCES
The decrease in cash during the first six months results primarily from investing activities -
primarily capitalized software development and acquisition of fixed
assets.
The decrease in accounts receivable is the result of lower billings during the first six months and
increased collections.
The increase in prepaid hardware and third party software for future delivery results from the
purchase of items for a recently signed contract that have not been
delivered.
The increase in property and equipment is primarily the result of the acquisition of additional
equipment to accommodate additional employees, upgrading of the data centers for internal
operations and Application Hosting Services.
7
The increase in capitalized software development costs, net, is the result of the development of
the next generation of core software products and expanded work flow module development.
The decrease in accounts payable results primarily from the payment of invoices which traditionally
are higher at year end, which corresponds with traditionally higher fourth quarter revenues from
hardware and third party software sales.
The decrease in deferred revenues reflects the normal amortization of prepaid maintenance payments
received in fiscal year 2007 and 2008, net of any additions in the first half of 2008.
Note 4 EQUITY AWARDS
During the first six months of the current fiscal year, the Company granted 75,000 options with a
weighted average exercise price of $2.17 per share. During the same period no options expired or
were forfeited and 5,000 options, with an exercise price of $1.50, were exercised under all plans.
The Company adopted the standards of Statement of Financial Accounting Standards No. 123(R),
Share-Based Payment, in fiscal year 2006, using the modified-prospective-transition method which
requires expensing the fair value of the equity awards. The expense relating to the fair value of
equity awards included in the second quarter and first six months of fiscal year 2008 and 2007
operating expenses amounted to $40,757 and $25,573 for the quarter and $80,811 and $55,571 for the
first six months, respectively. The increase reflects the amortization of new grants and the
cumulative effect of the amortization of option grants over the past three years.
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. 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. Therefore, no reserves for uncertain tax positions have been recorded pursuant to FIN
48.
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, 2006. All material state and local income tax matters have been concluded
for years through January 31, 2003.
The
expense reflects the estimated minimum state expenses (amounts to be paid) in the various states in which the company does business notwithstanding the year to date loss.
8
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 2008 diluted net (loss) per common share calculation, excludes the effect of the common stock
equivalents (stock options), as the inclusion thereof would be antidilutive. The Company had
approximately 479,000 equity award shares outstanding at July 31, 2008 that were not included in
the diluted net (loss) per share calculation as the inclusion thereof would be antidilutive.
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 as the
inclusion thereof would be antidilutive.
Note 7 CONTRACTUAL OBLIGATIONS
The following table details the remaining obligations, by fiscal year, as of the end of the quarter
for operating leases. There are no capitalized leases, debt, or other commitments. There are no
obligations beyond fiscal year 2010.
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
2008 |
|
2009 |
|
2010 |
|
2011 |
Operating leases |
|
|
743,261 |
|
|
|
185,585 |
|
|
|
380,738 |
|
|
|
176,938 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
Note 8 DEBT
Effective July 30, 2008, Streamline Health, Inc., a wholly owned subsidiary of Streamline Health
Solutions, Inc., entered into a new revolving loan agreement with the Fifth Third Bank, Cincinnati,
OH, in the principal amount of $2,000,000. The interest rate on amounts borrowed will accrue at a
variable rate from the Prime Rate minus 1% to the Prime Rate plus 3%, (or an effective rate of 4.5%
[prime minus 1/2 %] at July 31, 2008) based on the trailing twelve months earnings before interest,
taxes, depreciation and amortization (EBITDA). The agreement contains other covenants including:
Minimum Tangible Net Worth, Fixed Charge Coverage Ratio and Funded Indebtedness to EBITDA. The
loan is guaranteed by the Registrant and is secured by a first lien on all of the assets of the
Registrant and its subsidiary. The Company was in compliance with all of the covenants at July 31,
2008 and had the ability to borrow up to $1,900,000 on the facility. This facility is scheduled to
expire on August 1, 2010.
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 Warrant holder did not exercise the warrants. Accordingly, the Warrants have expired and
were cancelled.
9
Note 9 WARRANTIES AND INDEMNITIES
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 issue, the effort necessary to
resolve the issue, customer requirements and any potential concessions, if any, 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, 2008 and 2007,
Streamline Health had a warranty reserve in the amount of approximately $171,100 and $250,000,
respectively. 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.
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Item 2. |
|
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS |
In addition to historical information contained herein, this Report on Form 10-Q contains
forward-looking statements relating to the Companys plans, strategies, expectations, intentions,
etc. and are made pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. The forward-looking statements contained herein are no guarantee of future
performance and are subject to certain risks and uncertainties that are difficult to predict and
actual results could differ materially from
those reflected in the forward-looking statements. These risks and uncertainties include, but are
not limited to, the timing of contract negotiations and executions and the related timing of the
revenue recognition related thereto, the potential cancellation of existing contracts or clients
not completing projects included in the backlog, the impact of competitive products and pricing,
product demand and market acceptance, new product development, key strategic alliances with vendors
that resell Streamline Health products, 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, and including, but not limited to, discussions in the most recent Form 10-K, Part
I, Item 1 Business, Item 1A
10
Risk Factors, Part II, Item 7 Managements Discussion and Analysis of Financial Condition and
Results of Operations and Item 8 Financial Statements and Supplemental Data. In addition, other
written or oral statements that constitute forward-looking statements may be made by or on behalf
of the Company. Readers are cautioned not to place undue reliance on these forward-looking
statements, which reflect managements analysis only as of the date thereof. The Registrant
undertakes no obligation to publicly revise these forward-looking statements, to reflect events or
circumstances that arise after the date hereof. Readers should carefully review the risk factors
described in this and other documents Streamline Health Solutions, Inc. files from time to time
with the Securities and Exchange Commission, including future Quarterly Reports on Form 10-Q and
any Current Reports on Form 8-K.
Streamline Healths discussion and analysis of its financial condition and results of operations
are based upon its consolidated financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States. The preparation of these financial
statements requires Streamline Health to make estimates and judgments that affect the reported
amounts of assets, liabilities, revenues, and expenses, and related disclosure of contingent
liabilities. On an ongoing basis, Streamline Health evaluates its estimates, including those
related to product revenues, bad debts, capitalized software development costs, income taxes,
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.
11
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.
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, T. J. Sampson Community Hospital,
Bronx Lebanon Hospital Center, Patty A. Clay Medical 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 Parkview
Health, Pro Health Care, Peace Health, Texas Health Resources, Sarasota Memorial Hospital, the
Albert Einstein Healthcare Network, Beth Israel Medical Centers, 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
management 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 document management 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 management infrastructure (accessANYwareTM) 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 administrative departments.
Furthermore, these systems have been specifically designed to integrate with any
12
Clinical Information System. For example, Streamline Health has integrated its products with
selected systems from Emergis, Inc. (a Telus company) (Oacis Electronic Medical Record), Siemens
Medical Solutions USA Inc. (Siemens), Cerner Corporation, and GE Healthcare (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.
The Company operates primarily 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
(IDNs). 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 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
13
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 for
utilizing Streamline Healths software and third-party software on a 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.
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
14
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.
REVENUES
Revenues for the second fiscal quarter ended July 31, 2008, were $4,836,601, compared with
$3,203,215 reported in the comparable quarter of 2007. The increase was primarily a result of
increased software licenses and professional services relating to the delivery of an enhanced
version of our product that requires client specific additional functionality.
Revenues for the first six months ended July 31, 2008, were $8,440,351, compared with $6,982,615
reported in the comparable period of 2007. The increase was primarily a result of increased
software licenses and professional services relating to the delivery of an enhanced version of our
product that requires client specific additional functionality in the second quarter.
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 2008 and 2007 were 71% and 573%,
respectively. The cost of systems sales as a percentage of systems sales for the first six months
of fiscal 2008 and 2007 were 104% and 158%, respectively. The decreased percentage is primarily
reflective of the increase in software licensing revenues during the second quarter, offset by
increased capitalized software amortization during the current periods 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 43% and 48% for the second quarter of fiscal 2008 and 2007, respectively. As a percentage of
services, maintenance and support revenues, the cost of such services, maintenance and support was
44% and 46% for the first six months of fiscal 2008 and 2007, respectively. Maintenance revenues
increased slightly during the reporting periods.
15
Cost of Application-hosting services
The cost of application-hosting services operations increased approximately 10% during the second
quarter when compared to the comparable period in 2007, as the cost of providing these services is
relatively fixed, but subject to inflation for the goods and services it requires. As a percentage
of application-hosting revenues, the cost of application-hosting was 34% and 31% for the second
quarter of fiscal 2008 and 2007, respectively. As a percentage of application-hosting revenues, the
cost of application-hosting was 33% and 31% for the first six months of fiscal 2008 and 2007,
respectively. Application-hosting services revenues and expenses were substantially the same as
the comparable prior quarter. The cost of application-hosting services as a percentage of revenues
is expected to increase substantially in the second half of the year as Streamline Healths largest
application hosting client has discontinued using our software application and terminated the
existing agreement effective July 31, 2008. If the revenues, in excess of approximately $1,761,000
per year, from this client cannot be replaced, the termination of this agreement will have a
material adverse impact on the future results of operations. Although additional
application-hosting services customers have recently signed new agreements with the Company, the
amounts of new revenues are not expected to contribute to revenues until late 2008 and early 2009,
and, when totally implemented, will be approximately 40% less than the lost revenues. However, one
of the newly signed application hosting contracts was constructed to cover between 5 and 26 total
facilities. Only three implementations out of the total potential of 5 to 26 facilities are
included in the above lost revenue estimate. We expect to add additional application-hosting
customers in the future which will further replace this lost revenue.
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 2008, Selling, General and Administrative
expenses increased by 34% and 23%, respectively, over the comparable prior periods primarily
because of planned increased salary costs related to normal pay raises and the planned increased
headcount in the sales organization.
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 second quarter, research and development
expenses increased 6% when compared with the comparable prior quarter primarily as a result of the
increase in costs associated with new products under development. During the first six months,
research and development expenses are approximately the same when compared with the comparable
prior period primarily as a result of the increase in capitalized software development costs. The
Company capitalized, in accordance with Statement of Financial Accounting Standards No. 86,
Accounting for the Costs of Computer Software to Be Sold,
16
Leased, or Otherwise Marketed, approximately $511,000 and $500,000 of product research and
development costs in the second quarter of fiscal 2008 and 2007 and approximately $1,411,000 and
$1,000,000 in the first six months of fiscal 2008 and 2007, respectively.
Operating (loss)
The operating (loss) for the second quarter of fiscal 2008 was ($427,249) compared with an
operating (loss) of ($1,054,213) in the second quarter of fiscal 2007. The operating (loss) for the
first six months of fiscal 2008 was ($1,240,487) compared with an
operating (loss) of ($1,500,926) in the first six months of fiscal 2007. The decrease in the operating (loss) for the
three and six months ended July 31, 2008 is the result of the higher systems sales, primarily
software licensing revenues, offset by planned increased operating expenses as noted above.
Interest income consists primarily of interest on invested cash. The decrease in interest income
results from decreased average cash balances.
The decrease in interest expense for the three and six months ended July 31, 2008 is the result of
the repayment of the debt outstanding during the comparable prior periods.
Net (loss)
The net (loss) for the second quarter of fiscal 2008 was ($428,991) ($.05 per share) compared with
a net (loss) of ($1,071,304) ($.12 per share) in the second quarter of fiscal 2007. The net (loss)
for the first six months of fiscal 2008 was ($1,243,613) ($.13 per share) compared with a net
(loss) of ($1,514,616) ($.16 per share) in the first six months of fiscal 2007. The decrease in the
net (loss) for the three and six months ended July 31, 2008 is the result of the increased systems
sales, primarily software licensing revenues, lower interest expense, offset by planned increased
operating expenses as noted above, and lower interest income.
Management continues to believe that the healthcare document management and workflow market is
going to be a significant market. Management believes it has made, and continues to make,
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 and 2007. 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.
17
LIQUIDITY AND CAPITAL RESOURCES
During the last five fiscal years, Streamline Health has funded its operations, working capital
needs, and capital expenditures primarily from cash generated by operations. Streamline Healths
liquidity is dependent upon numerous factors that 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 $743,261 payable over the next three years. Capital expenditures
for property and equipment in 2008 are not expected to exceed $800,000.
During the four 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 four 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 and product development expenses,
including capitalized software in fiscal 2007 and 2008. The Company believes that this strategic
initiative to expand sales and marketing and expand our product offerings, especially in the area
of workflows, should produce improved results in 2008 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, 2008, Streamline Health had a cash balance of $372,692.
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 availability under the credit facility, will be sufficient to meet
anticipated cash requirements for the short term. However, continued expansion of the
18
Company in 2008 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 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, 2008, Streamline Health has master agreements and purchase orders 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 $17,691,138 as follows:
|
|
|
|
|
Streamline Health Software |
|
$ |
1,980,874 |
|
Custom Software |
|
|
348,584 |
|
Hardware and Third Party Software |
|
|
1,227,122 |
|
Professional Services |
|
|
5,295,629 |
|
Application Hosting Services |
|
|
4,604,815 |
|
Recurring Maintenance |
|
|
4,234,115 |
|
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 2007, 2006 and 2005
were approximately $6,740,000, $5,617,000 and $5,104,000, respectively. Maintenance and support
revenues are expected to increase in 2008.
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
19
generally provide that the customer may terminate its agreement upon a material breach by
Streamline Health, or may delay certain aspects of the installation. There can be no assurance that
a customer will not cancel all or any portion of a master agreement or delay installations. A
termination or installation delay of one or more phases of an agreement, or the failure of
Streamline Health to procure additional agreements, could have a material adverse effect on
Streamline Healths business, financial condition, and results of operations.
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, 2008. The Company exposures to market risk have not changed materially since
January 31, 2008.
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 quarter ended July 31, 2008 that could materially affect, or is reasonably likely to materially
affect, internal controls over financial reporting.
20
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.
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, 2008. The risk factors have not materially changed since January 31,
2008. 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 5. OTHER MATTERS
None
21
Item 6. EXHIBITS
(a) Exhibits
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3.1 |
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Certificate of Incorporation of Streamline Health Solutions, Inc. (*) |
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3.2 |
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Bylaws of Streamline Health Solutions, Inc. (*) |
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4 |
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Revolving Note, and associated documents, dated July 30, 2008, between
Streamline Health, Inc. (a wholly owned subsidiary of the Registrant) and the Fifth
Third Bank. (*) |
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11 |
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Computation of Earnings (Loss) Per Common Share |
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31.1 |
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Certification of Chief Executive Officer pursuant to Rule 13a -14(a) and Rule 15d
14(a) of the Securities Exchange Act, as Amended |
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31.2 |
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Certification of Chief Financial Officer pursuant to Rule 13a -14(a) and Rule 15d
14(a) of the Securities Exchange Act, as Amended |
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32.1 |
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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 |
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32.2 |
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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 |
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(*) |
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Incorporated herein by reference from, the Registrants SEC filings. |
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(See INDEX TO EXHIBITS) |
22
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.
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STREAMLINE HEALTH
SOLUTIONS, INC. |
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DATE: September 4, 2008
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By:
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/s/ J. Brian Patsy
J. Brian Patsy
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Chief Executive Officer |
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DATE: September 4, 2008
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By:
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/s/ Paul W. Bridge, Jr.
Paul W. Bridge, Jr.
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Chief Financial Officer and Treasurer |
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23
INDEX TO EXHIBITS
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Exhibit No. |
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Exhibit |
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3.1 |
(a) |
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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. |
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3.1 |
(b) |
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Certificate of Incorporation of Streamline Health Solutions, Inc. f/k/a LanVision
Systems, Inc., amendment No. 1 Previously filed with the Commission and incorporated herein
by reference from the Registrants Form 10-Q, as filed with the Commission on September 8,
2006. |
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3.2 |
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Bylaws of Streamline Health Solutions, Inc. Previously filed with the Commission
and incorporated herein by reference from the Registrants Form 10-Q, as filed with the
Commission on June 5, 2007. |
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4 |
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Revolving Note, and associated documents, dated July 30, 2008, 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 10.1 & 10.2 of the
Registrants Form 8-K, as filed with the Commission on August 1, 2008.) |
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11 |
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Computation of Earnings (Loss) Per Common Share |
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31.1 |
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Certification of Chief Executive Officer pursuant to Rule 13a -14(a) and Rule 15d 14(a)
of the Securities Exchange Act, as Amended |
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31.2 |
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Certification of Chief Financial Officer pursuant to Rule 13a -14(a) and Rule 15d 14(a)
of the Securities Exchange Act, as Amended |
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32.1 |
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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 |
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32.2 |
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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
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Three Months |
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Six Months |
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2008 |
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2007 |
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2008 |
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2007 |
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Net (loss) |
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$ |
(428,991 |
) |
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$ |
(1,071,304 |
) |
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$ |
(1,243,613 |
) |
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$ |
(1,514,616 |
) |
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Average shares outstanding |
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9,275,335 |
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9,225,212 |
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9,267,910 |
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9,218,482 |
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Stock options & purchase
plan: |
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Total options & purchase
plan shares |
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Warrants assumed converted |
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Assumed treasury stock
buyback |
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Convertible redeemable
preferred stock assumed
converted |
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Number of shares used in per
common share computation |
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9,275,335 |
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9,225,212 |
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9,267,910 |
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9,218,482 |
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Basic net ( loss ) per share of
common stock |
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$ |
(0.05 |
) |
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$ |
(0.12 |
) |
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$ |
(0.13 |
) |
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$ |
(0.16 |
) |
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Diluted net ( loss ) per share
of common stock |
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$ |
(0.05 |
) |
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$ |
(0.12 |
) |
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$ |
(0.13 |
) |
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$ |
(0.16 |
) |
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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:
I have reviewed this quarterly report on Form 10-Q of Streamline Health Solutions, Inc.;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this
report, fairly present in all material respects the financial condition, results of operations and
cash flows of the Registrant as of, and for, the periods presented in this report;
The registrants other certifying officer and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) for the Registrant and have:
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under our supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures, as
of the end of the period covered by this report based on such evaluation; and
26
Disclosed in this report any change in the registrants internal control over financial reporting
that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal
quarter in the case of an annual report) that has materially affected, or is reasonably likely to
materially affect, the registrants internal control over financial reporting; and
The registrants other certifying officer and I have disclosed, based on our most recent evaluation
of internal control over financial reporting, to the registrants auditors and the audit committee
of the registrants board of directors (or persons performing the equivalent functions):
All significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the registrants ability
to record, process, summarize and report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrants internal control over financial reporting.
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September 4, 2008 |
/s/ J. Brian Patsy
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Chief Executive Officer and President |
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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:
I have reviewed this quarterly report on Form 10-Q of Streamline Health Solutions, Inc.;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this
report, fairly present in all material respects the financial condition, results of operations and
cash flows of the Registrant as of, and for, the periods presented in this report;
The registrants other certifying officer and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) for the Registrant and have:
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under our supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures, as
of the end of the period covered by this report based on such evaluation; and
Disclosed in this report any change in the registrants internal control over financial reporting
that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal
28
quarter in the case of an annual report) that has materially affected, or is reasonably likely to
materially affect, the registrants internal control over financial reporting; and
The registrants other certifying officer and I have disclosed, based on our most recent evaluation
of internal control over financial reporting, to the registrants auditors and the audit committee
of the registrants board of directors (or persons performing the equivalent functions):
All significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the registrants ability
to record, process, summarize and report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrants internal control over financial reporting.
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September 4, 2008 |
/s/ Paul W. Bridge, Jr.
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Chief Financial Officer and Treasurer |
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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:
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(1) |
|
The Quarterly Report on Form 10-Q of the Company for the quarter ended July 31, 2008 (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 |
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(2) |
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The information contained in the Report fairly presents, in all material respects, the
financial condition, and results of operations of the Company. |
September 4, 2008
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Chairman of the Board, |
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Chief Executive Officer and President |
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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:
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(3) |
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The Quarterly Report on Form 10-Q of the Company for the quarter ended July 31, 2008 (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 |
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(4) |
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The information contained in the Report fairly presents, in all material respects, the
financial condition, and results of operations of the Company. |
September 4, 2008
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/s/ Paul W. Bridge, Jr.
Chief Financial Officer
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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