Streamline Health Solutions
Annual Report 2018

Plain-text annual report

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington, DC 20549FORM 10‑K(Mark One)☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended January 31, 2019OR☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from toCommission File Number: 000‑28132STREAMLINE HEALTH SOLUTIONS, INC.(Exact name of registrant as specified in its charter)Delaware 31‑1455414(State or other jurisdiction of (I.R.S. Employerincorporation or organization) Identification No.) 1175 Peachtree Street, NE, 10th Floor,Atlanta, GA 30361(Address of principal executive offices) (Zip Code)(888) 997‑8732(Registrant’s telephone number, including area code)Securities registered pursuant to Section 12(b) of the Act:Common Stock, $.01 par value(Title of Class)The NASDAQ Stock Market, Inc.(Name of exchange on which listed)Securities registered pursuant to Section 12(g) of the Act:NoneIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒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 duringthe 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 thepast 90 days. Yes ☒ No ☐Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 ofRegulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best ofthe registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10‑K, or any amendment to thisForm 10‑K. ☐Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerginggrowth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b‑2 ofthe Exchange Act. (Check one):Large accelerated filer ☐Accelerated filer ☐Non-accelerated filer ☐Smaller reporting company ☒ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant elected not to use the extended transition period for complying with any new or revisedfinancial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). Yes ☐ No ☒The aggregate market value of the voting stock held by non-affiliates of the registrant, computed using the closing price as reported by The NASDAQ StockMarket, Inc. for the Registrant’s Common Stock on July 31, 2018, was $20,232,964.The number of shares outstanding of the Registrant’s Common Stock, $.01 par value, as of March 24, 2019: 20,905,691.Documents incorporated by reference:Information required by Part III is incorporated by reference from Streamline’s Proxy Statement for its 2019 Annual Meeting of Stockholders or an amendmentto this Annual Report on Form 10‑K, which will be filed with the Securities and Exchange Commission within 120 days after the end of its fiscal year endedJanuary 31, 2019. Table of ContentsFORWARD-LOOKING STATEMENTSWe make forward-looking statements in this Report and in other materials we file with the Securities and ExchangeCommission (“SEC”) or otherwise make public. In this Report, both Part I, Item 1, “Business,” and Part II, Item 7,“Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contain forward-lookingstatements. In addition, our senior management makes forward-looking statements to analysts, investors, the media andothers. Statements with respect to expected revenue, income, receivables, backlog, client attrition, acquisitions and othergrowth opportunities, sources of funding operations and acquisitions, the integration of our solutions, the performance of ourchannel partner relationships, the sufficiency of available liquidity, research and development, and other statements of ourplans, beliefs or expectations are forward-looking statements. These and other statements using words such as “anticipate,”“believe,” “estimate,” “expect,” “intend,” “plan,” “project,” “target,” “can,” “could,” “may,” “should,” “will,” “would” andsimilar expressions also are forward-looking statements. Each forward-looking statement speaks only as of the date of theparticular statement. The forward-looking statements we make are not guarantees of future performance, and we have basedthese statements on our assumptions and analyses in light of our experience and perception of historical trends, currentconditions, expected future developments and other factors we believe are appropriate under the circumstances. Forward-looking statements by their nature involve substantial risks and uncertainties that could significantly affect expected results,and actual future results could differ materially from those described in such statements. Management cautions againstputting undue reliance on forward-looking statements or projecting any future results based on such statements or present orhistorical earnings levels.Among the factors that could cause actual future results to differ materially from our expectations are the risks anduncertainties described under “Risk Factors” set forth in Part I, Item 1A, and the other cautionary statements in otherdocuments we file with the SEC, including the following:·competitive products and pricing;·product demand and market acceptance;·entry into new markets;·new product and services development and commercialization;·key strategic alliances with vendors and channel partners that resell our products;·uncertainty in continued relationships with clients due to termination rights;·our ability to control costs;·availability, quality and security of products produced and services provided by third-party vendors;·the healthcare regulatory environment;·potential changes in legislation, regulation and government funding affecting the healthcare industry;·healthcare information systems budgets;·availability of healthcare information systems trained personnel for implementation of new systems, as well asmaintenance of legacy systems;·the success of our relationships with channel partners;·fluctuations in operating results;2 Table of Contents·our future cash needs;·the potential delisting of our common stock from the Nasdaq Capital Market;·the consummation of resources in researching acquisitions, business opportunities or financings and capitalmarket transactions;·the failure to adequately integrate past and future acquisitions into our business;·critical accounting policies and judgments;·changes in accounting policies or procedures as may be required by the Financial Accounting Standards Boardor other standard-setting organizations;·changes in economic, business and market conditions impacting the healthcare industry and the markets inwhich we operate; and·our ability to maintain compliance with the terms of our credit facilities.Most of these factors are beyond our ability to predict or control. Any of these factors, or a combination of these factors,could materially affect our future financial condition or results of operations and the ultimate accuracy of our forward-looking statements. There also are other factors that we may not describe (generally because we currently do not perceivethem to be material) that could cause actual results to differ materially from our expectations.We expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of newinformation, future events or otherwise, except as required by law.3 Table of Contents PART I ITEM 1. BusinessCompany OverviewIncorporated in 1989, the Company is a provider of solutions and services in the middle of the revenue cycle forhealthcare providers throughout the United States and Canada. Streamline Health®’s technology helps hospitals improvetheir financial performance by moving later revenue cycle interventions earlier in the process to optimize their codingaccuracy for every patient encounter prior to bill submission. By improving coding accuracy before billing, providers canreduce revenue leakage, mitigate the risk of overbilling, and reduce days in accounts receivable. This enables providers toturn previously unpredictable revenue cycles into more predictable revenue streams.The Company provides computer software-based solutions and auditing services, which capture, aggregate and translatestructured and unstructured data to deliver intelligently organized, easily accessible predictive insights to its clients.Hospitals and physician groups use the knowledge generated by Streamline Health to help them improve their financialperformance.The Company’s software solutions are delivered to clients either by access to the Company’s data center systemsthrough a secure connection in a software as a service (“SaaS”) delivery method or by a fixed-term or perpetual license, wheresuch software is installed locally in the client’s data center.The Company operates exclusively in one segment as a provider of health information technology solutions andassociated services that improve healthcare processes and information flows within a healthcare facility. The Company sellsits solutions and services in North America to hospitals and health systems, including physician practices, through its directsales force and its reseller partnerships.Unless the context requires otherwise, references to “Streamline Health,” the “Company,” “we,” “us” and “our” areintended to mean Streamline Health Solutions, Inc. and its wholly-owned subsidiary. All references to a fiscal year refer to thefiscal year commencing February 1 in that calendar year and ending on January 31 of the following calendar year.SolutionsThe Company offers solutions and services to assist its clients in revenue cycle management including Coding andClinical Documentation Improvement (CDI), Health Information Management (HIM), Financial Management andeValuator, its flagship solution which delivers 100% automated coding analysis prior to billing. The Company’s solutionsare designed to improve the flow of critical patient information throughout the enterprise. The solutions and services help totransform and structure information between disparate information technology systems into actionable data, giving the enduser comprehensive access to clinical and business intelligence to enable better decision-making. Solutions can be accessedsecurely through SaaS, or delivered either by a perpetual license or by a fixed-term license installed locally.HIM, Coding & CDI Solutions - These solutions provide an integrated cloud-based software suite that enhances theproductivity of CDI and Coding staff and enables the seamless sharing of patient data. This suite of solutions includesindividual workflows such as content management (ECM), release of information, computer-assisted coding (eCAC), CDI,Abstracting and Physician Query. The eCAC solution includes patented Natural Language Processing (NLP) that streamlinesconcurrent chart review and coding workflows.eValuator Coding Analysis Platform - This technology is a cloud-based SaaS analytics solution that delivers thecapability of fully automated analysis on 100% of billing codes entered by a healthcare provider’s coding team. This is doneon a pre-bill basis, enabling providers to identify and address their highest-impact cases prior to bill drop. Rule sets areenabled for inpatient, outpatient and pro-fee cases. With eValuator, providers can add an audit and review function on a pre-bill basis to all cases, allowing the provider to better optimize reimbursements and mitigate risk on its billing practices.4 TMTable of ContentsFinancial Management Solutions - These solutions enable financial staff across the healthcare enterprise to drill downquickly and deeply into actionable and real-time financial data and key performance indicators to improve revenuerealization and staff efficiency. This suite of solutions includes individual workflows such as accounts receivablemanagement, denials management, claims processing, spend management and audit management. These solutions providedashboards, data mining tools and prescriptive reporting, which help to simplify, facilitate and optimize overall revenuecycle performance of the healthcare enterprise. These solutions are also used to increase the completion and accuracy ofpatient charts and related coding, improve accounts receivable collections, reduce and manage denials, and improve auditoutcomes.Patient Care Solution – Although outside the Company’s primary focus of solutions in the middle of the revenue cyclefor healthcare providers, the Company’s Clinical Analytics solution enables clients to improve their patient care via cohortbuilding and data visualization, fostering an open, continuous learning culture inside a healthcare organization. Providersusing Clinical Analytics are empowered with real-time, on-demand predicative insight for improved patient outcomes.ServicesAudit Services — The Company provides technology-enabled coding audit services to help clients review and optimizetheir internal clinical documentation and coding functions across the applicable segment of the client’s enterprise. TheCompany provides these services using experienced auditors and its eValuator proprietary software to improve the targetingof records with the highest likelihood of requiring an audit. The audit services are provided for inpatient DRG codingauditing, outpatient APC auditing, HCC auditing and Physician/Pro-Fee services coding auditing.Custom Integration Services — The Company’s professional services team works with clients to design customintegrations that integrate data to or from virtually any clinical, financial, or administrative system. By taking data anddocuments from multiple, disparate systems and bringing them into one streamlined system, clients are able to maximizeefficiencies and increase operational performance. The Company’s professional services team also creates customintegrations that transfer data from the Company’s solutions into the client’s external or internal systems.Training Services — Training courses are offered to help clients quickly learn to use our solutions in the most efficientmanner possible. Training sessions are available on-site or off-site for multiple staff members or as few as one person.Electronic Image Conversion — The Company’s electronic image conversion service allows organizations to protecttheir repository of images while taking advantage of its content management technology. Electronic image conversioncreates one repository that integrates directly with our clinical content management system. This service is available via theSaaS model or for locally-installed solutions.Database Monitoring Services — The Company’s advanced database monitoring services for clients with locally-installed solutions help lighten the burden of ongoing system monitoring by the client’s information technology staff andensure a continual, stable production environment. The Company’s database administrators ensure the client’s system isrunning optimally with weekly manual checks of the database environment to identify system issues that may require furtherattention. Monitoring is done through protected connections to data security.Clients and Strategic PartnersThe Company continues to provide transformational data-driven solutions to some of the finest, most well-respectedhealthcare enterprises in the United States and Canada. Clients are geographically dispersed throughout North America, withthe heaviest concentration currently in the New York metropolitan area. The Company provides these solutions through acombination of direct sales and relationships with strategic channel partners.During fiscal year 2018, no individual client accounted for 10% or more of our total revenues. Two clients represented12% and 9%, respectively, of total accounts receivable as of January 31, 2019.5 Table of ContentsDuring fiscal year 2017, no individual client accounted for 10% or more of our total revenues. Two clients represented12% and 11%, respectively, of total accounts receivable as of January 31, 2018.For more information regarding our major clients, please see “Risks Relating to Our Business - Our sales have beenconcentrated in a small number of clients” in Part 1, Item 1A, “Risk Factors”.Acquisitions and DivestituresThe Company regularly evaluates opportunities for acquisitions and divestitures for portions of the Company that maynot align with current growth strategies. The Company acquired substantially all of the assets of Opportune IT HealthcareSolutions, Inc. (“Opportune IT”), a provider of coding compliance, recovery audit contractor consulting, and ICD-10readiness and training to hospitals, physicians and medical groups, on September 8, 2016. The Company also divested theStreamline Health® Patient Engagement suite of solutions on December 1, 2016.Business SegmentsWe manage our business as one single business segment. For our total assets at January 31, 2019 and 2018 and totalrevenue and net loss for the fiscal years ended January 31, 2019 and 2018, see our consolidated financial statements includedin Part II, Item 8 herein.Contracts, License and Services FeesThe Company enters into agreements with its clients that specify the scope of the system to be installed and/or servicesto be provided by the Company, as well as the agreed-upon aggregate price, applicable term duration and the timetable forthe associated licenses and services.For clients purchasing software to be installed locally or provided on a SaaS model, these are multi-elementarrangements that include either a perpetual or term license and right to access the applicable software functionality (whetherinstalled locally at the client site or the right to use the Company’s solutions as a part of SaaS services), terms regardingmaintenance and support services, terms for any third-party components such as hardware and software, and professionalservices for implementation, integration, process engineering, optimization and training, as well as fees and payment termsfor each of the foregoing. If the client purchases solutions on a perpetual license model, the client is billed the license fee upfront. Maintenance and support is provided on a term basis for separate fees, with an initial term typically from one tofive years in length. The maintenance and support fee is charged annually in advance, commencing either upon contractexecution or deployment of the solution in live production. If the client purchases solutions on a term-based model, theclient is billed periodically a combined access fee for a specified term, typically from one to seven years in length. The accessfee includes the access rights along with all maintenance and support services.The Company also generally provides software and SaaS clients professional services for implementation, integration,process engineering, optimization and training. These services and the associated fees are separate from the license,maintenance and access fees. Professional services are provided on either a fixed-fee or hourly arrangements billable toclients based on agreed-to payment milestones (fixed fee) or monthly payment structure on hours incurred (hourly). Theseservices can either be included at the time the related locally installed software or SaaS solution is licensed as part of theinitial purchase agreement, or added on afterward as an addendum to the existing agreement for services required after theinitial implementation.For coding audit services clients, these review services are provided either through a stand-alone services agreement orservices addendum to an existing master agreement with the client. These review services are available as either a one-timeservice or recurring monthly, quarterly or annual review structure. These services are typically provided on a per reviewedaccount/chart basis. Monthly minimums are required where material discounts have been offered. Payment typically occursupon completion of the applicable review project.The commencement of revenue recognition varies depending on the size and complexity of the system and/or servicesinvolved, the implementation or performance schedule requested by the client and usage by clients of SaaS for6 Table of Contentssoftware-based components. The Company’s agreements are generally non-cancelable but provide that the client mayterminate its agreement upon a material breach by the Company and/or or may delay certain aspects of the installation orassociated payments in such events. The Company does allow for termination for convenience in certain situations. TheCompany also includes trial or evaluation periods for certain clients, especially for new or modified solutions. Therefore, it isdifficult for the Company to accurately predict the revenue it expects to achieve in any particular period, and a terminationor installation delay of one or more phases of an agreement, or the failure of the Company to procure additional agreements,could have a material adverse effect on the Company’s business, financial condition, and results of operations, as furtherdiscussed in Section 1A Risk Factors herein. Historically, the Company has not experienced a material amount of contractcancellations; however, the Company sometimes experiences delays in the course of contract performance and the Companyaccounts for them accordingly.Third-Party License FeesThe Company incorporates software licensed from various third-party vendors into its proprietary software. Stand-alonethird-party software is also required to operate certain of the Company’s proprietary software and/or SaaS services. TheCompany licenses these software products and pays the required license fees when such software is delivered to clients.AssociatesAs of January 31, 2019, the Company had 106 employees (with 103 as full-time employees and 3 as part-timeemployees), a net decrease of 10 employees during fiscal 2018. The Company utilizes independent contractors tosupplement its staff, as needed. None of the Company’s associates are represented by a labor union or subject to a collectivebargaining agreement. The Company has never experienced a work stoppage and believes that its employee relations aregood. The Company’s success depends, to a significant degree, on its management, sales and technical personnel.For more information on contracts, backlog, acquisitions and research and development, see also Part II, Item 7,“Management’s Discussion and Analysis of Financial Condition and Results of Operations”.CompetitionRegarding our Patient Care Solutions, HIM, Coding and CDI Solutions, eValuator Coding Analysis Platform, andFinancial Management Solutions, several companies historically have dominated the clinical information system softwaremarket and several of these companies have either acquired, developed or are developing their own document managementand workflow technologies. The industry is undergoing consolidation and realignment as companies position themselves tocompete more effectively. Strategic alliances between vendors offering HIM workflow and document managementtechnologies and vendors of other healthcare systems are increasing. Barriers to entry to this market include technologicaland application sophistication, the ability to offer a proven product, creating and utilizing a well-established client base anddistribution channels, brand recognition, the ability to operate on a variety of operating systems and hardware platforms, theability to integrate with pre-existing systems and capital for sustained development and marketing activities. The Companyhas many competitors including clinical information system vendors that are larger, more established and have substantiallymore resources than the Company.Regarding our Audit Services, there are numerous medium and small companies and independent consultants who offerthese services. Barriers to entry to this market include creating and utilizing a well-established client base and distributionchannels, brand recognition, establishing differentiators for our services and capital for sustained development andmarketing activities.The Company believes that these obstacles taken together represent a moderate to high-level barrier to entry. TheCompany believes that the principal competitive factors in its market are client recommendations and references, companyreputation, system reliability, system features and functionality (including ease of use), technological advancements, clientservice and support, breadth and quality of the systems, the potential for enhancements and future compatible products, theeffectiveness of marketing and sales efforts, price, and the size and perceived financial stability7 Table of Contentsof the vendor. In addition, the Company believes that the speed with which companies in its market can anticipate theevolving healthcare industry structure and identify unmet needs are important competitive factors.Additional Intellectual Property RightsIn addition to the software licenses described in other sections of this Item 1, “Business”, the Company also holdsregistered trademarks for its Streamline Health® and other key trademarks used in selling our products. These marks arecurrently active, with registrations being valid for a period of 3 years each. The Company actively renews these marks at theend of each registration period.RegulationOur clients derive a substantial portion of their revenue from third-party private and governmental payors, includingthrough Medicare, Medicaid and other government-sponsored programs. Our clients also have express handling andretention obligations under information-based laws such as the Health Insurance Portability and Accountability Act of 1996.There are no material regulatory proposals of which the Company is aware that we believe currently have a high likelihoodof passage that we anticipate would have a material impact on the operation or demand of the Company’s products andservices. However, the Company acknowledges there is currently great uncertainty in the US healthcare market generallyfrom a regulatory perspective. In addition, there is regulatory uncertainty in the data and technology sectors as it relates toinformation security regulations. Material changes could have unanticipated impact on demand or usability of theCompany’s solutions, require the Company to incur additional development and/or operating costs (on a one-time orrecurring basis) or cause clients to terminate their agreements or otherwise be unable to pay amounts owed to the Company,as further discussed in the risk factors in Part 1, Item 1A, “Risk Factors” herein.Requests for DocumentsCopies of documents filed by the Company with the SEC, including annual reports on Form 10‑K, quarterly reports onForm 10‑Q, current reports on Form 8‑K, proxy statements and all amendments to those reports and statements, if any, can befound at the web site http://investor.streamlinehealth.net as soon as practicable after such material is electronically filed with,or furnished to, the SEC. The information contained on the Company’s website is not part of, or incorporated by referenceinto, this annual report on Form 10‑K. Copies can be downloaded free of charge from the Company’s web site or directly fromthe SEC web site, http://www.sec.gov. Also, copies of the Company’s annual report on Form 10‑K will be made available,free of charge, upon written request to the Company, attention: Corporate Secretary, 1175 Peachtree Street, NE, 10 Floor,Atlanta, GA 30361. ITEM 1A. Risk FactorsAn investment in our common stock or other securities involves a number of risks. You should carefully consider each ofthe risks described below before deciding to invest in our common stock or other securities. If any of the following risksdevelops into actual events, our business, financial condition or results of operations could be negatively affected, themarket price of our common stock or other securities could decline, and you may lose all or part of your investment.Risks Relating to Our BusinessOur sales have been concentrated in a small number of clients.Our revenues have been concentrated in a relatively small number of large clients, and we have historically derived asubstantial percentage of our total revenues from a few clients. For both fiscal years ended January 31, 2019 and 2018, ourfive largest clients accounted for 29% of our total revenues. If one or more clients terminate all or any portion of a masteragreement, delay installations or if we fail to procure additional agreements, there could be a material adverse effect on ourbusiness, financial condition and results of operations. See Note 8 - Major Clients to our consolidated financial statementsincluded in Part II, Item 8 herein for further notes regarding representation of the largest individual major clients.8 thTable of ContentsA significant increase in new SaaS contracts could reduce near-term profitability and require a significant cash outlay,which could adversely affect near term cash flow and financial flexibility.If new or existing clients purchase significant amounts of our SaaS services, we may have to expend a significant amountof initial setup costs and time before those new clients are able to begin using such services, and we cannot begin torecognize revenues from those SaaS agreements until the commencement of such services. Accordingly, we anticipate thatour near-term cash flow, revenue and profitability may be adversely affected by significant incremental setup costs from newSaaS clients that would not be offset by revenue until new SaaS clients go into production. While we anticipate long-termgrowth in profitability through increases in recurring SaaS subscription fees and significantly improved profit visibility, anyinability to adequately finance setup costs for new SaaS solutions could result in the failure to put new SaaS solutions intoproduction, and could have a material adverse effect on our liquidity, financial position and results of operations. Inaddition, this near-term cash flow demand could adversely impact our financial flexibility and cause us to forego otherwiseattractive business opportunities or investments.Our eValuator platform, coding audit services and associated software and technologies represent a new market for theCompany, and we may not see the anticipated market interest or growth due to being a new player in the industry.The Company is currently investing in the eValuator platform as well as new software-based technologies relating tohigh automation and machine-based analytics regarding a client’s coding audit process. The return on this investmentrequires that the product developments continue to be defined and completed in a timely and cost-effective manner, thereremains general interest in the marketplace (for both existing and future clients) for this technology, the demand for theproduct generates sufficient revenue in light of the development costs and that the Company is able to execute a successfulproduct launch for these technologies. If the Company is unable to meet these requirements when launching thesetechnologies, or if there is a delay in the launch process, the Company may not see an increase in revenue to offset the currentdevelopment costs or otherwise translate to added growth and revenue for the Company.Clients may exercise termination rights within their contracts, which may cause uncertainty in anticipated and futurerevenue streams.The Company generally does not allow for termination of a client’s agreement except at the end of the agreed upon termor for cause. However, certain of the Company’s client contracts provide that the client may terminate the contract withoutcause prior to the end of the term of the agreement by providing written notice, sometimes with relatively short noticeperiods. The Company also provides trial or evaluation periods for certain clients, especially for new products and services.Furthermore, there can be no assurance that a client will not cancel all or any portion of an agreement, even without anexpress early termination right. And, the Company may face additional costs or hardships collecting on amounts owed if aclient terminates an agreement without such a right. Whether resulting from termination for cause or the limited terminationfor convenience rights discussed above, the existence of contractual relationships with these clients is not an assurance thatwe will continue to provide services for our clients through the entire term of their respective agreements. If clientsrepresenting a significant portion of our revenue terminated their agreements unexpectedly, we may not, in the short-term, beable to replace the revenue and income from such contracts and this would have a material adverse effect on the Company’sbusiness, financial condition, results of operations and cash flows. In addition, client contract terminations could harm ourreputation within the industry, especially any termination for cause, which could negatively impact our ability to obtain newclients.Changes in healthcare regulations impacting coding, payers and other aspects of the healthcare regulatory cycle couldhave substantial impact on our financial performance, growth and operating costs.Our sales and profitability depend, in part, on the extent to which coverage of and reimbursement for medical careprovided is available from governmental health programs, private health insurers, managed care plans and other third-partypayors. Unanticipated regulatory changes could materially impact the need for and/or value of our solutions. For example, ifgovernmental or other third-party payors materially reduce reimbursement rates or fail to reimburse our clients adequately,our clients may suffer adverse financial consequences. Changes in regulations affecting the healthcare industry, such as anyincreased regulation by governmental agencies of the purchase and sale of medical products, or restrictions on permissiblediscounts and other financial arrangements, could also directly impact the9 Table of Contentscapabilities our solutions and services provide and the pricing arrangements we are required to offer to be competitive in themarket. Similarly, the U.S. Congress may adopt legislation that may change, override, conflict with or preempt the currentlyexisting regulations and which could restrict the ability of clients to obtain, use or disseminate patient health informationand/or impact the value of the functionality our products and services provide.These situations would, in turn, reduce the demand for our solutions or services and/or the ability for a client to purchaseour solutions or services. This could have a material impact on our financial performance. In addition, the speed with whichthe Company can respond to and address any such changes when compared with the response of other companies in the samemarket (especially companies who may accurately anticipate the evolving healthcare industry structure and identify unmetneeds) are important competitive factors. If the Company is not able to address the modifications in a timely mannercompared with our competition, that may further reduce demand for our solutions and services.The potential impact on us of new or changes in existing federal, state and local regulations governing healthcareinformation could be substantial.Healthcare regulations issued to date have not had a material adverse effect on our business. However, we cannot predictthe potential impact of new or revised regulations that have not yet been released or made final, or any other regulations thatmight be adopted. The U.S. Congress may adopt legislation that may change, override, conflict with or preempt the currentlyexisting regulations and which could restrict the ability of clients to obtain, use or disseminate patient health information.Although the features and architecture of our existing solutions can be modified, it may be difficult to address the changingregulation of healthcare information.The healthcare industry is highly regulated. Any material changes in the political, economic or regulatory healthcareenvironment that affect the group purchasing business or the purchasing practices and operations of healthcareorganizations, or that lead to consolidation in the healthcare industry, could require us to modify our services or reduce thefunds available to providers to purchase our solutions and services.Our business, financial condition and results of operations depend upon conditions affecting the healthcare industrygenerally and hospitals and health systems particularly. Our ability to grow will depend upon the economic environment ofthe healthcare industry, as well as our ability to increase the number of solutions that we sell to our clients. The healthcareindustry is highly regulated and is subject to changing political, economic and regulatory influences. Factors such aschanges in reimbursement policies for healthcare expenses, consolidation in the healthcare industry, regulation, litigationand general economic conditions affect the purchasing practices, operation and, ultimately, the operating funds of healthcareorganizations. In particular, changes in regulations affecting the healthcare industry, such as any increased regulation bygovernmental agencies of the purchase and sale of medical products, or restrictions on permissible discounts and otherfinancial arrangements, could require us to make unplanned modifications to our solutions and services, or result in delays orcancellations of orders or reduce funds and demand for our solutions and services.Our clients derive a substantial portion of their revenue from third-party private and governmental payors, includingthrough Medicare, Medicaid and other government-sponsored programs. Our sales and profitability depend, in part, on theextent to which coverage of and reimbursement for medical care provided is available from governmental health programs,private health insurers, managed care plans and other third-party payors. If governmental or other third-party payorsmaterially reduce reimbursement rates or fail to reimburse our clients adequately, our clients may suffer adverse financialconsequences, which in turn, may reduce the demand for and ability to purchase our solutions or services.We face significant competition, including from companies with significantly greater resources.We currently compete with many other companies for the licensing of similar software solutions and related services.Several companies historically have dominated the clinical information systems software market and several of thesecompanies have either acquired, developed or are developing their own content management, analytics and coding/clinicaldocumentation improvement solutions, as well as the resultant workflow technologies. The industry is undergoingconsolidation and realignment as companies position themselves to compete more effectively. Many of these companies arelarger than us and have significantly more resources to invest in their business. In addition, information10 Table of Contentsand document management companies serving other industries may enter the market. Suppliers and companies with whomwe may establish strategic alliances also may compete with us. Such companies and vendors may either individually, or byforming alliances excluding us, place bids for large agreements in competition with us. A decision on the part of any of thesecompetitors to focus additional resources in any one of our three solutions stacks (content management, analytics andcoding/clinical documentation improvement), workflow technologies and other markets addressed by us could have amaterial adverse effect on us.The healthcare industry is evolving rapidly, which may make it more difficult for us to be competitive in the future.The U.S. healthcare system is under intense pressure to improve in many areas, including modernization, universalaccess and controlling skyrocketing costs of care. We believe that the principal competitive factors in our market are clientrecommendations and references, company reputation, system reliability, system features and functionality (including ease ofuse), technological advancements, client service and support, breadth and quality of the systems, the potential forenhancements and future compatible solutions, the effectiveness of marketing and sales efforts, price and the size andperceived financial stability of the vendor. In addition, we believe that the speed with which companies in our market cananticipate the evolving healthcare industry structure and identify unmet needs is an important competitive factor. If we areunable to keep pace with changing conditions and new developments, we will not be able to compete successfully in thefuture against existing or potential competitors.Rapid technology changes and short product life cycles could harm our business.The market for our solutions and services is characterized by rapidly changing technologies, regulatory requirements,evolving industry standards and new product introductions and enhancements that may render existing solutions obsolete orless competitive. As a result, our position in the healthcare information technology market could change rapidly due tounforeseen changes in the features and functions of competing products, as well as the pricing models for such products. Ourfuture success will depend, in part, upon our ability to enhance our existing solutions and services and to develop andintroduce new solutions and services to meet changing requirements. Moreover, competitors may develop competitiveproducts that could adversely affect our operating results. We need to maintain an ongoing research and developmentprogram to continue to develop new solutions and apply new technologies to our existing solutions but may not havesufficient funds with which to undertake such required research and development. If we are not able to foresee changes or toreact in a timely manner to such developments, we may experience a material, adverse impact on our business, operatingresults and financial condition.Our intellectual property rights are valuable, and any inability to protect them could reduce the value of our solutions andservices.Our intellectual property, which represents an important asset to us, has some protection against infringement throughcopyright and trademark law. We generally have little patent protection on our software. We rely upon license agreements,employment agreements, confidentiality agreements, nondisclosure agreements and similar agreements to maintain theconfidentiality of our proprietary information and trade secrets. Notwithstanding these precautions, others may copy, reverseengineer or independently design technology similar to our solutions. If we fail to protect adequately our intellectualproperty through trademarks and copyrights, license agreements, employment agreements, confidentiality agreements,nondisclosure agreements or similar agreements, our intellectual property rights may be misappropriated by others,invalidated or challenged, and our competitors could duplicate our technology or may otherwise limit any competitivetechnology advantage we may have. It may be necessary to litigate to enforce or defend our proprietary technology or todetermine the validity of the intellectual property rights of others. Any litigation, successful or unsuccessful, may result insubstantial cost and require significant attention by management and technical personnel.Due to the rapid pace of technological change, we believe our future success is likely to depend upon continuedinnovation, technical expertise, marketing skills and client support and services rather than on legal protection of ourintellectual property rights. However, we have aggressively asserted our intellectual property rights when necessary andintend to do so in the future.11 Table of ContentsWe could be subjected to claims of intellectual property infringement that could be expensive to defend.While we do not believe that our solutions and services infringe upon the intellectual property rights of third parties, thepotential for intellectual property infringement claims continually increases as the number of software patents andcopyrighted and trademarked materials continues to rapidly expand. Any claim for intellectual property right infringement,even if not meritorious, could be expensive to defend. If we were held liable for infringing third party intellectual propertyrights, we could incur substantial damage awards, and potentially be required to cease using the technology, produce non-infringing technology or obtain a license to use such technology. Such potential liabilities or increased costs could bematerial to us.Over the last several years, we have completed a number of acquisitions and may undertake additional acquisitions in thefuture. Any failure to adequately integrate past and future acquisitions into our business could have a material adverseeffect on us.Over the last several years, we have completed several acquisitions of businesses through asset and stock purchases. Weexpect that we will make additional acquisitions in the future.Acquisitions involve a number of risks, including, but not limited to:·the potential failure to achieve the expected benefits of the acquisition, including the inability to generate sufficientrevenue to offset acquisition costs, or the inability to achieve expected synergies or cost savings;·unanticipated expenses related to acquired businesses or technologies and their integration into our existingbusinesses or technology;·the diversion of financial, managerial and other resources from existing operations;·the risks of entering into new markets in which we have little or no experience or where competitors may havestronger positions;·potential write-offs or amortization of acquired assets or investments;·the potential loss of key employees, clients or partners of an acquired business;·delays in client purchases due to uncertainty related to any acquisition;·potential unknown liabilities associated with an acquisition; and·the tax effects of any such acquisitions.If we fail to successfully integrate acquired businesses or fail to implement our business strategies with respect toacquisitions, we may not be able to achieve projected results or support the amount of consideration paid for such acquiredbusinesses, which could have an adverse effect on our business and financial condition.Finally, if we finance acquisitions by issuing equity or convertible or other debt securities, our existing stockholdersmay be diluted, or we could face constraints related to the terms of and repayment obligations related to the incurrence ofindebtedness. This could adversely affect the market price of our securities.12 Table of ContentsWe could consume resources in researching acquisitions, business opportunities or financings and capital markettransactions that are not ultimately consummated, which could materially adversely affect our financial condition andsubsequent attempts to locate and acquire or invest in another business.We anticipate that the investigation of each specific acquisition or business opportunity and the negotiation, drafting,and execution of relevant agreements, disclosure documents, and other instruments with respect to such transaction willrequire substantial management time and attention and substantial costs for financial advisors, accountants, attorneys andother advisors. If a decision is made not to consummate a specific acquisition, business opportunity or financing and capitalmarket transaction, the costs incurred up to that point for the proposed transaction likely would not be recoverable.Furthermore, even if an agreement is reached relating to a specific acquisition, investment target or financing, we may fail toconsummate the investment or acquisition for any number of reasons, including those beyond our control. Any such eventcould consume significant management time and result in a loss to us of the related costs incurred, which could adverselyaffect our financial position and our ability to consummate other acquisitions and investments.Third party products are essential to our software.Our software incorporates software licensed from various vendors into our proprietary software. In addition, third-party,stand-alone software is required to operate some of our proprietary software modules. The loss of the ability to use thesethird-party products, or ability to obtain substitute third-party software at comparable prices, could have a material adverseeffect on our ability to license our software.Our solutions may not be error-free and could result in claims of breach of contract and liabilities.Our solutions are very complex and may not be error-free, especially when first released. Although we perform extensivetesting, failure of any solution to operate in accordance with its specifications and documentation could constitute a breachof the license agreement and require us to correct the deficiency. If such deficiency is not corrected within the agreed-uponcontractual limitations on liability and cannot be corrected in a timely manner, it could constitute a material breach of acontract allowing the termination thereof and possibly subjecting us to liability. Also, we sometimes indemnify our clientsagainst third-party infringement claims. If such claims are made, even if they are without merit, they could be expensive todefend. Our license and SaaS agreements generally limit our liability arising from these types of claims, but such limits maynot be enforceable in some jurisdictions or under some circumstances. A significant uninsured or under-insured judgmentagainst us could have a material adverse impact on us.We could be liable to third parties from the use of our solutions.Our solutions provide access to patient information used by physicians and other medical personnel in providingmedical care. The medical care provided by physicians and other medical personnel are subject to numerous medicalmalpractice and other claims. We attempt to limit any potential liability of ours to clients by limiting the warranties on oursolutions in our agreements with our clients (i.e., healthcare providers). However, such agreements do not protect us fromthird-party claims by patients who may seek damages from any or all persons or entities connected to the process ofdelivering patient care. We maintain insurance, which provides limited protection from such claims, if such claims result inliability to us. Although no such claims have been brought against us to date regarding injuries related to the use of oursolutions, such claims may be made in the future. A significant uninsured or under-insured judgment against us could have amaterial adverse impact on us.Our SaaS and support services could experience interruptions.We provide SaaS for many clients, including the storage of critical patient, financial and administrative data. In addition,we provide support services to clients through our client support organization. We have redundancies, such as backupgenerators, redundant telecommunications lines and backup facilities built into our operations to prevent disruptions.However, complete failure of all generators, impairment of all telecommunications lines or severe casualty damage to theprimary building or equipment inside the primary building housing our hosting center or client support facilities could causea temporary disruption in operations and adversely affect clients who depend on the application13 Table of Contentshosting services. Any interruption in operations at our data center or client support facility could cause us to lose existingclients, impede our ability to obtain new clients, result in revenue loss, cause potential liability to our clients and increaseour operating costs.Our SaaS solutions are provided over an internet connection. Any breach of security or confidentiality of protected healthinformation could expose us to significant expense and harm our reputation.We provide remote SaaS solutions for clients, including the storage of critical patient, financial and administrative data.We have security measures in place to prevent or detect misappropriation of protected health information. We must maintainfacility and systems security measures to preserve the confidentiality of data belonging to clients, as well as their patients,that resides on computer equipment in our data center, which we handle via application hosting services, or that is otherwisein our possession. Notwithstanding efforts undertaken to protect data, it can be vulnerable to infiltration as well asunintentional lapse. If confidential information is compromised, we could face claims for contract breach, penalties and otherliabilities for violation of applicable laws or regulations, significant costs for remediation and re-engineering to preventfuture occurrences and serious harm to our reputation.The loss of key personnel could adversely affect our business.Our success depends, to a significant degree, on our management, sales force and technical personnel. We must recruit,motivate and retain highly skilled managers, sales, consulting and technical personnel, including solution programmers,database specialists, consultants and system architects who have the requisite expertise in the technical environments inwhich our solutions operate. Competition for such technical expertise is intense. Our failure to attract and retain qualifiedpersonnel could have a material adverse effect on us.Our future success depends upon our ability to grow, and if we are unable to manage our growth effectively, we may incurunexpected expenses and be unable to meet our clients’ requirements.We will need to expand our operations if we successfully achieve greater demand for our products and services. Wecannot be certain that our systems, procedures, controls and human resources will be adequate to support expansion of ouroperations. Our future operating results will depend on the ability of our officers and employees to manage changingbusiness conditions and to implement and improve our technical, administrative, financial control and reporting systems. Wemay not be able to expand and upgrade our systems and infrastructure to accommodate these increases. Difficulties inmanaging any future growth, including as a result of integrating any prior or future acquisition with our existing businesses,could cause us to incur unexpected expenses or render us unable to meet our clients’ requirements, and consequently have asignificant negative impact on our business, financial condition and operating results.We may not have access to sufficient or cost-efficient capital to support our growth, execute our business plans and remaincompetitive in our markets.As our operations grow and as we implement our business strategies, we expect to use both internal and external sourcesof capital. In addition to cash flow from normal operations, we may need additional capital in the form of debt or equity tooperate and support our growth, execute our business plans and remain competitive in our markets. We may have no orlimited availability to such external capital, in which case our future prospects may be materially impaired. Furthermore, wemay not be able to access external sources of capital on reasonable or favorable terms. Our business operations could besubject to both financial and operational covenants that may limit the activities we may undertake, even if we believe theywould benefit our company.We previously entered into a software license and royalty agreement with Montefiore Medical Center pursuant to which weare obligated to pay Montefiore $1,000,000 in cash by July 31, 2020. The payment of this obligation could adversely affectour business.On October 25, 2013, we entered into a software license and royalty agreement with Montefiore Medical Center(“Montefiore”) pursuant to which Montefiore granted us an exclusive, worldwide 15‑year license of Montefiore’s proprietaryclinical analytics platform solution, Clinical Looking Glass® (“CLG”), now known as our Clinical Analytics14 Table of Contentssolution. We originally committed that Montefiore would receive at least an additional $3,000,000 of on-going royaltypayments related to future sublicensing of CLG by us within the first six and one-half years of the license term. On July 1,2018, we entered into an amendment to software license and royalty agreement to modify our payment obligations such thatunder the modified provisions, our obligation to pay on-going royalties was replaced with the obligation to, among otherthings, pay $1,000,000 in cash by July 31, 2020. To the extent that cash flow from operations is insufficient to pay thisobligation, we may pay all or some of this obligation from, among other things, drawings on our credit facility, proceeds fromasset sales or the sale of our securities. The payment of this obligation may reduce the amount of proceeds available foracquisitions, negatively impact the value of our common stock and reduce the overall return.Potential disruptions in the credit markets may adversely affect our business, including the availability and cost of short-term funds for liquidity requirements and our ability to meet long-term commitments, which could adversely affect ourresults of operations, cash flows and financial condition.If internally generated funds are not available from operations, we may be required to rely on the banking and creditmarkets to meet our financial commitments and short-term liquidity needs. Our access to funds under our revolving creditfacility or pursuant to arrangements with other financial institutions is dependent on the financial institution’s ability tomeet funding commitments. Financial institutions may not be able to meet their funding commitments if they experienceshortages of capital and liquidity or if they experience high volumes of borrowing requests from other borrowers within ashort period of time.We must maintain compliance with the terms of our existing credit facilities or receive a waiver for any non-compliance.The failure to maintain compliance could have a material adverse effect on our ability to finance our ongoing operationsand we may not be able to find an alternative lending source if a default occurs.In November 2014, we entered into a Credit Agreement (the “Credit Agreement”) with Wells Fargo Bank, N.A., asadministrative agent, and other lender parties thereto. Pursuant to the Credit Agreement, the lenders agreed to providea $10,000,000 senior term loan and a $5,000,000 revolving line of credit to our primary operating subsidiary. The CreditAgreement includes customary financial covenants, including the requirements that the Company maintain certain minimumliquidity and achieve certain minimum EBITDA levels.In order to draw upon its revolving line of credit, pursuant to the terms of the Credit Agreement, the Company is requiredto maintain minimum liquidity of at least (i) $5,000,000 through January 31, 2018, (ii) $4,000,000 from February 1, 2018through November 19, 2018, (iii) $3,500,000 from November 20, 2018 through and including January 31, 2019, and(iv) $4,000,000 from February 1, 2019 through and including the maturity date of the credit facility. The Company was incompliance with the applicable loan covenants at January 31, 2019.If we do not maintain compliance with all of the continuing covenants and other terms and conditions of the creditfacility or secure a waiver for any non-compliance, we could be required to repay outstanding borrowings on an acceleratedbasis, which could subject us to decreased liquidity and other negative impacts on our business, results of operations andfinancial condition. Furthermore, if we needed to do so, it may be difficult for us to find an alternative lending source. Inaddition, because our assets are pledged as a security under our credit facilities, if we are not able to cure any default or repayoutstanding borrowings, our assets are subject to the risk of foreclosure by our lenders. Without a sufficient credit facility, wewould be adversely affected by a lack of access to liquidity needed to operate our business. Any disruption in access to creditcould force us to take measures to conserve cash, such as deferring important research and development expenses, whichmeasures could have a material adverse effect on us.Our outstanding preferred stock have significant redemption and repayment rights that could have a material adverseeffect on our liquidity and available financing for our ongoing operations.In August 2012, we completed a private offering of preferred stock, warrants and convertible notes to a group ofinvestors for gross proceeds of $12 million. In November 2012, the convertible notes converted into shares of preferred stock.Subject to the terms of the Subordination and Intercreditor Agreement, the preferred stock is redeemable at the option of theholders thereof any time after August 31, 2016 if not previously converted into shares of common stock. We may not achievethe thresholds required to trigger automatic conversion of the preferred stock, and alternatively,15 Table of Contentsholders may not voluntarily elect to convert the preferred stock into common stock. The election of the holders of ourpreferred stock to redeem the preferred stock could subject us to decreased liquidity and other negative impacts on ourbusiness, results of operations and financial condition. Under the terms of the Subordination and Intercreditor Agreementamong the preferred stockholders, the Company and Wells Fargo, our obligation to redeem the preferred stock issubordinated to our obligations under the senior term loan and the preferred stock may not be redeemed without the consentof Wells Fargo. For additional information regarding the terms, rights and preferences of the preferred stock, see Note 3 to ourconsolidated financial statements included in Part II, Item 8 herein and our other SEC filings.Economic conditions in the U.S. and globally may have significant effects on our clients and suppliers that could result inmaterial adverse effects on our business, operating results and stock price.Economic conditions in the U.S. and globally could deteriorate and cause the worldwide economy to enter into astagnant period that could materially adversely affect our clients’ access to capital or willingness to spend capital on oursolutions and services or their levels of cash liquidity with which to pay for solutions that they will order or have alreadyordered from us. Challenging economic conditions also would likely negatively impact our business, which could result in:(1) reduced demand for our solutions and services; (2) increased price competition for our solutions and services;(3) increased risk of collectability of cash from our clients; (4) increased risk in potential reserves for doubtful accounts andwrite-offs of accounts receivable; (5) reduced revenues; and (6) higher operating costs as a percentage of revenues.All of the foregoing potential consequences of a deterioration of economic conditions are difficult to forecast andmitigate. As a consequence, our operating results for a particular period are difficult to predict, and, therefore, prior results arenot necessarily indicative of future results. Any of the foregoing effects could have a material adverse effect on our business,results of operations, and financial condition and could adversely affect the market price of our common stock and othersecurities.The variability of our quarterly operating results can be significant.Our operating results have fluctuated from quarter-to-quarter in the past, and we may experience continued fluctuationsin the future. Future revenues and operating results may vary significantly from quarter-to-quarter as a result of a number offactors, many of which are outside of our control. These factors include: the relatively large size of client agreements;unpredictability in the number and timing of systems sales and sales of application hosting services; length of the salescycle; delays in installations; changes in clients’ financial conditions or budgets; increased competition; the developmentand introduction of new products and services; the loss of significant clients or remarketing partners; changes in governmentregulations, particularly as they relate to the healthcare industry; the size and growth of the overall healthcare informationtechnology markets; any liability and other claims that may be asserted against us; our ability to attract and retain qualifiedpersonnel; national and local general economic and market conditions; and other factors discussed in this report and ourother filings with the SEC.The preparation of our financial statements requires the use of estimates that may vary from actual results.The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principlesrequires management to make significant estimates that affect the financial statements. One of our most critical estimates isthe capitalization of software development costs. Due to the inherent nature of these estimates, we may be required tosignificantly increase or decrease such estimates upon determination of the actual results. Any required adjustments couldhave a material adverse effect on us and our results of operations.Failure to improve and maintain the quality of internal control over financial reporting and disclosure controls andprocedures or other lapses in compliance could materially and adversely affect our ability to provide timely and accuratefinancial information about us or subject us to potential liability.In connection with the preparation of the consolidated financial statements for each of our fiscal years, our managementconducts a review of our internal control over financial reporting. We are also required to maintain effective disclosurecontrols and procedures. Any failure to maintain adequate controls or to adequately implement16 Table of Contentsrequired new or improved controls could harm operating results, or cause failure to meet reporting obligations in a timely andaccurate manner.Our operations are subject to foreign currency exchange rate risk.In connection with our expansion into foreign markets, which primarily consists of Canada, we sometimes receivepayment in currencies other than the U.S. dollar. Accordingly, changes in exchange rates, and in particular a strengthening ofthe U.S. dollar, will negatively affect our net sales and gross margins from our non-U.S. dollar denominated revenue, asexpressed in U.S. dollars. There is also a risk that we will have to adjust the pricing of solutions denominated in foreigncurrencies when there has been significant volatility in foreign currency exchange rates.Risks Relating to an Investment in Our SecuritiesThe market price of our common stock is likely to be highly volatile as the stock market in general can be highly volatile.The public trading of our common stock is based on many factors that could cause fluctuation in the price of ourcommon stock. These factors may include, but are not limited to:·General economic and market conditions;·Actual or anticipated variations in annual or quarterly operating results;·Lack of or negative research coverage by securities analysts;·Conditions or trends in the healthcare information technology industry;·Changes in the market valuations of other companies in our industry;·Announcements by us or our competitors of significant acquisitions, strategic partnerships, divestitures, jointventures or other strategic initiatives;·Announced or anticipated capital commitments;·Ability to maintain listing of our common stock on The Nasdaq Stock Market;·Additions or departures of key personnel; and·Sales and repurchases of our common stock by us, our officers and directors or our significant stockholders, ifany.Most of these factors are beyond our control. Further, as a result of our relatively small public float, our common stockmay be less liquid, and the trading price for our common stock may be more affected by relatively small volumes of tradingthan is the case for the common stock of companies with a broader public ownership. These factors may cause the marketprice of our common stock to decline, regardless of our operating performance or financial condition.If equity research analysts do not publish research reports about our business or if they issue unfavorable commentary ordowngrade our common stock, the price of our common stock could decline.The trading market for our common stock may rely in part on the research and reports that equity research analystspublish about our business and us. We do not control the opinions of these analysts. The price of our stock could decline ifone or more equity analysts downgrade our stock or if those analysts issue other unfavorable commentary or cease17 Table of Contentspublishing reports about our business or us. Furthermore, if no equity research analysts conduct research or publish reportsabout our business and us, the market price of our common stock could decline.All of our debt obligations, our existing preferred stock and any preferred stock that we may issue in the future will havepriority over our common stock with respect to payment in the event of a bankruptcy, liquidation, dissolution or windingup.In any bankruptcy, liquidation, dissolution or winding up of the Company, our shares of common stock would rank inright of payment or distribution below all debt claims against us and all of our outstanding shares of preferred stock, if any.As a result, holders of our shares of common stock will not be entitled to receive any payment or other distribution of assetsin the event of a bankruptcy or upon a liquidation or dissolution until after all of our obligations to our debt holders andholders of preferred stock have been satisfied. Accordingly, holders of our common stock may lose their entire investment inthe event of a bankruptcy, liquidation, dissolution or winding up of our company. Similarly, holders of our preferred stockwould rank junior to our debt holders and creditors in the event of a bankruptcy, liquidation, dissolution or winding up ofthe Company.There may be future sales or other dilution of our equity, which may adversely affect the market price of our common stock.We are generally not restricted from issuing in public or private offerings additional shares of common stock or preferredstock (except for certain restrictions under the terms of our outstanding preferred stock), and other securities that areconvertible into or exchangeable for, or that represent a right to receive, common stock or preferred stock or any substantiallysimilar securities. Such offerings represent the potential for a significant increase in the number of outstanding shares of ourcommon stock. The market price of our common stock could decline as a result of sales of common stock, preferred stock orsimilar securities in the market made after an offering or the perception that such sales could occur.In addition to our currently outstanding preferred stock, the issuance of an additional series of preferred stock couldadversely affect holders of shares of our common stock, which may negatively impact your investment.Our Board of Directors is authorized to issue classes or series of preferred stock without any action on the part of thestockholders. The Board of Directors also has the power, without stockholder approval, to set the terms of any such classes orseries of preferred stock that may be issued, including rights and preferences over the shares of common stock with respect todividends or upon our dissolution, winding-up or liquidation, and other terms. If we issue preferred stock in the future thathas a preference over the shares of our common stock with respect to the payment of dividends or upon our dissolution,winding up or liquidation, or if we issue preferred stock with voting rights that dilute the voting power of the shares of ourcommon stock, the rights of the holders of shares of our common stock or the market price of our common stock could beadversely affected.As of January 31, 2019, we had 2,895,464 shares of preferred stock outstanding. For additional information regarding theterms, rights and preferences of such stock, see Note 13 to our consolidated financial statements included in Part II, Item 8herein and our other SEC filings.We do not currently intend to pay dividends on our common stock and, consequently, your ability to achieve a return onyour investment will depend solely on appreciation in the price of our common stock.We have never declared or paid any cash dividends on our common stock and do not currently intend to do so for theforeseeable future. We currently intend to invest our future earnings, if any, to fund our growth. Therefore, you are not likelyto receive any dividends on your common stock for the foreseeable future and the success of an investment in shares of ourcommon stock will depend upon any future appreciation in its value. The trading price of our common stock could declineand you could lose all or part of your investment.18 Table of ContentsSales of shares of our common stock or securities convertible into our common stock in the public market may cause themarket price of our common stock to fall.The issuance of shares of our common stock or securities convertible into our common stock in an offering from time totime could have the effect of depressing the market price for shares of our common stock. In addition, because our commonstock is thinly traded, resales of shares of our common stock by our largest stockholders or insiders could have the effect ofdepressing market prices for our common stock.If we are unable to maintain compliance with Nasdaq listing requirements, our stock could be delisted, and the tradingprice, volume and marketability of our stock could be adversely affected.Our common stock is listed on the Nasdaq Capital Market. We cannot assure you that we will be able to maintaincompliance with Nasdaq’s current listing standards, or that Nasdaq will not implement additional listing standards withwhich we will be unable to comply. Failure to maintain compliance with Nasdaq listing requirements could result in thedelisting of our shares from Nasdaq, which could have a material adverse effect on the trading price, volume andmarketability of our common stock. Furthermore, a delisting could adversely affect our ability to issue additional securitiesand obtain additional financing in the future or result in a loss of confidence by investors or employees.Note Regarding Risk FactorsThe risk factors presented above are all of the ones that we currently consider material. However, they are not the onlyones facing our company. Additional risks not presently known to us, or which we currently consider immaterial, may alsoadversely affect us. There may be risks that a particular investor views differently from us, and our analysis might be wrong. Ifany of the risks that we face actually occur, our business, financial condition and operating results could be materiallyadversely affected and could differ materially from any possible results suggested by any forward-looking statements that wehave made or might make. In such case, the market price of our common stock or other securities could decline and youcould lose all or part of your investment. We expressly disclaim any obligation to update or revise any forward-lookingstatements, whether as a result of new information, future events or otherwise, except as required by law. ITEM 1B. Unresolved Staff CommentsNone. ITEM 2. PropertiesThe Company entered into a membership agreement to utilize shared office space at 1175 Peachtree Street, NE,10th Floor, Atlanta, GA 30361. The shared office arrangement expires in November 2020 and provides for membership feesbased on the number of contracted seats.The Company believes that its space is adequate for its current needs and that suitable alternative space is available toaccommodate expansion of the Company’s operations. ITEM 3. Legal ProceedingsWe are, from time to time, a party to various legal proceedings and claims, which arise in the ordinary course of business.We are not aware of any legal matters that could have a material adverse effect on our consolidated results of operations,financial position or cash flows. ITEM 4. Mine Safety DisclosuresNot applicable.19 Table of Contents PART II ITEM 5. Market For Registrant’s Common Equity, Related Stockholder Matters And Issuer Purchases Of EquitySecuritiesThe Company’s common stock trades on The NASDAQ Stock Market (“NASDAQ”) under the symbol STRM.According to the stock transfer agent’s records, the Company had 224 stockholders of record as of April 1, 2019.Because brokers and other institutions on behalf of stockholders hold many of such shares, the Company is unable todetermine with complete accuracy the current total number of stockholders represented by these record holders. TheCompany estimates that it has approximately 3,200 stockholders, based on information provided by the Company’s stocktransfer agent from its search of individual participants in security position listings.During the three months ended January 31, 2019, we did not repurchase any shares of the Company’s common stock. ITEM 6. Selected Financial DataAs a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide thisinformation. ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsExecutive OverviewIn fiscal 2016, the Company evaluated all of its solutions and determined it could best assist healthcare providers inimproving their revenue cycle management by providing solutions and services in the middle portion of the revenue cycle,that is, the revenue cycle operations from initial charge capture to bill drop. Since that time in 2016, the Company continuesto make decisions supporting our focus in the middle of the revenue cycle. In late fiscal 2017, the Company introduced anew product for the middle of the revenue cycle, eValuator. This product has significant implications to the timing andaccuracy of our customers’ invoicing through rules that are created to review the accuracy of invoicing prior to the physicalinvoices being released. This is a notable change to existing processes of our customers. The development activitiescontinued through the end of fiscal 2018. There are continued development efforts planned for eValuatorin fiscal 2019, butnot to the extent of fiscal 2017 and 2018. Fiscal year 2017 was the first full year of this new, more narrowly focused effort to sell solutions and services in themiddle of the revenue cycle, improving healthcare providers’ coding accuracy to help them capture all of the financialreimbursement they deserve for the patient care they provide. With this focus, the Company is committed to leading anindustry movement to improve hospitals’ financial performance by moving mid-cycle billing interventions upstream, toimprove coding accuracy before billing, enabling our clients to reduce revenue leakage, mitigate overbill risk, and reducedenials and days in accounts receivable.By narrowing our focus to the middle of the revenue cycle we believe we have a more distinct and compelling valueproposition that can help us attract more clients. By innovating new technologies, we have been able to expand our targetmarkets beyond just hospitals and into outpatient centers, clinics and physician practices. Our coding solutions like CDI,Physician Query, Abstracting and eValuator are competitive in the market and enabled us to engage 15 new clients infiscal year 2017 and 18 new clients in fiscal 2018. The new eValuator coding analysis platform continues to drive moreattention to Streamline Health. Our current client base continues to show interest in eValuator, but we currently have an evengreater number of new clients than existing clients signing up for the solution.The Company acquired a product known as Clinical Analytics in its portfolio in October 2013. As a result of its focusedattention in the marketplace on the middle of the revenue cycle, the Company moved away from selling the product. Themarket and buyer for the Clinical Analytics platform is different than that for the mid-revenue cycle products. Without ameaningful customer base outside of Montefiore (see footnotes to the consolidated financial20 Table of Contentsstatements), and with the focus away from pursuit of these clients, the Company determined it should evaluate the remainingintangible assets and software development costs on its balance sheet related to Clinical Analytics for impairment. As such,the Company took a charge to income of approximately $3.7 million for impairment of the long-lived intangible assets andthe remaining software development costs associated with this product. The Company has no other intangible assets orsoftware development that is not associated with its core solutions in the middle of the revenue cycle.The Company has continued to instigate and maintain tight cost and investment controls so that the transition tofocusing our efforts in the middle of the revenue cycle has not resulted in a negative impact to our cash flows. While therehave been lower revenues as a result of the Company’s focus on the mid-revenue cycle products, the Company’s earnings andEBITDA have expanded. The Company believes this marginal improvement is a direct result of the Company’s costcontainment efforts, the most notable of which in fiscal 2018 was the sublease of the New York office space and assignmentof the lease for the Atlanta corporate office space. These office moves are expected to have a full year impact of lowering costby approximately $1.5 million, offset by current facility costs of approximately $180,000, once fully realized. The Companyrecognized approximately $1.0 million in exit costs associated with the changes in our leasing arrangements. These costswere primarily comprised of the loss associated with the New York lease (the difference between the cost of the lease and oursublease income), broker fees, and losses associated with disposing of office furniture and technology infrastructure.Regardless of the state of the Affordable Care Act, the healthcare industry continues to face sweeping changes and newstandards of care that are putting greater pressure on healthcare providers to be more efficient in every aspect of theiroperations. We believe these changes represent ongoing opportunities for our Company to work with our direct clients andpartner with various resellers to provide information technology solutions to help providers meet these new requirements.Results of OperationsStatements of Operations for the fiscal years ended January 31 (in thousands): 2019 2018 $ Change % Change Systems sales $2,472 $1,343 $1,129 84%Professional services 1,336 2,744 (1,408) (51)%Audit services 1,118 1,216 (98) (8)%Maintenance and support 12,586 13,171 (585) (4)%Software as a service 4,853 5,864 (1,011) (17)%Total revenues 22,365 24,338 (1,973) (8)%Cost of sales 8,137 10,174 (2,037) (20)%Selling, general and administrative 10,554 11,434 (880) (8)%Research and development 4,261 5,352 (1,091) (20)%Impairment of long-lived assets 3,681 — 3,681 100%Loss on exit of operating lease 1,034 — 1,034 100%Total operating expenses 27,667 26,960 707 3%Operating loss (5,302) (2,622) (2,680) 102%Other expense, net (563) (561) (2) 0%Income tax benefit — 84 (84) (100)%Net loss $(5,865) $(3,099) $(2,766) 89%Adjusted EBITDA(1) $2,889 $2,798 $91 3%(1)Non-GAAP measure meaning net earnings (loss) before net interest expense, tax expense (benefit), depreciation,amortization, stock-based compensation expense, transactional and other expenses that do not relate to our coreoperations. See “Use of Non-GAAP Financial Measures” below for additional information and reconciliation.21 Table of ContentsThe following table sets forth, for each fiscal year indicated, certain operating data as percentages of total revenues:Statements of Operations (1) Fiscal Year 2018 2017 Systems sales 11.1% 5.5%Professional services 6.0 11.3 Audit services 5.0 5.0 Maintenance and support 56.2 54.1 Software as a service 21.7 24.1 Total revenues 100.0% 100.0%Cost of sales 36.4 41.8 Selling, general and administrative 47.2 47.0 Research and development 19.1 22.0 Impairment of long-lived assets 16.5 — Loss on exit of operating lease 4.6 — Total operating expenses 123.8 110.8 Operating loss (23.7) (10.8) Other expense, net (2.5) (2.3) Income tax benefit — 0.3 Net loss (26.2)% (12.8)%Cost of Sales to Revenues ratio, by revenue stream: Systems sales 38.1% 144.9%Services, maintenance and support 41.2% 40.3%Software as a service 20.4% 22.5% (1)Because a significant percentage of the operating costs are incurred at levels that are not necessarily correlated withrevenue levels, a variation in the timing of systems sales and installations and the resulting revenue recognition cancause significant variations in operating results. As a result, period-to-period comparisons may not be meaningful withrespect to the past results nor are they necessarily indicative of the future results of the Company in the near or long-term. The data in the table is presented solely for the purpose of reflecting the relationship of various operating elementsto revenues for the periods indicated.Comparison of fiscal year 2018 with 2017Revenues Fiscal Year 2018 to 2017 Change (in thousands): 2018 2017 $ % Systems Sales: Proprietary software - perpetual license $1,398 $277 $1,121 405%Term license 899 998 (99) (10)%Hardware and third-party software 175 68 107 157%Professional services 1,336 2,744 (1,408) (51)%Audit services 1,118 1,216 (98) (8)%Maintenance and support 12,586 13,171 (585) (4)%Software as a service 4,853 5,864 (1,011) (17)%Total Revenues $22,365 $24,338 $(1,973) (8)% Proprietary software and term licenses — Proprietary software revenues recognized in fiscal 2018 were $1,398,000, ascompared to $277,000 in fiscal 2017. The increased fiscal 2018 revenues as compared to 2017 revenues are primarily22 Table of Contentsattributable to two larger perpetual license sales of our Streamline Health® Abstracting; one in our first quarter and one inour second quarter of fiscal 2018. These perpetual license sales have been gaining traction from a significant distributorpartner to the Company. The Company continues to see a positive trend in the volumes with this significant distributorpartner. Term license revenue for fiscal 2018 decreased $99,000 from fiscal 2017, to $899,000. This decrease is primarilydue to the adoption of the new revenue recognition standards effective February 1, 2018 and a portion is related to the lowerrevenues from certain Clinical Analytics contracts that terminated in fiscal 2018.Hardware and third-party software — Revenues from hardware and third-party software sales in fiscal 2018 were$175,000, as compared to $68,000 in fiscal 2017. Fluctuations from year to year are a function of client demand and thecustomers’ timing of replacing or enhancing their scanning capabilities through our vendors.Professional services — Revenues from professional services in fiscal 2018 were $1,336,000, as compared to $2,744,000in fiscal 2017. These decreases in professional services revenue are primarily due to the completion of large implementationprojects in fiscal 2017. In addition, professional services revenue is adversely impacted by the Company’s SaaS offering thathas less implementation services than its legacy on-premise products. The Company has utilized its professional staff toensure the success of its eValuator product. As the Company assigns its professional services staff to eValuator clients in aneffort to improve the customer experience and ensure the initial success of the product, fewer resources are available for timeand materials engagements. This shifting of resources is, however, intended to improve the long-term prospects of theCompany’s new eValuator product. Audit services — Audit services revenue for fiscal 2018 decreased, slightly, to $1,118,000 from $1,216,000 in fiscal2017. Audit services revenue was adversely impacted by the Company’s focus on utilizing its audit services personnel toassist in the success of eValuator solution customers. As the Company assigns its audit services staff to eValuator solutionclients, fewer resources are available for time and materials engagements. The assignment of audit services personnel toeValuator clients is temporary in nature and is intended to improve the long-term prospects of the Company’s new eValuatorproduct. Looking ahead to fiscal 2019, the Company will utilize fewer of its audit personnel for the success of eValuator.The Company is experiencing more demand for on-shore, technically proficient auditors in the marketplace. The Companyhas technically proficient and on-shore resources to address this need and, accordingly, the Company is expecting a strongerdemand for its audit services in fiscal 2019. See discussion on Non-GAAP measures, backlog, below. Maintenance and support — Revenues from maintenance and support in fiscal 2018 were $12,586,000 as compared to$13,171,000 in fiscal 2017. The decrease in maintenance and support revenues in fiscal 2018 resulted primarily from pricingpressure and certain terminations on the Company’s content management software solution, ECM. The Company believes ithas mitigated future pricing pressure and terminations through aggressively pursuing long-term contracts with our significantlegacy product customers. These activities have proven useful, as they have resulted in substantially better visibility in thenear-term revenue base for our Company. Software as a service (SaaS) — Revenues from SaaS in fiscal 2018 were $4,853,000, as compared to $5,864,000 in fiscal2017. The decrease in fiscal 2018 revenue was attributable to cancellations by a few customers of our Financial Managementsolutions, offset by growth associated with the Company’s new eValuator product. The Company’s new eValuator producthad approximately $235,000 of recognized revenue in the fourth quarter of fiscal 2018, which was marginally better thanexpected.23 Table of ContentsCost of Sales Fiscal Year 2018 to 2017 Change (in thousands): 2018 2017 $ % Cost of systems sales $942 $1,946 $(1,004) (52)%Cost of professional services 2,657 2,401 256 11%Cost of audit services 1,373 1,604 (231) (14)%Cost of maintenance and support 2,173 2,904 (731) (25)%Cost of software as a service 992 1,319 (327) (25)%Total cost of sales $8,137 $10,174 $(2,037) (20)% Total cost of sales includes personnel directly affiliated with earning the revenue, amortization of capitalized softwareexpenditures, depreciation and amortization, royalties and the cost of third-party hardware and software. The Companyrealized cost savings from its containment efforts in all categories of total cost of sales. The decrease in expense for fiscal2018 compared with fiscal 2017 was primarily due to the reduction in amortization of capitalized software costs as a result ofassets becoming fully amortized, including the internally-developed software acquired from Meta Health Technology, Inc.(“Meta”) in 2012 which reached the end of its assigned economic life in the third quarter of fiscal 2017. We incurredamortization expense on all internally-developed software of $1,160,000 and $2,113,000 in fiscal 2018 and 2017,respectively.Cost of systems sales varies from period-to-period depending on hardware and software configurations of the systemssold. The decrease in cost of systems sales in fiscal 2018 from 2017 was primarily due to a reduction in amortization ofcapitalized software costs due to certain amortization of software reaching the end of its assigned economic life during fiscal2018 and 2017.The cost of professional services includes compensation and benefits for personnel and related expenses. The increase inexpense for fiscal 2018 as compared with 2017 is primarily due to the decrease in professional services related to SaaSimplementations, for which costs are deferred and amortized ratably over the estimated life of the SaaS customer relationship,as well as the increase in amortization of these deferred implementation costs upon completion of additional projects.eValuator has a much smaller implementation effort as compared with other software from the Company’s product portfolio.As a result, the Company defers less cost in the current period. The cost of audit services includes compensation and benefits for audit services personnel, and related expenses. Thedecrease in expense for fiscal 2018 compared to 2017 is attributed to the reduction in personnel. Again, the Company isbeginning to receive renewed interest in its audit services as a result of the Company’s on-shore capabilities and expertise inpre-billing audit and coding services. The cost of maintenance and support includes compensation and benefits for client support personnel and the cost ofthird-party maintenance contracts. The decrease in expense for fiscal 2018 as compared with 2017 was primarily due to adecrease in personnel costs and a reduction in third-party maintenance contracts.The cost of SaaS solutions is relatively fixed, subject to inflation for the goods and services it requires. The decrease inexpense for fiscal 2018 as compared to 2017 was primarily due to the reduction in depreciation expense as a result of datacenter equipment becoming fully depreciated.Selling, General and Administrative Expense Fiscal Year 2018 to 2017 Change (in thousands): 2018 2017 $ % General and administrative expenses $6,782 $7,121 $(339) (5)%Sales and marketing expenses 3,772 4,313 (541) (13)%Total selling, general, and administrative expense $10,554 $11,434 $(880) (8)% 24 Table of ContentsGeneral and administrative expenses consist primarily of compensation and related benefits, reimbursable travel andentertainment expenses related to our executive and administrative staff, general corporate expenses, amortization ofintangible assets, and occupancy costs. The decrease in general and administrative expenses for fiscal 2018 as compared tofiscal 2017 is primarily attributed to a reduction in occupancy cost, and in amortization of intangible assets, includingintangibles from the 2012 Meta acquisition that reached the end of their assigned economic lives in the third quarter of fiscal2017. The Company subleased its New York facility in the second quarter of fiscal 2018, and assigned the lease for itsAtlanta corporate office space in the third quarter of fiscal 2018. The Company moved to a smaller footprint in Atlanta for itscorporate headquarters. As a result of the office space changes, the Company is expected to realize an annual savings of $1.5million, offset by current facility costs of approximately $180,000, once the sublease for the New York facilities expires inNovember 2019. As a result of the sublease and assignment, the Company recorded a charge to income of $1.0 millionrelated to the loss on the New York sublease, broker fees, and cost to dispose of the furniture and equipment related toinfrastructure technology. This will benefit future periods in terms of lower cost of rent and lower depreciation andamortization. Sales and marketing expenses consist primarily of compensation and related benefits and reimbursable travel andentertainment expenses related to our sales and marketing staff, as well as advertising and marketing expenses, includingexpenses related to trade shows. The decrease in sales and marketing expense for fiscal 2018 compared with 2017 wasprimarily due to a reduction in personnel cost, trade shows expense, and sales, marketing, and investor relations consultantfees.Research and Development Fiscal Year 2018 to 2017 Change (in thousands): 2018 2017 $ % Research and development expense $4,261 $5,352 $(1,091) (20)%Plus: Capitalized research and development cost 3,003 1,836 1,167 64%Total research and development cost $7,264 $7,188 $76 1% Research and development expenses consist primarily of compensation and related benefits, the use of independentcontractors for specific near-term development projects and an allocated portion of general overhead costs, includingoccupancy costs. The Company invested in its technology consistently between fiscal 2018 and 2017. However, more of thecost in fiscal 2018 was apportioned to enhancements. This is primarily related to the Company’s investment in its neweValuator product. In each of fiscal 2018 and 2017, the Company was awarded $108,000 and $366,000, respectively, inresearch and development tax credits by the State of Georgia. In fiscal 2017, the Company was awarded tax credits for prioryears. The fiscal 2019 and future research and development tax credits are expected to be approximately $100,000 per year.Impairment of Long-Lived Assets Fiscal Year 2018 to 2017 Change (in thousands): 2018 2017 $ % Impairment of long-lived assets $3,681 $ — $3,681 100% The Company acquired a product known as Clinical Analytics in its portfolio in October 2013. As a result of its focusedattention in the marketplace on the middle of the revenue cycle, the Company moved away from selling the product. TheCompany follows ASC 360 in identifying triggering events that might cause an impairment to its existing long-livedassets. As such, in the fourth quarter of fiscal 2018, the Company had its only existing customer on Clinical Analyticsterminate its contract. Upon review, the Company has determined that the markets for Clinical Analytics and for the middleof the revenue cycle are very different, and accordingly, the Company does not anticipate or forecast future sales for thisproduct. The Company has determined that intangible assets and remaining software development associated with ClinicalAnalytics were fully impaired and should be removed from its balance sheet. In the fourth quarter of fiscal 2018, we took acharge to income of $3,681,000 for impairment of the long-lived intangible assets ($3,226,000) and the remaining softwaredevelopment costs ($455,000) associated with this product. The Company has25 Table of Contentsno other intangible assets or software development that is not associated with its core solutions in the middle of the revenuecycle.Loss on Exit of Operating Lease Fiscal Year 2018 to 2017 Change (in thousands): 2018 2017 $ % Loss on exit of operating lease $1,034 $ — $1,034 100% In an effort to reduce our ongoing operating expenses, we closed our New York office in the second quarter of fiscal2018 and subleased the office space for the remaining period of the original lease term, which ends on November 2019. As aresult of vacating and subleasing the office, we recorded a $472,000 loss on exit of the operating lease in the second quarterof fiscal 2018, which captures the net cash flows associated with the vacated premises, including receipts of rent from oursublessee totaling $384,000, and the $48,000 loss incurred on the disposal of fixed assets.In addition, in the third quarter of fiscal 2018, we assigned our then current Atlanta office lease that would have expiredin November 2022 and entered into a membership agreement to occupy shared office space in Atlanta. As a result ofassigning the office lease, we recorded a $562,000 loss on exit of the operating lease in fiscal 2018, which is mainlycomprised of broker commissions of $275,000 and a $499,000 loss on the disposal of leasehold improvements, furniture andequipment, net of $239,000 in gain from the extinguishment of associated lease incentive liability. See Note 12 – Commitments and Contingencies in our notes to our consolidated financial statements included in Part II,Item 8 for further details on our shared office arrangement.Other Expense Fiscal Year 2018 to 2017 Change (in thousands): 2018 2017 $ % Interest expense $(384) $(474) $90 (19)%Miscellaneous expense (179) (87) (92) 106%Total other expense $(563) $(561) $(2) —% Interest expense consists of interest and commitment fees on the line of credit and interest on the term loans, and isinclusive of deferred financing cost amortization. Amortization of deferred financing cost was $69,000 and $71,000 in fiscal2018 and 2017, respectively. Interest expense was lower in fiscal 2018 as compared with 2017 primarily due to lower debtbalances of the Company. The increase in miscellaneous expense in fiscal 2018 as compared to fiscal 2017 was primarily a result of losses from (i)foreign currency transactions, (ii) loss on fixed assets and (iii) the lease liability from our New York office in fiscal 2018being higher than fiscal 2017. In fiscal 2017, the Company also recorded income from valuation adjustments to our warrantliability. This had the effect of reducing the expense recognized for fiscal 2017. Our warrants expired in February 2018 andhad no further financial impact. There was an impact in each of fiscal 2018 and 2017 to miscellaneous expense related to thevaluation of the recorded liability on Montefiore. The valuation impact was higher in fiscal 2017 than 2018. The Companyamended the Montefiore liability in the second quarter of fiscal 2018. See accompanying footnotes to the consolidatedfinancial statements for further information concerning the Montefiore liability, Note 12 – Commitment and Contingencies.Provision for Income TaxesWe recorded tax benefit of zero and $84,000 in fiscal 2018 and 2017, respectively. Please refer to Note 7 - Income Taxesto our consolidated financial statements included in Part II, Item 8 herein for details on current and deferred tax (expense)benefit for federal and state income taxes.26 Table of ContentsBacklog January 31, 2019 October 31, 2018Company proprietary software $180,000 $687,000Professional services 1,953,000 1,843,000Audit services 1,513,000 1,239,000Maintenance and support 15,259,000 12,686,000Software as a service 9,065,000 9,617,000 Total backlog $27,970,000 $26,072,000 January 31, 2018 October 31, 2017 Total backlog $32,793,000 $47,668,000 At January 31, 2019, the Company had contracts and purchase orders from clients and remarketing partners for systemsand related services that have not been delivered or installed, which if fully performed, would generate future revenues of$27,970,000 compared with $32,793,000 at January 31, 2018. The decrease in backlog from fiscal 2017 to fiscal 2018 isprimarily due to the termination of a large, multi-facility customer on Streamline Health® Clinical Analytics solution. Seediscussion above, Impairment of long-lived assets, where the Company has taken an impairment on the remaining assets forClinical Analytics in the fourth quarter of fiscal 2018. The Company’s proprietary software backlog consists of signed agreements to purchase either perpetual softwarelicenses or term licenses. Typically, perpetual licenses included in backlog are either not yet generally available or thesoftware is generally available and the client has not taken possession. Term licenses included in backlog consist of signedagreements where the client has already taken possession, but the payment for the software is bundled with maintenance andsupport fees over the life of the contract. The Company’s proprietary software backlog and recognized revenue can varydepending on the size and timing of customer activity. The reduction at January 31, 2019 as compared with October 31,2018 is substantially all related to the timing of orders for the Company’s proprietary software. Any increase or decrease inthe backlog for proprietary software is a moment in time and does not provide an indication of the expected revenue for thenext fiscal quarter or next fiscal year. The Company has historically been able to forecast the revenue from proprietarysoftware over a reasonable period (one year), however, there can be fluctuations in months and quarters within the year. Professional services backlog consists of signed contracts for services that have yet to be performed and these arerecognized into revenue within twelve months of the contract signing. The increase in professional services backlog is aresult of improved customer demand late in fiscal 2018. This increased customer demand is believed to be related to ourcompetitors moving many of these services off-shore. We believe our customers are receiving a higher-quality of servicewith US-based staff. This increase in professional services demand is overcoming lower implementation revenue from oursoftware business. Our new eValuator solution requires less effort in terms of implementation as compared with theCompany’s other solutions. An implementation for eValuator takes between 30 and 60 days and can be doneremotely. Accordingly, the Company is realizing less revenue in professional fees for implementation work as comparedwith prior years. Audit services backlog consists of signed contracts for audit services that have yet to be performed. Typically, backlog isrecognized within twelve months of the contract signing. The Company began offering audit services in September 2016,following the acquisition of Opportune IT. As we became more familiar with the changing nature of some audit servicesengagements, we adjusted the backlog calculation to only include agreements that have clearly definable service periods.The increase in audit services backlog is primarily due to higher demand of the Company’s on-shore, quality, staffing, as wellas, our expertise that we have developed with the eValuator solution. The Company believes, as is the case with professionalservices, that our competitors that are moving much of this work to lower cost, off-shore personnel, are missing customerdemand for quality and expertise. Maintenance and support backlog consists of maintenance agreements for perpetual licenses and/or third party softwareor hardware, in each case consisting of signed agreements to purchase such services but that represent future performance forthe contracted maintenance and support term. Clients typically prepay maintenance and support fees on27 Table of Contentsan annual basis with some monthly pre-payment arrangements existing. Maintenance and support fees are generally billed30‑60 days prior to the beginning of the maintenance period. The substantial increase in maintenance and support backlogis due to the Company’s efforts over the last 12 months to secure Content Management and CDI software customers withlonger-term contracts. We pushed all our customers to multi-year contracts so that we could better manage our revenue forfiscal 2019 and fiscal 2020. That resulted in our maintenance and support backlog increasing as we had customers comingoff auto-renewing (one year) agreements and moving to 2 and 3 year agreements. This was a successful initiative by theCompany as it resulted in us securing our revenue on some of the Company’s legacy products. Software-as-a-service (“SaaS”) backlog includes three of our products, (i) eValuator, (ii) CDI and Coding, and (iii)Financial Management agreements. The commencement of revenue recognition for SaaS varies depending on the size andcomplexity of the system, the implementation schedule requested by the client and ultimately the official go-live on thesystem. eValuator SaaS backlog is growing considerably, while there is some decline, particularly in FinancialManagement. The Company met or exceeded its goals for eValuator SaaS backlog through the fourth quarter of fiscal 2018,however, the impact was not fully realized due to the lower SaaS backlog associated with Financial Management. Additional commentary regarding the average duration of client contracts and risks relating to termination can be foundin Part I, Item 1, “Business” (see specifically the Contracts, License and Services Fees section) and Part I, Item 1A, “RiskFactors” herein.Termination rights in the Company’s master agreements are generally limited to termination for cause, except for selectexceptions, as further discussed in the Contracts, License and Services Fees section of Part I, Item 1, “Business” herein.However, there can be no assurance that a client will not cancel all or any portion of an agreement or delay portions of anagreement, as further discussed in Part I, Item 1A, “Risk Factors” herein. Such events could have a material adverse effect onthe Company’s ability to recognize amounts and the Company’s financial condition and results of operations.Use of Non-GAAP Financial MeasuresIn order to provide investors with greater insight, and allow for a more comprehensive understanding of the informationused by management and the Board of Directors in its financial and operational decision-making, the Company hassupplemented the Consolidated Financial Statements presented on a GAAP basis in this annual report on Form 10‑K with thefollowing non-GAAP financial measures: EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted EBITDA perdiluted share.These non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or asa substitute for analysis of Company results as reported under GAAP. The Company compensates for such limitations byrelying primarily on our GAAP results and using non-GAAP financial measures only as supplemental data. We also provide areconciliation of non-GAAP to GAAP measures used. Investors are encouraged to carefully review this reconciliation. Inaddition, because these non-GAAP measures are not measures of financial performance under GAAP and are susceptible tovarying calculations, these measures, as defined by the Company, may differ from and may not be comparable to similarlytitled measures used by other companies.EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, and Adjusted EBITDA per diluted shareWe define: (i) EBITDA as net earnings (loss) before net interest expense, income tax expense (benefit), depreciation andamortization; (ii) Adjusted EBITDA as net earnings (loss) before net interest expense, income tax expense (benefit),depreciation, amortization, stock-based compensation expense, transaction expenses and other expenses that do not relate toour core operations; (iii) Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of GAAP net revenue; and(iv) Adjusted EBITDA per diluted share as Adjusted EBITDA divided by adjusted diluted shares outstanding. EBITDA,Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted EBITDA per diluted share are used to facilitate a comparison ofour operating performance on a consistent basis from period to period and provide for a more complete understanding offactors and trends affecting our business than GAAP measures alone. These measures assist management and the board andmay be useful to investors in comparing our operating performance consistently28 Table of Contentsover time as they remove the impact of our capital structure (primarily interest charges), asset base (primarily depreciationand amortization), items outside the control of the management team (taxes) and expenses that do not relate to our coreoperations including: transaction-related expenses (such as professional and advisory services), corporate restructuringexpenses (such as severances) and other operating costs that are expected to be non-recurring. Adjusted EBITDA removes theimpact of share-based compensation expense, which is another non-cash item. Adjusted EBITDA per diluted share includesincremental shares in the share count that are considered anti-dilutive in a GAAP net loss position.The Board of Directors and management also use these measures (i) as one of the primary methods for planning andforecasting overall expectations and for evaluating, on at least a quarterly and annual basis, actual results against suchexpectations; and (ii) as a performance evaluation metric in determining achievement of certain executive and associateincentive compensation programs.Our lender uses a measurement that is similar to the Adjusted EBITDA measurement described herein to assess ouroperating performance. The lender under our Credit Agreement requires delivery of compliance reports certifying compliancewith financial covenants, certain of which are based on a measurement that is similar to the Adjusted EBITDA measurementreviewed by our management and Board of Directors.EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin are not measures of liquidity under GAAP or otherwise, andare not alternatives to cash flow from continuing operating activities, despite the advantages regarding the use and analysisof these measures as mentioned above. EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, and Adjusted EBITDA perdiluted share, as disclosed in this annual report on Form 10‑K have limitations as analytical tools, and you should notconsider these measures in isolation or as a substitute for analysis of our results as reported under GAAP; nor are thesemeasures intended to be measures of liquidity or free cash flow for our discretionary use. Some of the limitations of EBITDAand its variations are:·EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractualcommitments;·EBITDA does not reflect changes in, or cash requirements for, our working capital needs;·EBITDA does not reflect the interest expense, or the cash requirements to service interest or principal paymentsunder our credit agreement;·EBITDA does not reflect income tax payments that we may be required to make; and·Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized often willhave to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements.Adjusted EBITDA has all the inherent limitations of EBITDA. To properly and prudently evaluate our business, theCompany encourages readers to review the GAAP financial statements included elsewhere in this annual report onForm 10‑K, and not rely on any single financial measure to evaluate our business. We also strongly urge readers to review thereconciliation of these non-GAAP financial measures to the most comparable GAAP measure in this section, along with theconsolidated financial statements included elsewhere in Part II, Item 8 herein.The following table reconciles EBITDA and Adjusted EBITDA to net loss, and Adjusted EBITDA per diluted share toloss per diluted share for the fiscal years ended January 31, 2019 and 2018 (amounts in thousands, except per share data). Allof the items included in the reconciliation from EBITDA and Adjusted EBITDA to net loss and the related per sharecalculations are either recurring non-cash items, or items that management does not consider in assessing our on-goingoperating performance. In the case of the non-cash items, management believes that investors may find it useful to assess theCompany’s comparative operating performance because the measures without such items are less susceptible to variances inactual performance resulting from depreciation, amortization and other expenses that do not relate to our core operations andare more reflective of other factors that affect operating performance. In the case of items that do not29 Table of Contentsrelate to our core operations, management believes that investors may find it useful to assess our operating performance if themeasures are presented without these items because their financial impact does not reflect ongoing operating performance. Fiscal Year In thousands, except per share data 2018 2017 Adjusted EBITDA Reconciliation Net loss $(5,865) $(3,099) Interest expense 384 475 Income tax benefit — (84) Depreciation 450 774 Amortization of capitalized software development costs 1,160 2,113 Amortization of intangible assets 937 1,161 Amortization of other costs 346 270 EBITDA (2,588) 1,610 Share-based compensation expense 629 1,109 Impairment of long-lived assets 3,681 — Loss (gain) on disposal of fixed assets 7 (16) Non-cash valuation adjustments to assets and liabilities 126 95 Loss on exit of operating lease 1,034 — Adjusted EBITDA $2,889 $2,798 Adjusted EBITDA margin (1) 13% 11% Adjusted EBITDA per Diluted Share Reconciliation Net loss per common share — diluted $(0.30) $(0.16) Adjusted EBITDA per adjusted diluted share (2) $0.13 $0.13 Diluted weighted average shares 19,540,980 19,090,899 Includable incremental shares — adjusted EBITDA (3) 3,065,402 3,244,825 Adjusted diluted shares 22,606,382 22,335,724 (1)Adjusted EBITDA as a percentage of GAAP net revenues.(2)Adjusted EBITDA per adjusted diluted share for the Company’s common stock is computed using the more dilutive ofthe two-class method or the if-converted method.(3)The number of incremental shares that would be dilutive under profit assumption, only applicable under a GAAP netloss. If GAAP profit is earned in the current period, no additional incremental shares are assumed.Application of Critical Accounting PoliciesThe following is a summary of the Company’s most critical accounting policies. See Note 2 - Significant AccountingPolicies to our consolidated financial statements included in Part II, Item 8 herein for a complete discussion of the significantaccounting policies and methods used in the preparation of our consolidated financial statements.Revenue RecognitionWe adopted the new revenue recognition standard (“ASC 606”) effective February 1, 2018 using the modifiedretrospective method for all contracts not completed as of the date of adoption. ASC 606 superseded nearly all existingrevenue recognition guidance under GAAP. The core principle of ASC 606 is to recognize revenue when control of promisedgoods or services is transferred to customers in an amount that reflects the consideration that is expected to be received forthose goods or services. Refer to Note 2 - Significant Accounting Policies to our consolidated financial statements includedin Part II, Item 8 herein for additional information regarding our revenue recognition policies under the new standard and theimpact of adoption on our financial position and results of operations as of and for the year ended January 31, 2019.30 Table of ContentsAllowance for Doubtful AccountsAccounts and contract receivables are comprised of amounts owed the Company for solutions and services provided.Contracts with individual clients and resellers determine when receivables are due and payable. In determining theallowances for doubtful accounts, the unpaid receivables are reviewed periodically to determine the payment status basedupon the most currently available information. During these periodic reviews, the Company determines the requiredallowances for doubtful accounts for estimated losses resulting from the unwillingness or inability of its clients or resellers tomake required payments.Capitalized Software Development CostsSoftware development costs are accounted for in accordance with either ASC 985‑20, Software — Costs of Software tobe Sold, Leased or Marketed, or ASC 350‑40, Internal-Use Software. Costs associated with the planning and designing phaseof software development are classified as research and development costs and are expensed as incurred. Once technologicalfeasibility has been determined, a portion of the costs incurred in development, including coding, testing and qualityassurance, are capitalized until available for general release to clients, and subsequently reported at the lower of unamortizedcost or net realizable value. Amortization is calculated on a solution-by-solution basis and is over the estimated economiclife of the software. Amortization for our legacy software systems is provided on a solution-by-solution basis over theestimated economic life of the software, using the straight-line method. Amortization commences when a solution isavailable for general release to clients. Acquired internally-developed software from acquisitions is amortized using thestraight-line method. Unamortized capitalized costs determined to be in excess of the net realizable value of a solution areexpensed at the date of such determination. The Company reviews, on an on-going basis, the carrying value of its capitalizedsoftware development expenditures, net of accumulated amortization.Goodwill and Intangible AssetsGoodwill and other intangible assets were recognized in conjunction with the acquisitions of Interpoint Partners, LLC(“Interpoint”), Meta Health Technology, Inc. (“Meta”), Clinical Looking Glass® (“CLG”), Opportune IT and UnibasedSystems Architecture, Inc. (“Unibased”). Identifiable intangible assets include purchased intangible assets with finite lives,which primarily consist of internally-developed software, client relationships, non-compete agreements and licenseagreements. Finite-lived purchased intangible assets are amortized over their expected period of benefit, which generallyranges from one month to 10 years, using the straight-line and undiscounted expected future cash flows methods.We assess the useful lives and possible impairment of existing recognized goodwill on at least an annual basis, andgoodwill and intangible assets when an event occurs that may trigger such a review. Factors considered important whichcould trigger a review include:·significant under-performance relative to historical or projected future operating results;·significant changes in the manner of use of the acquired assets or the strategy for the overall business;·identification of other impaired assets within a reporting unit;·disposition of a significant portion of an operating segment;·significant negative industry or economic trends;·significant decline in the Company’s stock price for a sustained period; and·a decline in the market capitalization relative to the net book value.Determining whether a triggering event has occurred involves significant judgment by the Company.31 Table of ContentsIncome TaxesIncome taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized forthe future tax consequences attributable to differences between the financial statement carrying amounts of existing assetsand liabilities and their respective tax bases and for tax credits and loss carry-forwards. Deferred tax assets and liabilities aremeasured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences areexpected to be recovered or settled. In assessing net deferred tax assets, we consider whether it is more likely than not thatsome or all of the deferred tax assets will not be realized. We establish a valuation allowance when it is more likely than notthat all or a portion of deferred tax assets will not be realized. See Note 7 - Income Taxes to our consolidated financialstatements included in Part II, Item 8 herein for further details.Liquidity and Capital ResourcesThe Company’s liquidity is dependent upon numerous factors including: (i) the timing and amount of revenues andcollection of contractual amounts from clients, (ii) amounts invested in research and development and capital expenditures,and (iii) the level of operating expenses, all of which can vary significantly from quarter-to-quarter. The Company’s primarycash requirements include regular payment of payroll and other business expenses, principal and interest payments on debtand capital expenditures. Capital expenditures generally include computer hardware and computer software to supportinternal development efforts or SaaS data center infrastructure. Operations are funded with cash generated by operations andborrowings under credit facilities. The Company believes that cash flows from operations and available credit facilities areadequate to fund current obligations for the next twelve months. Cash and cash equivalent balances at January 31, 2019 and2018 were $2,376,000 and $4,620,000, respectively. Continued expansion may require the Company to take on additionaldebt or raise capital through issuance of equities, or a combination of both. There can be no assurance the Company will beable to raise the capital required to fund further expansion.The Company has liquidity through the Credit Agreement described in more detail in Note 5 - Debt to our consolidatedfinancial statements included in Part II, Item 8 herein. The Company’s primary operating subsidiary has a $5,000,000revolving line of credit. In order to draw upon the revolving line of credit, the Company’s primary operating subsidiary mustcomply with customary financial covenants, including the requirement that the Company maintain minimum liquidity of atleast (i) $3,500,000 from November 20, 2018 through and including January 31, 2019, and (ii) $4,000,000 from February 1,2019 through and including the maturity date of the credit facility, which maturity date is May 21, 2020. Pursuant to theCredit Agreement’s definition, the liquidity of the Company’s primary operating subsidiary as of January 31, 2019 was$7,376,000, which satisfies the minimum liquidity financial covenant in the Credit Agreement.The Credit Agreement also requires the Company to achieve certain minimum EBITDA levels, calculated pursuant to theCredit Agreement and measured on a quarter-end basis, of at least the required amounts in the table set forth in Note 5 - Debtto our consolidated financial statements included in Part II, Item 8 herein for the applicable period set forth therein. Ourlender uses a measurement that is similar to the Adjusted EBITDA, a non-GAAP financial measure described above. Therequired minimum EBITDA level for the period ended January 31, 2019 was $20,000.The Company was in compliance with the applicable financial loan covenants at January 31, 2019. Based upon theborrowing base formula set forth in the Credit Agreement, as of January 31, 2019 and as of the date of this report, theCompany had access to the full amount of the $5,000,000 revolving line of credit.The Credit Agreement expressly permits transactions between affiliates that are parties to the Credit Agreement, whichincludes the Company and its primary operating subsidiary, including loans made between such affiliate loan parties.However, the Credit Agreement prohibits the Company and its subsidiary from declaring or paying any dividend or makingany other payment or distribution, directly or indirectly, on account of equity interests issued by the Company if such equityinterests: (a) mature or are mandatorily redeemable pursuant to a sinking fund obligation or otherwise (except as a result of achange of control or asset sale so long as any rights of the holders thereof upon the occurrence of a change of control or assetsale event shall be subject to the prior repayment in full of the loans and all other obligations that are accrued and payableupon the termination of the Credit Agreement), (b) are redeemable at the option of the32 Table of Contentsholder thereof, in whole or in part, (c) provide for the scheduled payments of dividends in cash, or (d) are or becomeconvertible into or exchangeable for indebtedness or any other equity interests that would constitute disqualified equityinterests pursuant to clauses (a) through (c) hereof, in each case, prior to the date that is 180 days after the maturity date of theCredit Agreement.Significant cash obligations As of January, 31(in thousands) 2019 2018Term loan $3,948 $4,498Royalty liability 905 2,469 Please reference Note 12 — Commitments and Contingencies and Note 5 — Debt to our consolidated financialstatements included in Part II, Item 8 for additional information.Operating cash flow activities Fiscal Year(in thousands) 2018 2017Net loss $(5,865) $(3,099)Non-cash adjustments to net loss 8,452 5,811Cash impact of changes in assets and liabilities (1,190) (681)Net cash provided by operating activities $1,397 $2,031 The decrease in net cash provided by operating activities is primarily due to two customers from whom payments werecollected just after year-end. These were significant customer collections representing over $1,000,000 in cash. While inprior years these customers paid their balances prior to January 31, 2018, payments expected to be received in fiscal 2018were only received subsequent to January 31, 2019. The Company’s clients typically have been well-established hospitals, medical facilities or major health informationsystem companies that resell the Company’s solutions, which have good credit histories, and payments have been receivedwithin normal time frames for the industry. However, some healthcare organizations have experienced significant operatinglosses as a result of limits on third-party reimbursements from insurance companies and governmental entities. Agreementswith clients often involve significant amounts and contract terms typically require clients to make progress payments.Adverse economic events, as well as uncertainty in the credit markets, may adversely affect the liquidity for some of ourclients.Investing cash flow activities Fiscal Year(in thousands) 2018 2017Purchases of property and equipment $(21) $(49)Proceeds from sales of property and equipment 21 20Capitalized software development costs (3,003) (1,836)Net cash used in investing activities $(3,003) $(1,865) Cash used for investing activities in fiscal 2018 was approximately $1,138,000 higher than fiscal 2017. See researchand development cost (above). The reason that the investment in capitalized software development costs in fiscal 2018 washigher than 2017 is related to the apportionment of costs to capitalized costs. The total cost for research and developmentwas the same in fiscal 2018 compared with fiscal 2017, however, more cost was capitalized due to the investment in theeValuator product. The Company is expecting to invest less in eValuator going forward as the product has been introducedto the market. 33 Table of ContentsThe Company estimates that to replicate its existing internally-developed software would cost significantly more thanthe stated net book value of $5,698,000, including the acquired internally-developed software of Opportune IT, atJanuary 31, 2019. Many of the programs related to capitalized software development continue to have significant value toour current solutions and those under development, as the concepts, ideas and software code are readily transferable and areincorporated into new solutions.Financing cash flow activities Fiscal Year(in thousands) 2018 2017Principal repayments on term loan $(597) $(1,112)Principal payments on capital lease obligations — (91)Proceeds from exercise of stock options and stock purchase plan 44 45Other (85) (42)Net cash used in financing activities $(638) $(1,200) The decrease in cash used in financing activities in fiscal 2018 over the prior year was primarily the result of a $500,000prepayment made towards our term loan in fiscal 2017 with proceeds from the sales of our Patient Engagement suite ofsolutions, as required pursuant to the mandatory prepayment provisions of the Credit Agreement, as well as the terminationof a capital lease in the third quarter of fiscal 2017. ITEM 7A. Quantitative and Qualitative Disclosures About Market RiskAs a “smaller reporting company,” as defined by Item 10 of Regulation S-K, we are not required to provide thisinformation.34 Table of Contents ITEM 8. Financial Statements And Supplementary DataINDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE COVERED BY REPORT OFINDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMReport of Independent Registered Public Accounting Firm 36Consolidated Balance Sheets at January 31, 2019 and 2018 37Consolidated Statements of Operations for the two years ended January 31, 2019 39Consolidated Statements of Changes in Stockholders’ Equity for the two years ended January 31, 2019 40Consolidated Statements of Cash Flows for the two years ended January 31, 2019 41Notes to Consolidated Financial Statements 42Schedule II — Valuation and Qualifying Accounts 64 All other financial statement schedules are omitted because they are not applicable or the required information isincluded in the consolidated financial statements or notes thereto.35 Table of ContentsReport of Independent Registered Public Accounting FirmTo the Board of Directors and Stockholders of Streamline Health Solutions, IncOpinion on the Financial StatementsWe have audited the accompanying consolidated balance sheets of Streamline Health Solutions, Inc. and its subsidiary(the Company) as of January 31, 2019 and 2018, the related consolidated statements of operations, changes in stockholders'equity and cash flows for the years then ended, and the related notes to the consolidated financial statements and schedule(collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, thefinancial position of the Company as of January 31, 2019 and 2018, and the results of their operations and their cash flowsfor the years then ended, in conformity with accounting principles generally accepted in the United States of America.Change in Accounting PrincipleAs discussed in Note 2 to the financial statements, the Company has changed its method of accounting for revenuerecognition in the year ended January 31, 2019 due to the adoption of FASB Accounting Standards Codification (Topic606), Revenue from Contracts with Customers. Basis for OpinionThese financial statements are the responsibility of the Company’s management. Our responsibility is to express anopinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with thePublic Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect tothe Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities andExchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan andperform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement,whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internalcontrol over financial reporting. As part of our audits we are required to obtain an understanding of internal control overfinancial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal controlover financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements,whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, ona test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluatingthe accounting principles used and significant estimates made by management, as well as evaluating the overall presentationof the financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ RSM US LLPWe have served as the Company’s auditor since 2015.Atlanta, Georgia,April 22, 201936 Table of ContentsSTREAMLINE HEALTH SOLUTIONS, INC. AND SUBSIDIARYCONSOLIDATED BALANCE SHEETS(rounded to the nearest thousand dollars, except share and per share information) January 31, 2019 2018ASSETS Current assets: Cash and cash equivalents $2,376,000 $4,620,000Accounts receivable, net of allowance for doubtful accounts of $345,000 and $349,000,respectively 2,933,000 3,001,000Contract receivables 1,263,000 224,000Prepaid assets 901,000 1,255,000Other current assets 445,000 547,000Total current assets 7,918,000 9,647,000Non-current assets: Property and equipment, net of accumulated amortization of $1,516,000 and $3,835,000,respectively 237,000 1,162,000Contract receivables, less current portion 407,000 —Capitalized software development costs, net of accumulated amortization of $19,689,000and $18,658,000, respectively 5,698,000 4,308,000Intangible assets, net of accumulated amortization of $3,858,000 and $6,969,000,respectively 1,669,000 5,835,000Goodwill 15,537,000 15,537,000Other 274,000 642,000Total non-current assets 23,822,000 27,484,000 $31,740,000 $37,131,000 See accompanying notes to consolidated financial statements. 37 Table of Contents January 31, 2019 2018LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $1,280,000 $421,000Accrued compensation 789,000 342,000Accrued other expenses 1,025,000 610,000Current portion of term loan 597,000 597,000Deferred revenues 8,338,000 9,482,000Other 94,000 —Total current liabilities 12,123,000 11,452,000Non-current liabilities: Term loan, net of current portion and deferred financing cost of $82,000 and $128,000,respectively 3,351,000 3,901,000Royalty liability 905,000 2,469,000Deferred revenues, less current portion 432,000 333,000Other 41,000 274,000Total non-current liabilities 4,729,000 6,977,000Total liabilities 16,852,000 18,429,000Series A 0% Convertible Redeemable Preferred Stock, $.01 par value per share, $8,686,000and $8,850,000 redemption value, 4,000,000 shares authorized, 2,895,464 and 2,949,995shares issued and outstanding, respectively 8,686,000 8,850,000Stockholders’ equity: Common stock, $.01 par value per share, 45,000,000 shares authorized; 20,767,708 and20,005,977 shares issued and outstanding, respectively 208,000 200,000Additional paid in capital 82,544,000 81,777,000Accumulated deficit (76,550,000) (72,125,000)Total stockholders’ equity 6,202,000 9,852,000 $31,740,000 $37,131,000 See accompanying notes to consolidated financial statements. 38 Table of ContentsSTREAMLINE HEALTH SOLUTIONS, INC. AND SUBSIDIARYCONSOLIDATED STATEMENTS OF OPERATIONS(rounded to the nearest thousand dollars, except share and per share information) Fiscal Year 2018 2017Revenues: Systems sales $2,472,000 $1,343,000Professional services 1,336,000 2,744,000Audit services 1,118,000 1,216,000Maintenance and support 12,586,000 13,171,000Software as a service 4,853,000 5,864,000Total revenues 22,365,000 24,338,000Operating expenses: Cost of systems sales 942,000 1,946,000Cost of professional services 2,657,000 2,401,000Cost of audit services 1,373,000 1,604,000Cost of maintenance and support 2,173,000 2,904,000Cost of software as a service 992,000 1,319,000Selling, general and administrative 10,554,000 11,434,000Research and development 4,261,000 5,352,000Impairment of long-lived assets 3,681,000 —Loss on exit of operating lease 1,034,000 —Total operating expenses 27,667,000 26,960,000Operating loss (5,302,000) (2,622,000)Other expense: Interest expense (384,000) (474,000)Miscellaneous expense (179,000) (87,000)Loss before income taxes (5,865,000) (3,183,000)Income tax benefit — 84,000Net loss (5,865,000) (3,099,000)Net loss per common share - basic $(0.30) $(0.16)Weighted average number of common shares - basic 19,540,980 19,090,899Net loss per common share - diluted $(0.30) $(0.16)Weighted average number of common shares - diluted 19,540,980 19,090,899 See accompanying notes to consolidated financial statements.39 Table of ContentsSTREAMLINE HEALTH SOLUTIONS, INC. AND SUBSIDIARYCONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY(rounded to the nearest thousand dollars, except share information) Additional Common Common paid in Accumulated Total stock shares stock capital deficit stockholders’ equityBalance at January 31, 2017 19,695,391 $197,000 $80,668,000 $(69,026,000) $11,839,000Stock issued pursuant to EmployeeStock Purchase Plan 47,282 — 45,000 — 45,000Restricted stock issued 295,337 3,000 (3,000) — —Surrender of stock upon vesting ofrestricted stock to satisfy taxwithholding obligations (32,033) — (42,000) — (42,000)Share-based compensation expense — — 1,109,000 — 1,109,000Net loss — — — (3,099,000) (3,099,000)Balance at January 31, 2018 20,005,977 $200,000 $81,777,000 $(72,125,000) $9,852,000Cumulative effect of ASC 606implementation — — — 1,440,000 1,440,000Stock issued pursuant to EmployeeStock Purchase Plan and exercise ofstock options 48,616 — 44,000 — 44,000Restricted stock issued 826,666 8,000 (8,000) — —Restricted stock forfeited (130,833) (1,000) 1,000 — —Surrender of stock upon vesting ofrestricted stock to satisfy taxwithholding obligations (37,249) — (62,000) — (62,000)Conversion of Series A Preferred Stock 54,531 1,000 163,000 — 164,000Share-based compensation expense — — 629,000 — 629,000Net loss — — — (5,865,000) (5,865,000)Balance at January 31, 2019 20,767,708 $208,000 $82,544,000 $(76,550,000) $6,202,000 See accompanying notes to consolidated financial statements.40 Table of ContentsSTREAMLINE HEALTH SOLUTIONS, INC. AND SUBSIDIARYCONSOLIDATED STATEMENTS OF CASH FLOWS(rounded to the nearest thousand dollars, except share information) Fiscal Year 2018 2017Cash flows from operating activities: Net loss $(5,865,000) $(3,099,000)Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 450,000 774,000Amortization of capitalized software development costs 1,160,000 2,113,000Amortization of intangible assets 937,000 1,161,000Amortization of other deferred costs 415,000 341,000Valuation adjustments 126,000 95,000Impairment of long-lived assets 3,681,000 —Loss on exit of operating lease 1,034,000 —Loss (gain) on disposal of fixed assets 7,000 (16,000)Share-based compensation expense 629,000 1,109,000Provision for accounts receivable 13,000 234,000Changes in assets and liabilities: Accounts and contract receivables (640,000) 1,498,000Other assets 466,000 (696,000)Accounts payable 859,000 (695,000)Accrued expenses 129,000 (117,000)Deferred revenues (2,004,000) (671,000)Net cash provided by operating activities 1,397,000 2,031,000Cash flows from investing activities: Purchases of property and equipment (21,000) (49,000)Proceeds from sales of property and equipment 21,000 20,000Capitalization of software development costs (3,003,000) (1,836,000)Net cash used in investing activities (3,003,000) (1,865,000)Cash flows from financing activities: Principal payments on term loan (597,000) (1,112,000)Principal payments on capital lease obligation — (91,000)Payments related to settlement of employee shared-based awards (62,000) (42,000)Proceeds from exercise of stock options and stock purchase plan 44,000 45,000Payment of deferred financing costs (23,000) —Net cash used in financing activities (638,000) (1,200,000)Net decrease in cash and cash equivalents (2,244,000) (1,034,000)Cash and cash equivalents at beginning of period 4,620,000 5,654,000Cash and cash equivalents at end of period $2,376,000 $4,620,000 Fiscal Year 2018 2017Supplemental cash flow disclosures: Interest paid $417,000 $418,000Income taxes paid $11,000 $8,000Supplemental disclosure of non-cash financing activities: Conversion of 54,531 shares of Series A Preferred Stock to common shares $164,000 $—Modification of royalty liability associated with the acquisition of Clinical Analytics $1,644,000 $— See accompanying notes to consolidated financial statements.41 Table of ContentsSTREAMLINE HEALTH SOLUTIONS, INC. AND SUBSIDIARYNOTES TO CONSOLIDATED FINANCIAL STATEMENTSJanuary 31, 2019 and 2018NOTE 1 — ORGANIZATION AND DESCRIPTION OF BUSINESSStreamline Health Solutions, Inc. and its subsidiary (“we”, “us”, “our”, “Streamline”, or the “Company”) operates in onesegment as a provider of healthcare information technology solutions and associated services. The Company provides thesecapabilities through the licensing of its HIM, Coding & CDI, eValuator Coding Analysis Platform, Financial Managementand Patient Care solutions and other workflow software applications and the use of such applications by software as a service(“SaaS”). The Company also provides audit services to help clients optimize their internal clinical documentation andcoding functions, as well as implementation and consulting services to complement its software solutions. The Company’ssoftware and services enable hospitals and integrated healthcare delivery systems in the United States and Canada to capture,store, manage, route, retrieve and process patient clinical, financial and other healthcare provider information related to thepatient revenue cycle.Fiscal YearAll references to a fiscal year refer to the fiscal year commencing February 1 in that calendar year and ending onJanuary 31 of the following calendar year.NOTE 2 — SIGNIFICANT ACCOUNTING POLICIESBasis of PresentationThe consolidated financial statements include the accounts of Streamline Health Solutions, Inc. and its wholly-ownedsubsidiary, Streamline Health, Inc. All significant intercompany transactions and balances are eliminated in consolidation.All amounts in the consolidated financial statements, notes and tables have been rounded to the nearest thousanddollars, except share and per share amounts, unless otherwise indicated.Use of EstimatesThe preparation of financial statements in conformity with U.S. generally accepted accounting principles requiresmanagement to make estimates and assumptions that affect the amounts reported in the financial statements andaccompanying notes. On an ongoing basis, management evaluates its estimates and judgments, including those related tostock-based compensation, capitalization of software development costs, intangible assets, allowance for doubtful accounts,and income taxes. Actual results could differ from those estimates.Cash and Cash EquivalentsFinancial instruments that potentially subject the Company to concentrations of credit risk consist principally of cashdemand deposits. Cash deposits are placed in Federal Deposit Insurance Corporation (“FDIC”) insured financial institutions.Cash deposits may exceed FDIC insured levels from time to time. For purposes of the consolidated balance sheets andconsolidated statements of cash flows, the Company considers all highly-liquid investments purchased with an originalmaturity of three months or less to be cash equivalents.ReceivablesAccounts and contract receivables are comprised of amounts owed to the Company for licensed software, professionalservices, including coding audit, maintenance services, and software as a service and are presented net of the allowance fordoubtful accounts. The timing of revenue recognition may not coincide with the billing terms of the42 Table of Contentsclient contract, resulting in unbilled receivables or deferred revenues; therefore certain contract receivables representrevenues recognized prior to client billings. Individual contract terms with clients or resellers determine when receivables aredue. For billings where the criteria for revenue recognition have not been met, deferred revenue is recorded until all revenuerecognition criteria have been met.Allowance for Doubtful AccountsIn determining the allowance for doubtful accounts, aged receivables are analyzed periodically by management. Eachidentified receivable is reviewed based upon the most recent information available and the status of any open or unresolvedissues with the client preventing the payment thereof. Corrective action, if necessary, is taken by the Company to resolveopen issues related to unpaid receivables. During these periodic reviews, the Company determines the required allowancesfor doubtful accounts for estimated losses resulting from the unwillingness or inability of its clients or resellers to makerequired payments. The allowance for doubtful accounts was approximately $345,000 and $349,000 at January 31, 2019 and2018, respectively. The Company believes that its reserve is adequate, however results may differ in future periods.Bad debt expense for fiscal years 2018 and 2017 was as follows: 2018 2017Bad debt expense $13,000 $234,000 Concessions AccrualIn determining the concessions accrual, the Company evaluates historical concessions granted relative to revenue. Theconcession accrual included in accrued other expenses on the Company’s consolidated balance sheets was $44,000 and$48,000 as of January 31, 2019 and 2018, respectively.Property and EquipmentProperty and equipment are stated at cost. Depreciation is computed using the straight-line method, over the estimateduseful lives of the related assets. Estimated useful lives are as follows:Computer equipment and software 3‑4 yearsOffice equipment 5 yearsOffice furniture and fixtures 7 yearsLeasehold improvements Term of lease or estimated useful life, whichever is shorter Depreciation expense for property and equipment in fiscal 2018 and 2017 was $450,000 and $774,000, respectively.Normal repair and maintenance is expensed as incurred. Replacements are capitalized and the property and equipmentaccounts are relieved of the items being replaced or disposed of, if no longer of value. The related cost and accumulateddepreciation of the disposed assets are eliminated and any gain or loss on disposition is included in the results of operationsin the year of disposal.LeasesOn December 13, 2013, the Company entered into an amended lease obligation to lease 24,335 square feet of officespace in Atlanta, Georgia. The lease commenced upon taking possession of the space and was scheduled to end inNovember 2022. The provisions of the lease provided for rent abatement for the first eight months of the lease term. Upontaking possession of the premises, the rent abatement and the unamortized balance of deferred rent associated with thepreviously leased premises were aggregated with the total expected rental payments and amortized on a straight-line basisover the term of the lease. In the third quarter of fiscal 2018, we assigned our Atlanta office lease and relocated our corporateoffice to a new space. See Note 12 – Commitments and Contingencies for further details on our new shared officearrangement.43 Table of ContentsIn fiscal 2014, the Company entered into a lease obligation to lease 10,350 square feet of office space in New York, NewYork. The lease commenced upon taking possession of the space and expires in November 2019. The lease agreementprovided for rent abatement for the first two months of the lease term. Upon taking possession of the premises, the rentabatement was aggregated with the total expected rental payments and amortized on a straight-line basis over the term of thelease. In the second quarter of fiscal 2018, we closed our New York office and subleased the office space for the remainingperiod of the original lease term. See Note 4 – Operating Leases for further details on the closure of our New York office.The Company had capital leases to finance office equipment purchases that continued into the third quarter of fiscal2017. The amortization expense of the leased equipment is included in depreciation expense. As of January 31, 2019 and2018, the Company had no material capital lease obligations.Debt Issuance CostsCosts related to the issuance of debt are capitalized and amortized to interest expense on a straight-line basis, which isnot materially different from the effective interest method, over the term of the related debt. Deferred financing costs arepresented on the Company’s consolidated balance sheets as a direct deduction from the carrying amount of the non-currentportion of our term loan.Impairment of Long-Lived AssetsThe Company reviews the carrying value of long-lived assets for impairment whenever facts and circumstances exist thatwould suggest that assets might be impaired or that the useful lives should be modified. Among the factors the Companyconsiders in making the evaluation are changes in market position and profitability. If facts and circumstances are presentwhich may indicate that the carrying amount of the assets may not be recoverable, the Company will prepare a projection ofthe undiscounted cash flows of the specific asset or asset group and determine if the long-lived assets are recoverable basedon these undiscounted cash flows. If impairment is indicated, an adjustment will be made to reduce the carrying amount ofthese assets to their fair values.Capitalized Software Development CostsSoftware development costs associated with the planning and designing phase of software development, includingcoding and testing activities necessary to establish technological feasibility, are classified as research and development andare expensed as incurred. Once technological feasibility has been determined, a portion of the costs incurred in development,including coding, testing and quality assurance, are capitalized and subsequently reported at the lower of unamortized costor net realizable value. The Company capitalized such costs, including interest, of $3,003,000 and $1,836,000 in fiscal 2018and 2017, respectively.Amortization for the Company’s software systems is provided on a solution-by-solution basis over the estimatedeconomic life of the software, typically three to five years, using the straight-line method. Amortization commences when asolution is available for general release to clients. Acquired internally-developed software from acquisitions is amortizedusing the straight-line method.Amortization expense on all internally-developed software was $1,160,000 and $2,113,000 in fiscal 2018 and 2017,respectively, and was included in the consolidated statements of operations as follows: Fiscal Year 2018 2017Amortization expense on internally-developed software included in: Cost of systems sales $768,000 $1,914,000Cost of software as a service 379,000 186,000Cost of audit services 13,000 13,000Total amortization expense on internally-developed software $1,160,000 $2,113,000 44 Table of ContentsResearch and development expense was $4,261,000 and $5,352,000 in fiscal 2018 and 2017, respectively.Fair Value of Financial InstrumentsThe FASB’s authoritative guidance on fair value measurements establishes a framework for measuring fair value, andexpands disclosure about fair value measurements. This guidance enables the reader of the financial statements to assess theinputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of theinformation used to determine fair values. Under this guidance, assets and liabilities carried at fair value must be classifiedand disclosed in one of the following three categories:Level 1: Quoted market prices in active markets for identical assets or liabilities.Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.Level 3: Unobservable inputs that are not corroborated by market data.The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expensesapproximate fair value based on the short-term maturity of these instruments. Cash and cash equivalents are classified asLevel 1. The carrying amount of the Company’s long-term debt approximates fair value since the variable interest rates beingpaid on the amounts approximate the market interest rate. Long-term debt is classified as Level 2.The table below provides information on our liabilities that are measured at fair value on a recurring basis: Quoted Prices in Significant Other Significant Total Fair Active Markets Observable Inputs Unobservable Inputs Value (Level 1) (Level 2) (Level 3)At January 31, 2019 Royalty liability (1) (3) $905,000 $ — $ — $905,000 At January 31, 2018 Royalty liability (1) (2) $2,469,000 $ — $ — $2,469,000(1)The initial fair value of royalty liability was determined by management with the assistance of an independent third-party valuation specialist, and by management thereafter. Fair value adjustments are included within miscellaneousexpense in the consolidated statements of operations.(2)The fair value of the royalty liability was determined based on the probability-weighted revenue scenarios for theStreamline Health® Clinical Analytics solution licensed from Montefiore Medical Center (discussed in Note 12 –Commitments and Contingencies).(3)Following the modification of the Royalty Agreement in the second quarter of fiscal 2018 (discussed in Note 12 –Commitments and Contingencies), the royalty liability was significantly reduced as a result of the commitment to fulfilla portion of our obligation by providing incremental maintenance services. The fair value of the royalty liability wasdetermined based on the portion of the modified royalty commitment payable in cash.In fiscal 2018, the Company determined that its strategic focus on serving the middle of the revenue cycle and theresulting decrease in the customer base for our Clinical Analytics solution constituted a triggering event for impairmentanalysis. We assessed the fair value of long-lived assets associated with our Clinical Analytics solution based on expectedfuture cash flows from this solution, including the royalty liability, and determined that related intangible assets andcapitalized software development costs classified as Level 3 were fully impaired, therefore had zero value as of December 31,2018. For further details on the impairment loss and royalty liability associated with our Clinical Analytics solution, seeNote 6 – Goodwill and Intangible Assets and Note 12 – Commitments and Contingencies, respectively.45 Table of ContentsRevenue RecognitionWe derive revenue from the sale of internally-developed software, either by licensing for local installation or by asoftware as a service (“SaaS”) delivery model, through our direct sales force or through third-party resellers. Licensed,locally-installed clients on a perpetual model utilize our support and maintenance services for a separate fee, whereas term-based locally installed license fees and SaaS fees include support and maintenance. We also derive revenue from professionalservices that support the implementation, configuration, training and optimization of the applications, as well as auditservices provided to help clients review their internal coding audit processes. Additional revenues are also derived fromreselling third-party software and hardware components.We recognize revenue in accordance with Accounting Standards Codification (ASC) 606, Revenue from Contracts withCustomers (“ASC 606”), the new revenue recognition standard established by ASU 2014‑09. The core principle of ASC 606is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount thatreflects the consideration to which the entity expects to be entitled in exchange for those goods or services.We commence revenue recognition (Step 5 below) in accordance with that core principle after applying the followingsteps:·Step 1: Identify the contract(s) with a customer·Step 2: Identify the performance obligations in the contract·Step 3: Determine the transaction price·Step 4: Allocate the transaction price to the performance obligations in the contract·Step 5: Recognize revenue when (or as) the entity satisfies a performance obligationWe follow the accounting revenue guidance under ASC 606 to determine whether contracts contain more than oneperformance obligation. Performance obligations are the unit of accounting for revenue recognition and generally representthe distinct goods or services that are promised to the customer. Revenue is recognized net of any taxes collected fromcustomers and subsequently remitted to governmental authorities.If we determine that we have not satisfied a performance obligation, we will defer recognition of the revenue until theperformance obligation is deemed to be satisfied. Maintenance and support and SaaS agreements are generally non-cancelable or contain significant penalties for early cancellation, although clients typically have the right to terminate theircontracts for cause if we fail to perform material obligations. However, if non-standard acceptance periods, non-standardperformance criteria, or cancellation or right of refund terms are required, revenue is recognized upon the satisfaction of suchcriteria.Significant judgment is required to determine the standalone selling price (“SSP”) for each performance obligation, theamount allocated to each performance obligation and whether it depicts the amount that the Company expects to receive inexchange for the related product and/or service. As the selling prices of the Company’s software licenses are highly variable,the Company estimates SSP of its software licenses using the residual approach when the software license is sold with otherservices and observable SSPs exist for the other services. The Company estimates the SSP for maintenance, professionalservices, and audit services based on observable standalone sales.Contract CombinationThe Company may execute more than one contract or agreement with a single customer. The Company evaluateswhether the agreements were negotiated as a package with a single objective, whether the amount of consideration to be paidin one agreement depends on the price and/or performance of another agreement, or whether the goods or services promisedin the agreements represent a single performance obligation. The conclusions reached can impact the46 Table of Contentsallocation of the transaction price to each performance obligation and the timing of revenue recognition related to thosearrangements.The Company has utilized the portfolio approach as the practical expedient. We have applied the revenue model to aportfolio of contracts with similar characteristics where we expected that the financial statements would not differ materiallyfrom applying it to the individual contracts within that portfolio.Systems SalesThe Company’s software license arrangements provide the customer with the right to use functional intellectualproperty. Implementation, support, and other services are typically considered distinct performance obligations when soldwith a software license unless these services are determined to significantly modify the software. Revenue is recognized at apoint in time. Typically, this is upon shipment of components or electronic download of software.Maintenance and Support ServicesOur maintenance and support obligations include multiple discrete performance obligations, with the two largest beingunspecified product upgrades or enhancements, and technical support, which can be offered at various points during acontract period. We believe that the multiple discrete performance obligations within our overall maintenance and supportobligations can be viewed as a single performance obligation since both the unspecified upgrades and technical support areactivities to fulfill the maintenance performance obligation and are rendered concurrently. Maintenance and supportagreements entitle clients to technology support, version upgrades, bug fixes and service packs. We recognize maintenanceand support revenue over the contract term.Software-Based Solution Professional ServicesThe Company provides various professional services to customers with software licenses. These include projectmanagement, software implementation and software modification services. Revenues from arrangements to provideprofessional services are generally distinct from the other promises in the contract and are recognized as the related servicesare performed. Consideration payable under these arrangements is either fixed fee or on a time-and-materials basis.Software as a ServiceSaaS-based contracts include use of the Company’s platform, implementation, support and other services whichrepresent a single promise to provide continuous access to its software solutions. The Company recognizes revenue over timefor the life of the contract. We defer the direct costs, which include salaries and benefits, for professional services related to SaaS contracts. Thesedeferred costs will be amortized over the identical term as the associated revenues. As of January 31, 2019 and 2018, we haddeferred costs of $251,000 and $471,000, respectively, net of accumulated amortization of $399,000 and $312,000,respectively. Amortization expense of these costs was $346,000 and $270,000 in fiscal 2018 and 2017, respectively.Audit ServicesThe Company provides technology-enabled coding audit services to help clients review and optimize their internalclinical documentation and coding functions across the applicable segment of the client’s enterprise. Audit services are aseparate performance obligation. We recognize revenue over time as the services are performed. 47 Table of ContentsComparative GAAP FinancialsThe adoption of the new standard has the following impact to the Company’s condensed consolidated statements ofoperations for the year ended January 31, 2019: Year Ended January 31, 2019 As reported underASC 606 Balances withoutadoption ofASC 606 Adjustments due toASC 606Revenues Systems sales $2,472,000 $2,322,000 $150,000Maintenance and support 12,586,000 12,590,000 (4,000) As of January 31, 2019 As reported underASC 606 Balances withoutadoption ofTopic 606 Adjustments due toASC 606Assets Contract receivables, current $1,263,000 $803,000 $460,000Contract receivables, noncurrent 407,000 27,000 380,000 Liabilities Deferred revenues, current 8,338,000 9,084,000 (746,000) Shareholders' Equity Accumulated deficit $(76,550,000) $(78,136,000) $1,586,000 The adoption of ASC 606 resulted in a decrease in deferred revenues and an increase in contract receivables driven byupfront recognition of revenue, rather than over the contract period, from certain multi-year term software license agreementsthat include both software licenses and software support and maintenance. Revenues related to SaaS-based offerings,hardware sales, maintenance and support, and audit services remain substantially unchanged.Disaggregation of RevenueThe following table provides information about disaggregated revenue by type and nature of revenue stream: Year Ended January 31, 2019 RecurringRevenue Non-recurringRevenue TotalSystems sales $899,000 $1,573,000 $2,472,000Professional services — 1,336,000 1,336,000Audit services — 1,118,000 1,118,000Maintenance and support 12,586,000 — 12,586,000Software as a service 4,853,000 — 4,853,000Total revenue: $18,338,000 $4,027,000 $22,365,000 Contract Receivables and Deferred RevenuesThe Company receives payments from customers based upon contractual billing schedules. Contract receivables includeamounts related to the Company’s contractual right to consideration for completed performance obligations not yetinvoiced. Deferred revenues include payments received in advance of performance under the contract. Our contractreceivables and deferred revenue are reported on an individual contract basis at the end of each reporting period. Contractreceivables are classified as current or noncurrent based on the timing of when we expect to bill the customer. Deferredrevenue is classified as current or noncurrent based on the timing of when we expect to recognize revenue. In48 Table of Contentsthe year ended January 31, 2019, we recognized $9,449,000 in revenue from deferred revenues outstanding as of January 31,2018.The cumulative effect of changes related to the adoption of ASC 606 are reflected in the opening balance ofaccumulated deficit as shown below: As ReportedJanuary 31, 2018 Adjustmentsdue to ASC 606 As AdjustedFebruary 1, 2018ASSETS Contract receivables, current $224,000 $283,000 $507,000Contract receivables, noncurrent — 468,000 468,000 LIABILITIES Deferred revenues, current 9,482,000 (689,000) 8,793,000 STOCKHOLDERS' EQUITY Accumulated deficit $(72,125,000) $1,440,000 $(70,685,000) Transaction price allocated to the remaining performance obligationsRevenue allocated to remaining performance obligations represents contracted revenue that will be recognized in futureperiods, which is comprised of deferred revenue and amounts that will be invoiced and recognized as revenue in futureperiods. Revenue allocated to remaining performance obligations was $27 million as of January 31, 2019, of which theCompany expects to recognize approximately 65% over the next 12 months and the remainder thereafter.Deferred commissions costs (contract acquisition costs)Contract acquisition costs, which consist of sales commissions paid or payable, is considered incremental andrecoverable costs of obtaining a contract with a customer. Sales commissions for initial and renewal contracts are deferredand then amortized on a straight-line basis over a period of benefit, which the Company has determined to be the customerlife. As a practical expedient, we expense sales commissions as incurred when the amortization period of related deferredcommission costs would have been one year or less.Deferred commissions costs paid and payable are included on the consolidated balance sheets within prepaid assets andother current assets, respectively, and totaled $185,000 and $114,000, respectively, as of January 31, 2019. As of January 31,2018, deferred commissions costs paid and payable totaled $136,000 and $116,000, respectively. In fiscal 2018, $145,000 inamortization expense associated with deferred sales commissions was included in selling, general and administrativeexpenses on the condensed consolidated statements of operations.ConcentrationsFinancial instruments, which potentially expose the Company to concentrations of credit risk, consist primarily ofaccounts receivable. The Company’s accounts receivable are concentrated in the healthcare industry. However, theCompany’s clients typically are well-established hospitals, medical facilities or major health information systems companiesthat resell the Company’s solutions that have good credit histories. Payments from clients have been received within normaltime frames for the industry. However, some hospitals and medical facilities have experienced significant operating losses asa result of limits on third-party reimbursements from insurance companies and governmental entities and extended paymentof receivables from these entities is not uncommon.To date, the Company has relied on a limited number of clients and remarketing partners for a substantial portion of itstotal revenues. The Company expects that a significant portion of its future revenues will continue to be generated by alimited number of clients and its remarketing partners.49 Table of ContentsThe Company currently buys all of its hardware and some major software components of its healthcare informationsystems from third-party vendors. Although there are a limited number of vendors capable of supplying these components,management believes that other suppliers could provide similar components on comparable terms.Business CombinationsThe assets acquired, liabilities assumed and contingent consideration are recorded at their fair value on the acquisitiondate with subsequent changes recognized in earnings. These estimates are inherently uncertain and are subject to refinement.Management develops estimates based on assumptions as a part of the purchase price allocation process to value the assetsacquired and liabilities assumed as of the business combination date. As a result, the Company may recognize adjustments toprovisional amounts of assets acquired or liabilities assumed in operating expenses in the reporting period in which theadjustments are determined.The Company records acquisition and transaction related expenses in the period in which they are incurred. Acquisitionand transaction-related expenses primarily consist of legal, banking, accounting and other advisory fees of third partiesassociated with potential acquisitions.Goodwill and Intangible AssetsGoodwill and other intangible assets were recognized in conjunction with the Interpoint, Meta, CLG and Opportune ITacquisitions, as well as the Unibased acquisition (prior to divestiture of such assets). Identifiable intangible assets includepurchased intangible assets with finite lives, which primarily consist of internally-developed software, client relationships,non-compete agreements and license agreements. Finite-lived purchased intangible assets are amortized over their expectedperiod of benefit, which generally ranges from one to 10 years, using the straight-line and undiscounted expected future cashflows methods.The Company assesses the useful lives and possible impairment of intangible assets when an event occurs that maytrigger such a review. Factors considered important which could trigger a review include:·significant underperformance relative to historical or projected future operating results;·significant changes in the manner of use of the acquired assets or the strategy for the overall business;·identification of other impaired assets within a reporting unit;·disposition of a significant portion of an operating segment;·significant negative industry or economic trends;·significant decline in the Company’s stock price for a sustained period; and·a decline in the market capitalization relative to the net book value.Determining whether a triggering event has occurred involves significant judgment by the Company.The Company assesses goodwill annually (as of November 1), or more frequently when events and circumstances, suchas the ones mentioned above, occur indicating that the recorded goodwill may be impaired. During the years endedJanuary 31, 2019 and 2018, the Company did not note any of the above qualitative factors, which would be considered atriggering event for goodwill impairment. In assessing qualitative factors to determine whether it is more likely than not thatthe fair value of a reporting unit is less than its carrying amount, the Company assesses relevant events and circumstancesthat may impact the fair value and the carrying amount of a reporting unit. The identification of relevant events andcircumstances and how these may impact a reporting unit’s fair value or carrying amount involve significant judgments bymanagement. These judgments include the consideration of macroeconomic conditions, industry and50 Table of Contentsmarket considerations, cost factors, overall financial performance, events which are specific to the Company and trends in themarket price of the Company’s common stock. Each factor is assessed to determine whether it impacts the impairment testpositively or negatively, and the magnitude of any such impact.The two-step goodwill impairment test requires the Company to identify its reporting units and to determine estimates ofthe fair values of those reporting units as of the impairment testing date. Reporting units are determined based on theorganizational structure the entity has in place at the date of the impairment test. A reporting unit is an operating segment orcomponent business unit with the following characteristics: (a) it has discrete financial information, (b) segment managementregularly reviews its operating results (generally an operating segment has a segment manager who is directly accountable toand maintains regular contact with the chief operating decision maker to discuss operating activities, financial results,forecasts or plans for the segment), and (c) its economic characteristics are dissimilar from other units (this contemplates thenature of the products and services, the nature of the production process, the type or class of customer for the products andservices and the methods used to distribute the products and services).The Company determined that it has one operating segment and one reporting unit.To conduct a quantitative two-step goodwill impairment test, the fair value of the reporting unit is first compared to itscarrying value. If the reporting unit’s carrying value exceeds its fair value, the Company performs the second step and recordsan impairment loss to the extent that the carrying value of goodwill exceeds its implied fair value. The Company estimatesthe fair value of its reporting unit using a blend of market and income approaches. The market approach consists of twoseparate methods, including reference to the Company’s market capitalization, as well as the guideline publicly tradedcompany method. The market capitalization valuation method is based on an analysis of the Company’s stock price on andaround the testing date, plus a control premium. The guideline publicly traded company method was made by reference to alist of publicly traded software companies providing services to healthcare organizations, as determined by management. Themarket value of common equity for each comparable company was derived by multiplying the price per share on the testingdate by the total common shares outstanding, plus a control premium. Selected valuation multiples are then determined andapplied to appropriate financial statistics based on the Company’s historical and forecasted results. The Company estimatesthe fair value of its reporting unit using the income approach, via discounted cash flow valuation models which include, butare not limited to, assumptions such as a “risk-free” rate of return on an investment, the weighted average cost of capital of amarket participant and future revenue, operating margin, working capital and capital expenditure trends. Determining the fairvalue of reporting unit and goodwill includes significant judgment by management, and different judgments could yielddifferent results.The Company performed its annual assessment of goodwill during the fourth quarter of fiscal 2018, using the two-stepapproach described above. The first step of the goodwill impairment test, used to identify potential impairment, compares thefair value of a reporting unit with its carrying amount, including goodwill. Based on the analysis performed for step one, thefair value of the reporting unit exceeded the carrying amount of the reporting unit, including goodwill, and, therefore, agoodwill impairment loss was not recognized. As the Company passed step one of the analysis, step two was not required.In fiscal 2018, long-lived assets associated with our Clinical Analytics solution were deemed impaired and theircorresponding balance was fully written off (see Note 6 - Goodwill and Intangible Assets to our consolidated financialstatements included herein).Equity AwardsThe Company accounts for share-based payments based on the grant-date fair value of the awards with compensationcost recognized as expense over the requisite service period. The Company incurred total annual compensation expenserelated to stock-based awards of $629,000 and $1,109,000 in fiscal 2018 and 2017, respectively.The fair value of the stock options granted in fiscal 2018 and 2017 was estimated at the date of grant using a Black-Scholes option pricing model. Option pricing model input assumptions such as expected term, expected volatility and risk-free interest rate impact the fair value estimate. Further, the forfeiture rate impacts the amount of aggregate51 Table of Contentscompensation. These assumptions are subjective and are generally derived from external (such as, risk-free rate of interest)and historical data (such as, volatility factor, expected term and forfeiture rates). Future grants of equity awards accounted foras stock-based compensation could have a material impact on reported expenses depending upon the number, value andvesting period of future awards.The Company issues restricted stock awards in the form of Company common stock. The fair value of these awards isbased on the market close price per share on the grant date. The Company expenses the compensation cost of these awards asthe restriction period lapses, which is typically a one- to four-year service period to the Company. In fiscal 2018 and 2017,37,249 and 32,033 shares of common stock were surrendered to the Company to satisfy tax withholding obligations totaling$62,000 and $42,000, respectively, in connection with the vesting of restricted stock awards. Shares surrendered by therestricted stock award recipients in accordance with the applicable plan are deemed canceled, and therefore are not availableto be reissued. The Company awarded 501,666 and 220,337 shares of restricted stock to officers and directors of theCompany in fiscal 2018 and 2017, respectively.Income TaxesIncome taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized forthe future tax consequences attributable to differences between the financial statement carrying amounts of existing assetsand liabilities and their respective tax bases and for tax credit and loss carry-forwards. Deferred tax assets and liabilities aremeasured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences areexpected to be recovered or settled. In assessing net deferred tax assets, the Company considers whether it is more likely thannot that some or all of the deferred tax assets will not be realized. The Company establishes a valuation allowance when it ismore likely than not that all or a portion of deferred tax assets will not be realized. See Note 7 - Income Taxes for furtherdetails.The Company provides for uncertain tax positions and the related interest and penalties based upon management’sassessment of whether certain tax positions are more likely than not to be sustained upon examination by tax authorities. AtJanuary 31, 2019, the Company believes it has appropriately accounted for any uncertain tax positions. The Company hasrecorded $275,000 and $295,000 in reserves for uncertain tax positions and corresponding interest and penalties,respectively, as of January 31, 2019 and 2018.Net Loss Per Common ShareThe Company presents basic and diluted earnings per share (“EPS”) data for its common stock. Basic EPS is calculatedby dividing the net loss attributable to common stockholders of the Company by the weighted average number of shares ofcommon stock outstanding during the period. Diluted EPS is calculated based on the profit or loss attributable to commonstockholders and the weighted average number of shares of common stock outstanding adjusted for the effects of all potentialdilutive common stock issuances related to options, unvested restricted stock, and convertible preferred stock. Potentialcommon stock dilution related to outstanding stock options and unvested restricted stock is determined using the treasurystock method, while potential common stock dilution related to Series A Convertible Preferred Stock is determined using the“if converted” method.The Company’s unvested restricted stock awards and Series A Convertible Preferred Stock are considered participatingsecurities under ASC 260, Earnings Per Share, which means the security may participate in undistributed earnings withcommon stock. The Company’s unvested restricted stock awards are considered participating securities because they entitleholders to non-forfeitable rights to dividends or dividend equivalents during the vesting term. The holders of the Series AConvertible Preferred Stock would be entitled to share in dividends, on an as-converted basis, if the holders of common stockwere to receive dividends, other than dividends in the form of common stock. In accordance with ASC 260, a company isrequired to use the two-class method when computing EPS when a company has a security that qualifies as a “participatingsecurity.” The two-class method is an earnings allocation formula that determines EPS for each class of common stock andparticipating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. Indetermining the amount of net earnings to allocate to common stockholders, earnings are allocated to both common andparticipating securities based on their respective52 Table of Contentsweighted-average shares outstanding for the period. Diluted EPS for the Company’s common stock is computed using themore dilutive of the two-class method or the if-converted method.In accordance with ASC 260, securities are deemed not to be participating in losses if there is no obligation to fund suchlosses. For the years ended January 31, 2019 and 2018, the unvested restricted stock awards and the Series A ConvertiblePreferred Stock were deemed not to be participating since there was a net loss. As of January 31, 2019 and 2018, there were2,895,464 and 2,949,995 shares of Series A Convertible Preferred Stock outstanding, respectively, each share beingconvertible into one share of the Company’s common stock. For the years ended January 31, 2019 and 2018, 169,959 and293,568, respectively, unvested restricted shares of common stock were excluded from the diluted EPS calculation as theireffect would have been anti-dilutive.The following is the calculation of the basic and diluted net loss per share of common stock: Fiscal Year 2018 2017Net earnings (loss) $(5,865,000) $(3,099,000)Weighted average shares outstanding - Basic 19,540,980 19,090,899Stock options, Restricted stock and Series A Convertible Preferred Stock — —Weighted average shares outstanding - Diluted 19,540,980 19,090,899Basic net earnings (loss) per share of common stock $(0.30) $(0.16)Diluted net earnings (loss) per share of common stock $(0.30) $(0.16) Diluted net loss per share excludes the effect of stock options as their inclusion would have been anti-dilutive. As ofJanuary 31, 2019 and 2018, there were 1,580,657 and 2,173,156 outstanding stock options, respectively.Loss ContingenciesWe are subject to the possibility of various loss contingencies arising in the course of business. We consider thelikelihood of the loss or impairment of an asset or the incurrence of a liability as well as our ability to reasonably estimate theamount of loss in determining loss contingencies. An estimated loss contingency is accrued when it is probable that aliability has been incurred or an asset has been impaired and the amount of loss can be reasonably estimated. We regularlyevaluate current information available to us to determine whether to accrue for a loss contingency and adjust any previousaccrual.Recent Accounting PronouncementsIn May 2014, the FASB issued ASU 2014‑09, Revenue from Contracts with Customers, Topic 606 (“ASC 606”), whichsupersedes the revenue recognition requirements in ASC 605, Revenue Recognition. The core principle of the guidance isthat an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount thatreflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014‑09defines a five-step process to achieve this principle and, in doing so, it is possible more judgment and estimates may berequired within the revenue recognition process than required under existing GAAP, including identifying performanceobligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocatingthe transaction price to each separate performance obligation. The ASU also requires additional disclosure about the nature,amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgmentsand changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In July 2016, the FASBdelayed the effective date by one year and the guidance became effective for us on February 1, 2018. The new revenuerecognition guidance permits two methods of adoption: retrospectively to each prior reporting period presented (fullretrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the dateof initial application as an adjustment to retained earnings (modified retrospective method). We adopted the standardeffective February 1, 2018 using the modified retrospective method.53 Table of ContentsWe have completed our assessment of our systems, available data and processes affected by the implementation of thisnew revenue recognition guidance. The Company’s formal accounting policies have been established. As a result of theimplementation of this standard, the Company recorded an adjustment to reduce accumulated deficit as of February 1, 2018by $1.4 million, related primarily to the timing of revenue. The most significant impact relates to our accounting for termsoftware license revenue. Revenues related to SaaS-based offerings, hardware sales, maintenance and support, and auditservices remain substantially unchanged. For arrangements which include both software license and maintenance andsupport components, we expect to recognize the revenue attributed to license upfront at a point in time rather than over theterm of the contract. We also expect to recognize license revenues upfront rather than be restricted to payment amounts dueunder extended payment term contracts as required under the previous guidance. Additionally, the new revenue recognitionguidance requires the capitalization of all incremental costs of obtaining a contract with a customer that an entity expects torecover. We had already been capitalizing sales commissions associated with new and renewal contracts. We did not identifyany other costs that would be eligible for capitalization under the new guidance. As a result, we did not record any additionaldeferral for such costs upon adoption of the new guidance on February 1, 2018.In February 2016, the FASB issued ASU 2016‑02, Leases (Topic 842), to increase transparency and comparability amongorganizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information aboutleasing arrangements. The ASU is effective for annual periods beginning after December 15, 2018, including interim periodswithin those fiscal years. The update became effective for us on February 1, 2019. Early adoption of the update is permitted.We currently expect to record right of use assets of approximately $175,000 and additional lease liability of approximately$175,000 upon the adoption of ASU 2016-02. We do not anticipate any material changes to our operating results or liquidityas a result of the adoption of ASU 2016-12.In August 2016, the FASB issued ASU 2016‑15, Statement of Cash Flows (Topic 230): Classification of Certain CashReceipts and Cash Payments, to clarify how certain cash receipts and cash payments should be presented and classified in thestatement of cash flows. The ASU should be applied using a retrospective transition method to each period presented. Thestandard became effective for us on February 1, 2018. The adoption of this ASU did not have a significant impact on ourconsolidated financial statements.In January 2017, the FASB issued ASU 2017‑01, Business Combinations (Topic 805): Clarifying the Definition of aBusiness, to clarify the definition of a business to assist entities with evaluating whether transactions should be accounted foras acquisitions (or disposals) of assets or businesses. The standard became effective for us on February 1, 2018. For theperiods included in this report, there was no impact on our financial position or results of operations as a result of theadoption of this update.In January 2017, the FASB issued ASU 2017‑04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test forGoodwill Impairment, which removes Step 2 from the goodwill impairment test. The standard will be effective for us onFebruary 1, 2020. Early adoption of this update is permitted. We do not expect that the adoption of this ASU will have asignificant impact on our consolidated financial statements.In May 2017, the FASB issued ASU 2017‑09, Compensation - Stock Compensation (Topic 718), Scope of ModificationAccounting, to clarify which changes to the terms or conditions of a share-based payment award require an entity to applymodification accounting in Topic 718. The update became effective for us on February 1, 2018. For the periods included inthis report, there was no impact on our financial position or results of operations as a result of the adoption of this update. In June 2018, the FASB issued ASU 2018-07, Compensation-Stock Compensation (Topic 718): Improvements toNonemployee Share-Based Payment Accounting, which expands the scope of Topic 718 to include share-based paymenttransactions for acquiring goods and services from nonemployees. The update specifies that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in its own operations byissuing share-based payment awards. ASU 2018-07 also clarifies that Topic 718 does not apply to share-based payments usedto effectively provide (1) financing to the issuer or (2) awards granted in conjunction with selling goods or services tocustomers as part of a contract accounted for under ASC 606. The standard is effective for interim and annual periodsbeginning after December 15, 2018. Early adoption of the update is permitted. We adopted the ASU54 Table of Contentsearly effective February 1, 2018. The adoption of this ASU did not have a significant impact on our consolidated financialstatements.NOTE 3 — PREFERRED STOCKIn connection with a 2012 private placement investment, the Company issued 2,416,785 shares of Series A PreferredStock at $3.00 per share. The Series A Preferred Stock does not pay a dividend, however, the holders are entitled to receivedividends on shares of preferred stock equal (on an as-if-converted-to-common-stock basis) to and in the same form asdividends (other than dividends in the form of common stock) actually paid on shares of the common stock. The Series APreferred Stock has voting rights on a modified as-if-converted-to-common-stock-basis. The Series A Preferred Stock has anon-participating liquidation right equal to the original issue price plus accrued unpaid dividends, which are senior to theCompany’s common stock. The Series A Preferred Stock can be converted to common shares at any time by the holders or, atthe option of the Company, if the arithmetic average of the daily volume weighted average price of the common stock for theten day period prior to the measurement date is greater than $8.00 per share and the average daily trading volume for thesixty day period immediately prior to the measurement date exceeds 100,000 shares. The conversion price is $3.00 per share,subject to certain adjustments.On November 1, 2012, upon shareholder approval, convertible subordinated notes were converted into 1,583,210 sharesof Series A Convertible Preferred Stock.Subject to the Subordination and Intercreditor Agreement among the preferred stockholders, the Company and WellsFargo, each share of Series A Preferred Stock is redeemable at the option of the holder for an amount equal to the initialissuance price of $3.00 (adjusted to reflect stock splits, stock dividends or like events) plus any accrued and unpaiddividends thereon. The Series A Preferred Stock are classified as temporary equity as the securities are redeemable solely atthe option of the holder.In fiscal 2018, 54,531 shares of the Company’s Series A Convertible Preferred Stock were converted into common stock.As a result, Series A Convertible Preferred Stock was reduced by $164,000, with the offsetting increase to Common Stock andAdditional Paid-in Capital. As of January 31, 2019 and 2018, 2,895,464 and 2,949,995 shares of Series A ConvertiblePreferred Stock remained outstanding.NOTE 4 — OPERATING LEASESIn the second quarter of fiscal 2018, we closed our New York office and subleased the office space for the remainingperiod of the original lease term which expires in November 2019. As a result of vacating and subleasing the office, werecorded a $472,000 loss on exit of the operating lease in fiscal 2018, which captures the future net cash flows associatedwith the vacated premises as of the office closure date, including $384,000 in rent receipts from our sublessee and $48,000 inloss incurred on the disposal of fixed assets. As of January 31, 2019, the total minimum rentals due and to be received underthis non-cancelable sublease were $478,000 and $216,000, respectively.In the third quarter of fiscal 2018, we assigned our then current Atlanta office lease that would have expired in November2022 and entered into a membership agreement to occupy shared office space in Atlanta. As a result of assigning the officelease, we recorded a $562,000 loss on exit of the operating lease in the third quarter of fiscal 2018, which is mainlycomprised of $275,000 in broker commissions and a $499,000 loss on the disposal of leasehold improvements, furniture andequipment, net of a $239,000 gain from the write-off of associated lease incentive liability. See Note 12 – Commitments andContingencies for further details on our shared office arrangement.Rent and leasing expense for facilities and equipment was $964,000 and $1,234,000 for fiscal years 2018 and 2017,respectively.55 Table of ContentsNOTE 5 — DEBTTerm Loan and Line of CreditOn November 21, 2014, we entered into a Credit Agreement (the “Credit Agreement”) with Wells Fargo Bank, N.A., asadministrative agent, and other lender parties thereto. Pursuant to the Credit Agreement, the lenders agreed to providea $10,000,000 senior term loan and a $5,000,000 revolving line of credit to our primary operating subsidiary. Amountsoutstanding under the Credit Agreement bear interest at either LIBOR or the base rate, as elected by the Company, plus anapplicable margin. Subject to the Company’s leverage ratio, pursuant to the terms of the amendment to the Credit Agreemententered into as of April 15, 2015, the applicable LIBOR rate margin varies from 4.25% to 6.25%, and the applicable base ratemargin varies from 3.25% to 5.25%. The term loan and line of credit provide support for working capital, capitalexpenditures and other general corporate purposes, including permitted acquisitions. The outstanding senior term loan issecured by substantially all of our assets. Pursuant to the terms of the fourth amendment to the Credit Agreement entered intoas of November 20, 2018, the original term loan and line of credit maturity date of November 21, 2019 was extended to May21, 2020. The senior term loan principal balance is payable in quarterly installments, which started in March 2015 and willcontinue through the maturity date, with the full remaining unpaid principal balance due at maturity. Financing costsassociated with the new credit facility are being amortized over its term on a straight-line basis, which is not materiallydifferent from the effective interest method.The Credit Agreement includes customary financial covenants, including the requirements that the Company maintainminimum liquidity and achieve certain minimum EBITDA levels (as defined in the Credit Agreement). In addition, the CreditAgreement prohibits the Company from paying dividends on the common and preferred stock. Pursuant to the terms of theCredit Agreement, the Company is required to maintain minimum liquidity of at least (i) $5,000,000 through January 31,2018, (ii) $4,000,000 from February 1, 2018 through November 19, 2018, (iii) $3,500,000 from November 20, 2018 throughand including January 31, 2019, and (iv) $4,000,000 from February 1, 2019 through and including the maturity date of thecredit facility.The following table shows our minimum EBITDA covenant thresholds, as modified by the fourth amendment to theCredit Agreement:Applicable period MinimumEBITDAFor the fiscal quarter ended October 31, 2018 $(509,000)For the 2-quarter period ended January 31, 2019 20,000For the 3-quarter period ending April 30, 2019 204,000For the 4-quarter period ending July 31, 2019 180,000For the 4-quarter period ending October 31, 2019 508,000For the 4-quarter period ending January 31, 2020 408,000For the 4-quarter period ending April 30, 2020 and each fiscal quarter thereafter 562,000 The Company was in compliance with the applicable financial loan covenants at January 31, 2019.As of January 31, 2019, the Company had no outstanding borrowings under the revolving line of credit, and had accrued$14,000 in interest and unused line fees. Based upon the borrowing base formula set forth in the Credit Agreement, as ofJanuary 31, 2019, the Company had access to the full amount of the $5,000,000 revolving line of credit.56 Table of ContentsOutstanding principal balances on debt consisted of the following at: January 31, 2019 January 31, 2018Senior term loan $4,030,000 $4,626,000Deferred financing cost (82,000) (128,000)Total 3,948,000 4,498,000Less: Current portion (597,000) (597,000)Non-current portion of debt $3,351,000 $3,901,000 Future principal payments of debt consisted of the following at January 31, 2019:Fiscal year Senior Term Loan (1)2019 $597,0002020 3,433,000Total repayments $4,030,000(1)Term loan balance on the consolidated balance sheet is reported net of deferred financing costs of $82,000.(2)NOTE 6 — GOODWILL AND INTANGIBLE ASSETSIntangible assets consist of the following: January 31, 2019 Estimated Accumulated Useful Life Gross Assets Amortization Net AssetsFinite-lived assets: Client relationships 5-10 years $5,397,000 $3,756,000 $1,641,000Covenants not to compete 3 years 130,000 102,000 28,000Total $5,527,000 $3,858,000 $1,669,000 January 31, 2018 Estimated Accumulated Useful Life Gross Assets Amortization Net AssetsFinite-lived assets: Client relationships 5-15 years 5,805,000 3,308,000 2,497,000Covenants not to compete 0.5-15 years 986,000 823,000 163,000Supplier agreements 5 years 1,582,000 1,582,000 —License agreement15 years4,431,0001,256,0003,175,000Total $12,804,000 $6,969,000 $5,835,000 In fiscal 2018, we recognized an impairment charge of $3,681,000 as the carrying value of finite-lived intangible assetsand capitalized product development cost relating to our Clinical Analytics solution no longer appeared recoverable. Thisimpairment charge is included in the “Impairment of long-lived assets” line in our consolidated statements of operations forthe year ended January 31, 2019. See Note 12 – Commitments and Contingencies for royalty liability associated with ourClinical Analytics solution.57 Table of ContentsFuture amortization expense for intangible assets is estimated as follows: Annual Amortization Expense2019 $554,0002020 491,0002021 455,0002022 169,000Total $1,669,000 NOTE 7 — INCOME TAXESIncome taxes consist of the following: Fiscal Year 2018 2017Current tax (expense) benefit: Federal $7,000 $—State (7,000) (11,000)Total current provision — (11,000)Deferred tax benefit: Federal — 95,000State — —Total deferred tax benefit — 95,000Current and deferred tax benefit $ — $84,000 The income tax benefit differs from the amount computed using the federal statutory income tax rates of 21% and 32.9%for fiscal 2018 and 2017, respectively, as follows: Fiscal Year 2018 2017Federal tax benefit at statutory rate $(1,232,000) $1,047,000State and local taxes, net of federal benefit (expense) (95,000) 195,000Change in valuation allowance (767,000) 4,505,000Permanent items: Incentive stock options 18,000 (112,000)Change in fair value of warrants liability — 15,000Other 1,000 (24,000)Reserve for uncertain tax position 32,000 (19,000)R&D Credit (Federal) (158,000) 219,000R&D Credit (State) 134,000 (129,000)Tax Cuts and Jobs Act — (5,827,000)Expiring carryforwards 1,965,000 —Other 102,000 214,000Income tax benefit $ — $84,000 58 Table of ContentsThe Company provides deferred income taxes for temporary differences between assets and liabilities recognized forfinancial reporting and income tax purposes. The income tax effects of these temporary differences and credits are as follows: January 31, 2019 2018Deferred tax assets: Allowance for doubtful accounts $84,000 $91,000Deferred revenue 63,000 155,000Accruals 141,000 71,000Net operating loss carryforwards 9,532,000 10,617,000Stock compensation expense 205,000 236,000Property and equipment 30,000 109,000R&D credit 1,102,000 1,144,000Other 133,000 117,000Total deferred tax assets 11,290,000 12,540,000Valuation allowance (11,045,000) (11,813,000)Net deferred tax assets 245,000 727,000Deferred tax liabilities: Finite-lived intangible assets (245,000) (727,000)Total deferred tax liabilities (245,000) (727,000)Net deferred tax liabilities $ — $ — At January 31, 2019, the Company had U.S. federal net operating loss carry forwards of $36,800,000, which expire atvarious dates through fiscal 2037. The Company also had state net operating loss carry forwards of $17,170,000, whichexpire through fiscal 2038. Federal and state R&D credit carry forwards will expire through fiscal 2038 and 2028,respectively. The Tax Cuts and Jobs Act signed into law on December 22, 2017 eliminated the ability to carryback netoperating losses and allows net operating losses to be carried forward indefinitely. At January 31, 2019, the Company hadindefinite-lived federal net operating loss carry forwards of $3,900,000.In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that all orsome portion of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent uponthe generation of future taxable income during the periods in which those temporary differences become deductible.Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planningstrategies in making this assessment. The Company established a valuation allowance of $11,045,000 and $11,813,000 atJanuary 31, 2019 and 2018, respectively. The decrease in the valuation allowance of $768,000 was driven primarily by theexpiration of federal net operating loss carry forwards.The Company and its subsidiary are subject to U.S. federal income tax as well as income taxes in multiple state and localjurisdictions. The Company has concluded all U.S. federal tax matters for years through January 31, 2014. All material stateand local income tax matters have been concluded for years through January 31, 2013. The Company is no longer subject toIRS examination for periods prior to the tax year ended January 31, 2014; however, carryforward losses that were generatedprior to the tax year ended January 31, 2014 may still be adjusted by the IRS if they are used in a future period.The Company has recorded a reserve, including interest and penalties, for uncertain tax positions of $275,000 and$295,000 as of January 31, 2019 and 2018, respectively. As of January 31, 2019 and 2018, the Company had no accruedinterest and penalties associated with unrecognized tax benefits. 59 Table of ContentsA reconciliation of the beginning and ending amounts of gross unrecognized tax benefits (excluding interest andpenalties) is as follows: 2018 2017Beginning of fiscal year $295,000 $290,000Additions for tax positions for the current year 32,000 62,000Additions for tax positions of prior years — 3,000Subtractions for tax positions of prior years (52,000) (60,000)End of fiscal year $275,000 $295,000 Impact of the Tax Cuts and Jobs ActThe Tax Act was signed into law on December 22, 2017. Among other things, the Tax Act reduces the U.S. federalcorporate tax rate from 34.0 percent to 21.0 percent effective January 1, 2018 and allows for 100 percent expensing of certainfixed assets placed in service after September 27, 2017.On December 22, 2017, Staff Accounting Bulletin No. 118 (“SAB 118”) was issued to address the application of U.S.GAAP in situations where a registrant does not have the necessary information available, prepared, or analyzed (includingcomputations) in reasonable detail to finalize the calculations for certain income tax effects of the Tax Cuts and Jobs Act. Inaccordance with SAB 118, in fiscal 2017 the Company recorded a provisional estimated net tax expense of $5.8 million inconnection with the tax effect of the Tax Act. Adjustments to this provisional amount recorded in fiscal 2018 did not have asignificant impact on our consolidated financial statements. Our accounting for the effects of the Tax Act enactment is nowcomplete.NOTE 8 — MAJOR CLIENTSIn fiscal year 2018, no individual client accounted for 10% or more of our total revenues. Two clients represented 12%and 9%, respectively, of total accounts receivable as of January 31, 2019.In fiscal year 2017, no individual client accounted for 10% or more of our total revenues. Two clients represented 12%and 11%, respectively, of total accounts receivable as of January 31, 2018.NOTE 9 — EMPLOYEE RETIREMENT PLANThe Company has established a 401(k) retirement plan that covers all associates. Company contributions to the planmay be made at the discretion of the board of directors. The Company matched 100% up to the first 4% of compensationdeferred by each associate in the 401(k) plan through December 31, 2018. Effective January 1, 2019, the Company’s matchedamount was decreased to 50% up to the first 4% of compensation deferred by each associate. The total compensation expensefor this matching contribution was $483,000 and $524,000 in fiscal 2018 and 2017, respectively.NOTE 10 — EMPLOYEE STOCK PURCHASE PLANThe Company has an Employee Stock Purchase Plan under which associates may purchase up to 1,000,000 shares ofcommon stock. Under the plan, eligible associates may elect to contribute, through payroll deductions, up to 10% of theirbase pay to a trust during any plan year, i.e., January 1 through December 31 of the same year. Semi-annually, typically inJanuary and July of each year, the plan issues, for the benefit of the employees, shares of common stock at the lesser of(a) 85% of the fair market value of the common stock on the first day of the vesting period (January 1 or July 1), or (b) 85% ofthe fair market value of the common stock on the last day of the vesting period (June 30 or December 31 of the same year). AtJanuary 31, 2019, 431,556 shares remain that can be purchased under the plan.The Company recognized compensation expense of $4,000 and $19,000 for fiscal years 2018 and 2017, respectively,under this plan.60 Table of ContentsDuring fiscal 2018, 13,339 shares were purchased at the price of $0.69 per share and 10,370 shares were purchased at theprice of $1.20 per share; during fiscal 2017, 21,234 shares were purchased at the price of $0.98 per share and 26,048 shareswere purchased at the price of $0.91 per share. The cash received for shares purchased from the plan was $22,000 and$45,000 in fiscal 2018 and 2017, respectively.The purchase price at June 30, 2019 will be 85% of the lower of (a) the closing price on January 2, 2019 ($0.88) or(b) the closing price on June 30, 2019.NOTE 11 — STOCK-BASED COMPENSATIONStock Option PlansThe Company’s Second Amended and Restated 2013 Stock Incentive Plan (the “2013 Plan”) replaced the 2005Incentive Compensation Plan (the “2005 Plan”). Under these plans, the Company is authorized to issue equity awards (stockoptions, stock appreciation rights or “SARs”, and restricted stock) to directors and associates of the Company. Outstandingawards under the 2005 Plan continue to be governed by the terms of the 2005 Plan until exercised, expired or otherwiseterminated or canceled, but no further equity awards are allowed to be granted under the 2005 Plan. Under the 2013 Plan, theCompany is authorized to issue a number of shares not to exceed (i) 2,300,000 plus (ii) the number of shares remainingavailable for issuance under the 2005 Plan as of the date the 2005 Plan was replaced, plus (iii) the number of shares thatbecome available under the 2005 Plan pursuant to forfeiture, termination, lapse, or satisfaction of a 2005 Plan award in cashor property other than shares of common stock. The options granted under the 2013 Plan and 2005 Plan have terms often years or less, and typically vest and become fully exercisable ratably over three years of continuous service to theCompany from the date of grant. At January 31, 2019 and 2018, options to purchase 1,355,657 and 1,873,156 shares of theCompany’s common stock, respectively, have been granted and are outstanding under the 2013 Plan. There are no SARsoutstanding.Inducement grants are approved by the Company’s compensation committee pursuant to NASDAQ MarketplaceRule 5635(c)(4). The terms of the grants were nearly identical to the terms and conditions of the Company’s stock incentiveplans in effect at the time of each inducement grant. For the year ended January 31, 2019, with regard to inducement grants,no stock options were issued, no options expired, 75,000 options were forfeited and no stock options were exercised. Forthe year ended January 31, 2018, with regard to inducement grants, no stock options were issued, no options expired, nooptions were forfeited and no stock options were exercised. As of January 31, 2019 and 2018, there were 225,000 and300,000 options outstanding, respectively, under inducement grants.Please see “Restricted Stock” section for information on the restricted shares.A summary of stock option activity follows: Weighted Average Remaining Aggregate Options Exercise Price Life in Years intrinsic valueOutstanding as of February 1, 2018 2,173,156 $3.42 Granted 47,000 1.68 Exercised (50,694) 1.18 Expired (201,469) 2.55 Forfeited (387,336) 3.61 Outstanding as of January 31, 2019 1,580,657 $3.50(1)6.13 $15,000Exercisable as of January 31, 2019 1,401,435 $3.73(2)5.91 $8,000Vested or expected to vest as of January 31, 2019 1,542,516 $3.54 6.09 $14,000(1)The exercise prices range from $1.10 to $8.10, of which 440,000 shares are between $1.10 and $2.00 per share, 362,240shares are between $2.19 and $4.00 per share, and 778,417 shares are between $4.02 and $8.10 per share.61 Table of Contents(2)The exercise prices range from $1.18 to $8.10, of which 280,778 shares are between $1.18 and $2.00 per share, 362,240shares are between $2.19 and $4.00 per share, and 758,417 shares are between $4.02 and $8.10 per share.For fiscal 2018 and 2017, the weighted average grant date fair value of options granted during the year was $1.03 and$0.65, respectively, and the total intrinsic value of options exercised during the year was $13,000 and zero for fiscal 2018and 2017, respectively.The fiscal 2018 and 2017 stock-based compensation was estimated at the date of grant using a Black-Scholes optionpricing model with the following weighted average assumptions for each fiscal year: 2018 2017 Expected life 6years 6yearsRisk-free interest rate 2.89% 2.65%Weighted average volatility factor 0.65 0.65 Dividend yield — — Forfeiture rate 20% 13% At January 31, 2019, there was $98,000 of unrecognized compensation cost related to non-vested stock-option awards.That cost is expected to be recognized over a remaining weighted average period of 0.6 years. The expense associated withstock option awards was $244,000 and $563,000, respectively, for fiscal 2018 and 2017. Cash received from the exercise ofoptions was zero in both fiscal 2018 and 2017. The 2005 Plan and the 2013 Plan contain change in control provisions whereby any outstanding equity awards underthe plans subject to vesting, which have not fully vested as of the date of the change in control, shall automatically vest andbecome immediately exercisable. One of the change in control provisions is deemed to occur if there is a change in beneficialownership, or authority to vote, directly or indirectly, of securities representing 20% or more of the total of all of theCompany’s then-outstanding voting securities, unless through a transaction arranged by or consummated with the priorapproval of the Board of Directors. Other change in control provisions relate to mergers and acquisitions or a determinationof change in control by the Company’s Board of Directors.Restricted StockThe Company is authorized to grant restricted stock awards to associates and directors under the 2013 Plan. TheCompany has also issued restricted stock as inducement grants to certain new employees. The restrictions on the sharesgranted generally lapse over a one- to four-year term of continuous employment from the date of grant. The grant date fairvalue per share of restricted stock, which is based on the closing price of our common stock on the grant date, is expensed ona straight-line basis as the restriction period lapses. The shares represented by restricted stock awards are consideredoutstanding at the grant date, as the recipients are entitled to voting rights. A summary of restricted stock award activity forfiscal 2018 and 2017 is presented below: Weighted Non-vested Average Number of Grant Date Shares Fair ValueNon-vested balance at January 31, 2017 858,225 $1.59Granted 295,337 1.17Vested (331,975) 1.47Forfeited — —Non-vested balance at January 31, 2018 821,587 $1.59Granted 826,666 1.15Vested (453,537) 1.34Forfeited (130,850) 1.61Non-vested balance at January 31, 2019 1,063,866 $1.27 62 Table of ContentsAt January 31, 2019, there was $1,110,000 of unrecognized compensation cost related to restricted stock awards. Thatcost is expected to be recognized over a remaining period of 2.3 years.The expense associated with restricted stock awards was $383,000 and $546,000, respectively, for fiscal 2018 and 2017.NOTE 12 — COMMITMENTS AND CONTINGENCIESMembership agreement to occupy shared office spaceIn fiscal 2018, the Company entered into a membership agreement to occupy shared office space in Atlanta, Georgia. Ournew shared office arrangement commenced upon taking possession of the space and ends in November 2020. Fees due underthe membership agreement are based on the number of contracted seats and the use of optional office services. As of January31, 2019, minimum fees due under the shared office arrangement totaled $286,000.Royalty LiabilityOn October 25, 2013, we entered into a Software License and Royalty Agreement (the “Royalty Agreement”) withMontefiore Medical Center (“Montefiore”) pursuant to which Montefiore granted us an exclusive, worldwide 15‑year licenseof Montefiore’s proprietary clinical analytics platform solution, Clinical Looking Glass® (“CLG”), now known as ourClinical Analytics solution. In addition, Montefiore assigned to us the existing license agreement with a customer usingCLG. As consideration under the Royalty Agreement, we paid Montefiore a one-time initial base royalty fee of $3,000,000.Additionally, we originally committed that Montefiore would receive at least an additional $3,000,000 of on-going royaltypayments related to future sublicensing of CLG by us within the first six and one-half years of the license term. On July 1,2018, we entered into a joint amendment to the Royalty Agreement and the existing Software License and SupportAgreement with Montefiore to modify the payment obligations of the parties under both agreements. According to themodified provisions, our obligation to pay on-going royalties under the Royalty Agreement was replaced with the obligationto (i) provide maintenance services for 24 months and waive associated maintenance fees, and (ii) pay $1,000,000 in cash byJuly 31, 2020. As a result of the commitment to fulfill a portion of our obligation by providing maintenance services at nocost, the royalty liability was significantly reduced, with a corresponding increase to deferred revenues. As of January 31,2019, we had $1,172,000 in deferred revenues associated with this modified royalty liability. The fair value of the royaltyliability as of January 31, 2019 was determined based on the amount payable in cash. As of January 31, 2019 and 2018, thepresent value of this royalty liability was $905,000 and $2,469,000, respectively.LitigationWe are, from time to time, a party to various legal proceedings and claims, which arise in the ordinary course of business.We are not aware of any legal matters that could have a material adverse effect on the Company’s consolidated results ofoperations, financial position or cash flows.NOTE 13 — SUBSEQUENT EVENTSWe have evaluated subsequent events occurring after January 31, 2019, and based on our evaluation we did not identifyany events that would have required recognition or disclosure in these consolidated financial statements.63 Table of ContentsSchedule IIValuation and Qualifying Accounts and ReservesStreamline Health Solutions, Inc.For the two years ended January 31, 2019 Additions Balance at Charged to Charged to Beginning of Costs and Other Balance atDescription Period Expenses Accounts Deductions End of Period (in thousands)Year ended January 31, 2019: Allowance for doubtful accounts $349 $13 $— $(17) $345Year ended January 31, 2018: Allowance for doubtful accounts $198 $234 $— $(83) $349 64 Table of Contents ITEM 9. Changes In And Disagreements With Accountants On Accounting And Financial DisclosureOn April 18, 2019, the Audit Committee of the Board of Directors (the “Audit Committee”) of Streamline HealthSolutions, Inc. (the “Company”) approved the engagement of Dixon Hughes Goodman LLP (“DHG”) as the Company’s newindependent registered public accounting firm, effective as of immediately after the filing of this Annual Report on Form 10-K. As a result, on April 18, 2019, the Audit Committee approved the dismissal of RSM US LLP (“RSM”) as the Company’sindependent registered public accounting firm, to be effective as of immediately after the filing of this Annual Report onForm 10-K. The engagement of DHG was the result of a comprehensive, competitive process conducted by the Company’sAudit Committee.RSM’s audit reports on the Company’s consolidated financial statements for each of the two most recent fiscal yearsended January 31, 2019 and 2018 did not contain an adverse opinion or a disclaimer of opinion, and were not qualified ormodified as to uncertainty, audit scope or accounting principles. During the two most recent fiscal years ended January 31,2019 and 2018, and in the subsequent interim period through April 22, 2019, there were no disagreements between theCompany and RSM on any matter of accounting principles or practices, financial statement disclosure or auditing scope orprocedure, which disagreement, if not resolved to the satisfaction of RSM, would have caused RSM to make reference to thesubject matter of the disagreement in connection with its reports.There were no reportable events (as such term is defined in Item 304(a)(1)(v) of Regulation S-K) during the fiscal yearsended January 31, 2019 and 2018 and the subsequent interim period through April 22, 2019. On April 18, 2019, the Company provided RSM with a copy of the disclosures that the Company is making in responseto Item 3.04 of Regulation S-K and requested that RSM furnish the Company with a letter addressed to the Securities andExchange Commission stating whether it agrees with the statements made by the Company in response to Item 3.04 ofRegulation S-K, and, if not, stating the respects in which it does not agree. The Company has received the requested letterfrom RSM, and a copy of RSM’s letter will be filed as Exhibit 16.1 to the Current Report on Form 8-K reporting the changein auditors.During the Company’s two most recent fiscal years ended January 31, 2019 and 2018 and subsequent interim periodthrough April 22, 2019, neither the Company nor anyone on its behalf consulted with DHG regarding either (i) theapplication of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinionthat might be rendered on the Company’s consolidated financial statements, and neither a written report nor oral advice wasprovided to the Company that DHG concluded was an important factor considered by the Company in reaching a decision asto the accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a “disagreement” (asthat term is defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions to Item 304 of Regulation S-K) or a“reportable event” (as that term is defined in Item 304(a)(1)(v) of Regulation S-K). ITEM 9A. Controls And ProceduresConclusions Regarding the Effectiveness of Disclosure Controls and ProceduresThe Company maintains disclosure controls and procedures that are designed to ensure that there is reasonable assurancethat the information required to be disclosed in the Company’s reports under the Securities Exchange Act of 1934, asamended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in theSEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management,including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regardingrequired disclosure based on the definition of “disclosure controls and procedures” in Exchange Act Rules 13a‑15(e) and15d‑15(e). In designing and evaluating the disclosure controls and procedures, management recognizes that any controls andprocedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desiredcontrol objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefitrelationship of possible controls and procedures. In addition, projections of any evaluation of effectiveness of our disclosurecontrols and procedures to future periods are subject to the risk that controls or procedures may become inadequate becauseof changes in conditions, or that the degree of compliance with the controls or procedures may deteriorate.65 Table of ContentsAs of the end of the period covered by this report, an evaluation was performed under the supervision and with theparticipation of the Company’s senior management, including the Chief Executive Officer (principal executive officer) andChief Financial Officer (principal financial officer), of the effectiveness of the design and operation of the Company’sdisclosure controls and procedures to provide reasonable assurance of achieving the desired objectives of the disclosurecontrols and procedures. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concludedthat, as of the end of the period covered by this report, our disclosure controls and procedures were effective.Management’s Report on Internal Control over Financial ReportingManagement is responsible for establishing and maintaining adequate internal control over financial reporting asdefined in Rules 13a‑15(f) and 15d‑15(f) under the Exchange Act. Internal control over financial reporting is a processdesigned by, and under the supervision of, our Chief Executive Officer and Chief Financial Officer and effected bymanagement and our Board of Directors to provide reasonable assurance regarding the reliability of financial reporting andthe preparation of financial statements for external purposes in accordance with U.S. GAAP. Internal control over financialreporting includes those policies and procedures that:·Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions anddispositions of assets of the Company.·Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with U.S. GAAP and that receipts and expenditures of the Company are being made inaccordance with authorization of our management and our Board of Directors.·Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use ordisposition of our assets that could have a material effect on our consolidated financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements.Also, projections of any evaluation of the effectiveness of our internal control over financial reporting to future periods aresubject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliancewith the policies or procedures may deteriorate.Management, with the participation of the chief executive officer and chief financial officer, assessed the effectiveness ofthe Company’s internal control over financial reporting as of January 31, 2019, using criteria established in InternalControl - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission(COSO) and concluded that the Company’s internal control over financial reporting was effective as of January 31, 2019.This annual report on Form 10‑K does not include an attestation report of our independent registered public accountingfirm regarding internal control over financial reporting. Management’s report is not subject to attestation by our independentregistered public accounting firm pursuant to SEC rules that permit us to provide only management’s report in this annualreport on Form 10‑K.Changes in Internal Control Over Financial ReportingThere have been no changes in the Company’s internal control over financial reporting during the fiscal quarter endedJanuary 31, 2019 that has materially affected, or is reasonably likely to materially affect, internal control over financialreporting. ITEM 9B. Other InformationNone.66 Table of Contents PART III ITEM 10. Directors, Executive Officers And Corporate GovernanceInformation regarding directors, executive officers and corporate governance will be set forth in the proxy statement forour 2019 annual meeting of stockholders or an amendment to this Annual Report on Form 10‑K, which will be filed with theSecurities and Exchange Commission within 120 days after the end of the fiscal year covered by this Annual Report onForm 10‑K, and is incorporated herein by reference. ITEM 11. Executive CompensationInformation regarding executive compensation will be set forth in the proxy statement for our 2019 annual meeting ofstockholders or an amendment to this Annual Report on Form 10‑K, which will be filed with the Securities and ExchangeCommission within 120 days after the end of the fiscal year covered by this Annual Report on Form 10‑K, and isincorporated herein by reference. ITEM 12. Securities Ownership Of Certain Beneficial Owners And Management And Related Stockholder MattersInformation regarding security ownership of certain beneficial owners and management and related stockholder matterswill be set forth in the proxy statement for our 2019 annual meeting of stockholders or an amendment to this Annual Reporton Form 10‑K, which will be filed with the Securities and Exchange Commission within 120 days after the end of thefiscal year covered by this Annual Report on Form 10‑K, and is incorporated herein by reference. ITEM 13. Certain Relationships, Related Transactions And Directors IndependenceInformation regarding certain relationships and related transactions and director independence will be set forth in theproxy statement for our 2019 annual meeting of stockholders or an amendment to this Annual Report on Form 10‑K, whichwill be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year covered by thisAnnual Report on Form 10‑K, and is incorporated herein by reference. ITEM 14. Principal Accounting Fees And ServicesInformation regarding principal accountant fees and services will be set forth in the proxy statement for our 2019 annualmeeting of stockholders or an amendment to this Annual Report on Form 10‑K, which will be filed with the Securities andExchange Commission within 120 days after the end of the fiscal year covered by this Annual Report on Form 10‑K, and isincorporated herein by reference. PART IV ITEM 15. Exhibits, Financial Statement Schedules(a) See Index to Consolidated Financial Statements and Schedule Covered by Reports of Registered Public AccountingFirms included in Part II, Item 8 of this annual report on Form 10‑K. See Index to Exhibits contained in this annual report onForm 10‑K.(b) ExhibitsSee Index to Exhibits contained in this annual report on Form 10‑K.ITEM 16. Form 10‑K SummaryNone.67 Table of ContentsINDEX TO EXHIBITSEXHIBITS3.1Certificate of Incorporation of Streamline Health Solutions, Inc. f/k/a/ LanVision Systems, Inc., asamended through August 19, 2014 (Incorporated by reference from Exhibit 3.1 of the Form 10-Q, asfiled with the SEC on September 15, 2014).3.2Bylaws of Streamline Health Solutions, Inc., as amended and restated through March 28, 2014,(Incorporated by reference from Exhibit 3.1 of Form 8‑K, as filed with the Commission on April 3,2014).3.3Certificate of Designation of Preferences, Rights and Limitations of Series A 0% Convertible PreferredStock of Streamline Health Solutions, Inc. (Incorporated by reference from Exhibit 10.1 of the Form8‑K, as filed with the Commission on November 1, 2012).4.1Specimen Common Stock Certificate of Streamline Health Solutions, Inc. (Incorporated by referencefrom the Registration Statement on Form S‑1, File Number 333‑01494, as filed with the Commission onApril 15, 1996).10.1#Streamline Health Solutions, Inc. 1996 Employee Stock Purchase Plan, as amended and restatedeffective July 1, 2013 (Incorporated by reference from the Registration Statement on Form S‑8, FileNumber 333‑188763, as filed with the Commission on May 22, 2013).10.2#2005 Incentive Compensation Plan of Streamline Health Solutions, Inc. (Incorporated by referencefrom Exhibit 10.1 of the Form 8‑K, as filed with the Commission on May 26, 2005).10.2(a)#Amendment No. 1 to 2005 Incentive Compensation Plan of Streamline Health Solutions, Inc.(Incorporated by reference to Annex 1 of Definitive Proxy Statement on Schedule 14A, as filed with theCommission on April 13, 2011).10.2(b)#Amendment No. 2 to 2005 Incentive Compensation Plan of Streamline Health Solutions, Inc.(Incorporated by reference to Exhibit 4.3 of Registration Statement on Form S‑8, as filed with theCommission on November 15, 2012).10.3#Streamline Health Solutions, Inc. Second Amended and Restated 2013 Stock Incentive Plan(incorporated by reference to Appendix A to the Company’s Definitive Proxy Statement on Schedule14A filed on May 2, 2017)10.3(a)#Form of Restricted Stock Award Agreement for Non-Employee Directors (Incorporated by referencefrom Exhibit 10.2 of the Form 8‑K, as filed with the Commission August 25, 2014).10.3(b)#Form of Restricted Stock Award Agreement for Executives (Incorporated by reference from Exhibit10.3 of the Form 8‑K, as filed with the Commission August 25, 2014).10.3(c)#Form of Stock Option Agreement for Executives (Incorporated by reference from Exhibit 10.4 of theForm 8‑K, as filed with the Commission August 25, 2014).10.4#Employment Agreement dated September 10, 2014 by and between Streamline Health Solutions, Inc.and David W. Sides (Incorporated by reference from Exhibit 10.1 of the Form 10‑Q, as filed with theCommission on December 9, 2014).10.4(a)#Amendment to Employment Agreement dated January 8, 2015 by and between Streamline HealthSolutions, Inc. and David W. Sides (Incorporated by reference from Exhibit 10.2 of the Form 8‑K, asfiled with the Commission on January 9, 2015).10.4(b)#Amendment No. 2 to Employment Agreement dated April 19, 2016 by and between Streamline HealthSolutions, Inc. and David W. Sides (Incorporated by reference from Exhibit 10.4(b) of the Form 10‑K,as filed with the Commission on April 20, 2016).10.5#Employment Agreement dated September 10, 2018 by and between Streamline Health Solutions, Inc.and Thomas J. Gibson (Incorporated by reference from Exhibit 10.1 of the Form 10‑Q, as filed with theCommission on September 12, 2018).10.6#Employment Agreement dated February 3, 2014 by and between Streamline Health Solutions, Inc. andRandolph W. Salisbury (Incorporated by reference from Exhibit 10.24 of the Form 10‑K, as filed withthe Commission on June 13, 2014).10.6(a)#Amendment No. 1 to Employment Agreement dated June 4, 2015 between Streamline HealthSolutions, Inc. and Randolph W. Salisbury (Incorporated by reference from Exhibit 10.2 of the Form10‑Q, as filed with the Commission on June 9, 2015).68 Table of Contents10.7#*Employment Agreement dated February 18, 2019 by and between Streamline Health Solutions, Inc.and David A. Driscoll.10.8#Form of Indemnification Agreement for all directors and officers of Streamline Health Solutions, Inc.(Incorporated by reference from Exhibit 10.1 of the Form 8‑K, as filed with the Commission on June 7,2006).10.9Software License and Royalty Agreement dated October 25, 2013 between Streamline Health, Inc. andMontefiore Medical Center (Incorporated by reference from Exhibit 10.2 of the Form 10‑Q, as filedwith the Commission on December 17, 2013).10.9(a)Joint Amendment dated July 1, 2018, to the Software License and Support Agreement and the SoftwareLicense and Royalty Agreement by and between Streamline Health Solutions, Inc. and MontefioreMedical Center (Incorporated by reference from Exhibit 10.2 of the Form 10‑Q, as filed with theCommission on September 12, 2018).10.10Credit Agreement dated as of November 21, 2014 by and among Wells Fargo Bank, N.A., the lendersparty thereto, Streamline Health Solutions, Inc. and Streamline Health, Inc. (Incorporated by referencefrom Exhibit 10.2 of the Form 10‑Q, as filed with the Commission on December 9, 2014).10.10(a)Subordination and Intercreditor Agreement dated as of November 21, 2014 by and among eachsubordinated creditor signatory thereto, Streamline Health Solutions, Inc. and Wells Fargo Bank, N.A(Incorporated by reference from Exhibit 10.12(a) of the Form 10‑K, as filed with the Commission onApril 20, 2016).10.10(b)Waiver and First Amendment to Credit Agreement dated as of April 15, 2015 by and among WellsFargo Bank, N.A., the lenders party thereto, Streamline Health Solutions, Inc. and Streamline Health,Inc. (Incorporated by reference from Exhibit 10.13(a) of the Form 10‑K, as filed with the Commissionon April 16, 2015).10.10(c)Second Amendment to Credit Agreement dated as of April 29, 2016 by and among Wells Fargo Bank,N.A., the lenders party thereto, Streamline Health Solutions, Inc. and Streamline Health, Inc.(Incorporated by reference from Exhibit 10.1 of the Form 10‑Q, as filed with the Commission on June 8,2016).10.10(d)Third Amendment to Credit Agreement dated as of June 19, 2017 by and among Wells Fargo Bank,N.A., the lenders party thereto, Streamline Health Solutions, Inc. and Streamline Health, Inc.(Incorporated by reference from Exhibit 10.1 of the Form 10‑Q, as filed with the Commission onSeptember 13, 2017).10.10(e)Fourth Amendment to the Credit Agreement dated as of November 20, 2018 by and among Wells FargoBank, N.A., the lenders party thereto, Streamline Health Solutions, Inc. and Streamline Health, Inc.(incorporated by reference from Exhibit 10.1 of the Current Report on Form 8-K filed the SEC onNovember 27, 2018).10.11Securities Purchase Agreement, among Streamline Health Solutions, Inc, and each purchaser identifiedon the signature pages thereto, dated August 16, 2012 (Incorporated by reference from Exhibit 10.4 ofthe Form 8‑K, as filed with the Commission on August 21, 2012).14.1Code of Business Conduct and Ethics (Incorporated by reference from Exhibit 14.1 of the Form 10‑K,as filed with the Commission on April 16, 2015).21.1*Subsidiaries of Streamline Health Solutions, Inc.23.1*Consent of Independent Registered Public Accounting Firm - RSM US LLP31.1*Certification by Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2*Certification by Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1*Certification by Chief Executive Officer pursuant to U.S.C. Section 1350, as adopted pursuant toSection 906 of the Sarbanes-Oxley Act of 2002.32.2*Certification by Chief Financial Officer pursuant to U.S.C. Section 1350, as adopted pursuant toSection 906 of the Sarbanes-Oxley Act of 2002.69 Table of Contents101The following financial information from Streamline Health Solutions, Inc.’s Annual Report on Form10‑ K for the fiscal year ended January 31, 2019 filed with the SEC on April 22, 2019, formatted inXBRL includes: (i) Consolidated Balance Sheets at January 31, 2019 and 2018, (ii) ConsolidatedStatements of Operations for the two years ended January 31, 2019, (iii) Consolidated Statements ofChanges in Stockholders’ Equity for the two years ended January 31, 2019, (iv) ConsolidatedStatements of Cash Flows for the two years ended January 31, 2019, and (v) the Notes to ConsolidatedFinancial Statements.*Filed herewith.#Management Contracts and Compensatory Arrangements.Our SEC file number reference for documents filed with the SEC pursuant to the Securities Exchange Act of 1934, asamended, is 000‑28132.70 Table of Contents SIGNATURESPursuant to the requirements of section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has dulycaused this report to be signed on its behalf by the undersigned, thereunto duly authorized. STREAMLINE HEALTH SOLUTIONS, INC. By:/S/ DAVID W. SIDES David W. Sides Chief Executive Officer DATE: April 22, 2019 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the followingpersons on behalf of the registrant in the capacities and on the date indicated./S/ DAVID W. SIDES Chief Executive Officer and Director April 22, 2019David W. Sides (Principal Executive Officer) /s/ JONATHAN R. PHILLIPS Director April 22, 2019Jonathan R. Phillips /s/ WYCHE T. "TEE" GREEN, III Director April 22, 2019Wyche T. "Tee" Green, III /s/ JUDITH E. STARKEY Director April 22, 2019Judith E. Starkey /s/ KENAN H. LUCAS Director April 22, 2019Kenan H. Lucas /s/ THOMAS J. GIBSON Chief Financial Officer April 22, 2019Thomas J. Gibson (Principal Financial Officer) /s/ LUCIANA MULLEN Controller April 22, 2019Luciana Mullen(Principal Accounting Officer) 71ExExhibit 10.7 EMPLOYMENT AGREEMENT This EMPLOYMENT AGREEMENT (together with Exhibit A, the “Agreement”) is entered as ofFebruary 18, 2019, by and between Streamline Health Solutions, Inc., a Delaware corporation with itsheadquarters in Atlanta, Georgia (the “Company”), and David A. Driscoll, a resident of the state ofVirginia (“Executive”). RECITALS: WHEREAS, the Company and Executive hereby agree that Executive will serve as an officer of theCompany pursuant to the terms and conditions set forth in this Agreement. NOW, THEREFORE, in consideration of the premises and the agreements contained herein, and forother good and valuable consideration, the receipt and adequacy of which the parties hereby acknowledge, theparties agree as follows: 1.EMPLOYMENT The Company hereby agrees to employ Executive, and Executive, in consideration of such employmentand other consideration set forth herein, hereby accepts employment, upon the terms and conditions set forthherein. 2.POSITION AND DUTIES During the Term (as defined in Section 10 of this Agreement), Executive will be employed asChief Revenue Officer of the Company and may also serve as an officer or director of affiliates of theCompany for no additional compensation, as part of Executive’s services to the Company hereunder. Whileemployed hereunder, Executive will do all things necessary, legal and incident to the above positions, andotherwise will perform such executive-level functions, as the Chief Executive Officer of the Company (the“CEO”), to whom Executive will report, or the Board of Directors of the Company (the “Board”) may establishfrom time to time. 3.COMPENSATION AND BENEFITS Subject to such modifications as may be contemplated by Exhibit A and approved from time to time bythe Board or the Compensation Committee of the Board (the “Committee”), and unless otherwise consented toby Executive, Executive will receive the compensation and benefits listed on the attached Exhibit A, which isincorporated herein and expressly made a part of this Agreement. Such compensation and benefits will be paidand provided by the Company in accordance with the Company’s regular payroll, compensation and benefitspolicies. 4.EXPENSES The Company will pay or reimburse Executive for all travel and out-of-pocket expenses reasonablyincurred or paid by Executive in connection with the performance of Executive’s duties as an employee of theCompany upon compliance with the Company’s procedures for expense reimbursement, including thepresentation of expense statements or receipts or such other supporting documentation as the Company mayreasonably require. All expenses eligible for reimbursements in connection with the Executive’s employmentwith the Company must be incurred by Executive during the term of employment and must be in accordancewith37795120 Exthe Company’s expense reimbursement policies. The amount of reimbursable expenses incurred in one taxableyear will not affect the expenses eligible for reimbursement in any other taxable year. Each category ofreimbursement will be paid as soon as administratively practicable, but in no event will any such reimbursementbe paid after the last day of the taxable year following the taxable year in which the expense was incurred. Noright to reimbursement is subject to liquidation or exchange for other benefits. 5.BINDING AGREEMENT The Company warrants and represents to Executive that the Company, acting by the officer executing thisAgreement on itsbehalf of the Company, has the full right and authority to enter into this Agreement and to perform allof its obligations hereunder. 6.OUTSIDE EMPLOYMENT Executive will devote Executive’s full time and attention to the performance of the duties incident toExecutive’s position with the Company, and will not have any other employment with any other enterprise orsubstantial responsibility for any enterprise which would be inconsistent with Executive’s duty to devoteExecutive’s full time and attention to Company matters; provided, however, that the foregoing will not preventExecutive from participation in any charitable or civic organization or, subject to CEO consent, which consentwill not be unreasonably withheld, from service in a non-executive capacity on the boards of directors of up totwo other companies that does not interfere with Executive’s performance of the duties and responsibilities to be performed by Executive under this Agreement. 7.CONFIDENTIAL INFORMATION AND TRADE SECRETS The Company is in the business of providing solutions, including comprehensive suites ofhealth information management solutions relating to enterprise content management, computer assisted coding,business analytics, clinical analytics and integrated workflow systems, that help hospitals, physician groups andother healthcare organizations improve efficiencies and business processes across the enterprise to enhance andprotect revenues, offering a flexible, customizable way to optimize the clinical and financial performance ofany healthcare organization (the “Business”). For the purpose of this Agreement, “Confidential Information” will mean any written or unwritteninformation which relates to or is used in the Company’s Business (including, without limitation, theCompany’s services, processes, patents, systems, equipment, creations, designs, formats, programming,discoveries, inventions, improvements, computer programs, data kept on computers, engineering, research,development, applications, financial information, information regarding services and products in development,market information, including test marketing or localized marketing, other information regarding processes orplans in development, trade secrets, training manuals, know-how of the Company, and the customers, clients,suppliers and others with whom the Company does or has in the past done, business (including any informationabout the identity of the Company’s customers or suppliers and written customer lists and customer prospectlists), or information about customer requirements, transactions, work orders, pricing policies, plans or anyother Confidential Information, which the Company deems confidential and proprietary and which isgenerally not known to others outside the Company and which gives or tends to give the Companya competitive advantage over persons whodo not possess such information or the secrecy of which is otherwise of value to the Company in the conductof its business — regardless of when and by whom such information was developed or acquired, andregardless of whether any of these are described in writing, reduced to practice, copyrightable or consideredcopyrightable, patentable or considered patentable; provided, however, that “Confidential Information” will notinclude general industry information or information which is publicly available or is otherwise in the publicdomain without breach of this Agreement, information which Executive has lawfully acquired from a sourceother than through his employment with the Company, or information which is required to be disclosedpursuant to any law,37795120 Exregulation or rule of any governmental body or authority or court order (in which event Executive willimmediately notify the Company of such requirement or order so as to give the Company an opportunity toseek a protective order or other manner of protection prior to production or disclosure of the information).Executive acknowledges that Confidential Information is novel and proprietary to and of considerable value tothe Company. Confidential Information will also include confidential information of third parties, clients or prospectiveclients that has been provided to the Company or to Executive in conjunction with Executive’s employment,which information the Company is obligated to treat as confidential. Confidential Information does not includeinformation voluntarily disclosed to the public by the Company, except where such public disclosure has beenmade by the Executive without authorization from the Company, or which has beenindependently developed and disclosed by others, or which has otherwise entered the public domain through lawfulmeans. Executive acknowledges that all Confidential Information is the valuable, unique and special asset of theCompany and that the Company owns the sole and exclusive right, title and interest in and to this ConfidentialInformation. (a) To the extent that the Confidential Information rises to the level of a trade secret under applicable law, then Executive will, during Executive’s employment and for as long thereafter as theConfidential Information remains a trade secret (or for the maximum period of time otherwise allowed underapplicable law) protect and maintain the confidentiality of these trade secrets and refrain from disclosing,copying or using the trade secrets without the Company’s prior written consent, except as necessary inExecutive’s performance of Executive’s duties while employed with the Company. (b) To the extent that the Confidential Information defined above does not rise to the level of atrade secret under applicable law, Executive will not, during Executive’s employment and thereafter for aperiod of two (2) years, disclose, or cause to be disclosed in any way, Confidential Information, or any partthereof, to any person, firm, corporation, association or any other operation or entity, or use the ConfidentialInformation on Executive’s own behalf, for any reason or purpose except as necessary in the performanceof his duties while employed with the Company. Executive further agrees that, during Executive’s employmentand thereafter for a period of two (2) years, Executive will not distribute, or cause to be distributed, ConfidentialInformation to any third person or permit the reproduction of Confidential Information, except on behalf of theCompany in Executive’s capacity as an employee of the Company. Executive will take all reasonable care toavoid unauthorized disclosure or use of the Confidential Information. Executive agrees that all restrictionscontained in this Section 7 are reasonable and valid under the circumstances and hereby waives all defenses tothe strict enforcement thereof by the Company. Executive agrees that, upon the request of the Company, or in any event immediately upon terminationof his employment for whatever reason, Executive will immediately deliver up to the Company or its designeeall Confidential Information in Executive’s possession or control, and all notes, records, memoranda,correspondence, files and other papers, and all copies thereof, relating to or containing ConfidentialInformation. Executive does not have, nor can Executive acquire, any property or other rights in ConfidentialInformation. 8.PROPERTY OF THE COMPANY All ideas, inventions, discoveries, proprietary information, know-how, processes and otherdevelopments and, more specifically, improvements to existing inventions, conceived by Executive, alone orwith others, during the term of Executive’s employment with the Company, whether or not during workinghours and whether or not while working on a specific project, that are within the scope of the Company’sBusiness operations or that relate to any work or projects of the Company, are and will remain the exclusiveproperty of the Company. Inventions, improvements and discoveries relating to the Business of the Companyconceived or made by Executive, either alone or with others, while employed with the Company areconclusively and irrefutably37795120 Expresumed to have been made during the period of employment and are the sole property of the Company. TheExecutive will promptly disclose in writing any such matters to the Company but to no other person without theconsent of the Company. Executive hereby assigns and agrees to assign all right, title and interest in and to suchmatters to the Company. Executive will, upon request of the Company, execute such assignments or otherinstruments and assist the Company in the obtaining, at the Company’s sole expense, of any patents,trademarks or similar protection, if available, in the name of the Company. 9.PROTECTIVE COVENANTS (a) Non-Solicitation of Customers or Clients. During Executive’s employment and for a period oftwo (2) years following the date of any voluntary or involuntary termination of Executive’s employment forany reason, Executive agrees not to solicit, directly or indirectly (including by assisting others), any businessfrom any of the Company’s customers or clients, including actively sought prospective customers or clients,with whom Executive has had material contact during Executive’s employment with the Company, for thepurpose of providing products or services that are competitive with those provided by the Company. As used inthis paragraph, “material contact” means the contact between Executive and each customer, client or vendor, orpotential customer, client or vendor (i) with whom or which Executive dealt on behalf of the Company, (ii)whose dealings with the Company were coordinated or supervised by Executive, (iii) about whom Executiveobtained confidential information in the ordinary course of business as a result of Executive’sassociation with the Company, or (iv) who receives products or services authorized by the Company, the saleor provision of which products or services results or resulted in compensation, commissions or earnings forExecutive within two years prior to the date of the Executive’s termination. (b) Non-Piracy of Employees. During Executive’s employment and for a period of two (2) yearsfollowing the date of any voluntary or involuntary termination of Executive’s employment for any reason,Executive covenants and agrees that Executive will not, directly or indirectly, within the Territory, as definedbelow: (i) solicit, recruit or hire (or attempt to solicit, recruit or hire) or otherwise assist anyone in soliciting,recruiting or hiring, any employee or independent contractor of the Company who performed work for theCompany and worked with Executive within the last year of Executive’s employment with the Company, or (ii)otherwise encourage, solicit or support any such employee or independent contractor to leave his or heremployment or engagement with the Company. (c) Non-Compete. During Executive’s employment with the Company and (i) for a period of two(2) years following the date of any termination of Executive’s employment for any reason other thantermination of Executive’s employment by the Company without Good Cause or by the Executive for GoodReason or (ii) for a period of one (1) year following the date of any termination of Executive’s employmentwith the Company by the Company without Good Cause or by the Executive for Good Reason; and provided ineach of (i) and (ii) that the Company is not in default of its obligations specified in Sections 11 and 13 hereof,Executive agrees not to, directly or indirectly, compete with the Company, as an officer, director, member,principal, partner, shareholder, owner, manager, supervisor, administrator, employee, consultant or independentcontractor, by working for a competitor to, or engaging in competition with, the Business, in the Territory, in acapacity in which Executive performs duties and responsibilities that are the same as or similar to the dutiesperformed by Executive while employed by the Company, provided that the foregoing will not prohibitExecutive from owning not more than 5% of the outstanding stock of a corporation subject to the reportingrequirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The “Territory” willbe defined to be that geographic area comprised of the following states in the United States of America, theDistrict of Columbia, the Canadian provinces of Quebec and Alberta: 37795120 ExAlabamaIndianaNebraskaSouth CarolinaAlaskaIowaNevadaSouth DakotaArizonaKansasNew HampshireTennesseeArkansasKentuckyNew JerseyTexasCaliforniaLouisianaNew MexicoUtahColoradoMaineNew YorkVermontConnecticut DelawareMarylandNorth CarolinaVirginiaFloridaMassachusettsNorth DakotaWashingtonGeorgiaMichiganOhioWest VirginiaHawaiiMinnesotaOklahomaWisconsinIdahoMississippiOregonWyomingIllinoisMissouriPennsylvaniaMontanaRhode Island ; provided, however, that the Territory described herein is a good faith estimate of the geographic area that isnow applicable as the area in which the Company does or will do business during the term of Executive’semployment, and the Company and Executive agree that this non-compete covenant will ultimately beconstrued to cover only so much of such Territory as relates to the geographic areas in which the Executivedoes business for and on behalf of the Company within the two-year period preceding termination ofExecutive’s employment. 10.TERM Unless earlier terminated pursuant to Section 11 herein, the term of this Agreement will be for a periodbeginning on the start date specified in Exhibit A and ending on February [18], 2020 (the “Initial Term”). Uponexpiration of the Initial Term, this Agreement will automatically renew in successive one-year periods (each a “Renewal Period”), unless Executive or the Company notifies the other party at least 60 days prior to the endof the Initial Term or the applicable Renewal Period that this Agreement will not be renewed. The Initial Term,and, if this Agreement is renewed in accordance with this Section 10, each Renewal Period, will be included inthe definition of “Term” for purposes of this Agreement. Unless waived in writing by the Company, therequirements of Section 7 (Confidential Information and Trade Secrets), Section 8 (Property of the Company)and Section 9 (Protective Covenants) will survive the expiration or termination of this Agreement orExecutive’s employment for any reason. 11.TERMINATION (a) Death. This Agreement and Executive’s employment hereunder will be terminated on the deathof Executive, effective as of the date of Executive’s death. In such event, the Company will pay to the estate ofExecutive the sum of (i) accrued but unpaid base salary earned prior to Executive’s death (to be paid inaccordance with normal practices of the Company) and (ii) expenses incurred by Executive prior to his deathfor which Executive is entitled to reimbursement under (and paid in accordance with) Section4 herein, and Executive will be entitled to no severance or other post-termination benefits. (b) Continued Disability. This Agreement and Executive’s employment hereunder may beterminated, at the option of the Company, upon a Continued Disability (as defined herein) of Executive. Forthe purposes of this Agreement, and unless otherwise required under Section 409A of the Internal RevenueCode of 1986, as amended (the “Code”), “Continued Disability” will be defined as the inability or incapacity(either mental or physical) of Executive to continue to perform Executive’s duties hereunder for a continuousperiod of one hundred twenty (120) working days, or if, during any calendar year of the Term hereofbecause of disability, Executive will have been unable to perform Executive’s duties hereunder for a totalperiod of one hundred eighty (180) working days regardless of whether or not such days are consecutive. Thedetermination as to whether37795120 ExExecutive is unable to perform the essential functions of Executive’s job will be made by the Board or theCommittee in its reasonable discretion; provided, however, that if Executive is not satisfied with the decision ofthe Board or the Committee, Executive will submit to examination by three competent physicians who practicein the metropolitan area in which the Company maintains its principal executive office, one of whom will beselected by the Company, another of whom will be selected by Executive, with the third to be selected by the physicians so selected. The determination of a majority of the physicians so selected will supersede thedetermination of the Board or the Committee and will be final and conclusive. In the event of the termination ofExecutive’s employment due to Continued Disability, the Company will pay to Executive the sum of (i)accrued but unpaid base salary earned prior to the date of the Executive’s termination of employment due toContinued Disability (paid in accordance with the normal practices of the Company), and (ii) expensesincurred by Executive prior to his termination of employment for which Executive is entitled to reimbursement under (and paid in accordance with) Section 4 herein, and Executive will be entitled tono severance or other post-termination benefits. (c) Termination by the Company for Good Cause, by Executive Other Than for Good Reason, orupon Non-Renewal of the Term by Executive. Notwithstanding any other provision of this Agreement, theCompany may at any time terminate this Agreement and Executive’s employment hereunder for Good Cause,Executive may at any time terminate his employment other than for Good Reason (as defined in Section 11(d)herein), or Executive may notify the Company that he will not renew the Term. For this purpose, “Good Cause”will include the following: the current use of illegal drugs; conviction of any crime which involves moralturpitude, fraud or misrepresentation; commission of any act which would constitute a felony or whichadversely impacts the business or reputation of the Company; fraud; misappropriation or embezzlement ofCompany funds or property; willful misconduct or grossly negligent or reckless conduct which is materiallyinjurious to the reputation, business or business relationships of the Company; material violation or default onany of the provisions of this Agreement; or material and continuous failure to meet reasonable performancecriteria or reasonable standards of conduct as established from time to time by the Board, which failurecontinues for at least 30 days after written notice from the Company to Executive. Notice of a termination bythe Company for Good Cause will be delivered in writing to Executive stating the Good Cause for such action.If the employment of Executive is terminated by the Company for Good Cause, if Executive terminatesemployment for any reason other than for Good Reason (including, but not limited to, resignation), or ifExecutive notifies the Company he will not renew the Term, then, the Company will pay to Executive the sumof (i) accrued but unpaid salary through the termination date (paid in accordance with the normal practices ofthe Company), and (ii) expenses incurred by Executive prior to his termination date for which Executive isentitled to reimbursement under (and paid in accordance with) Section 4 herein, and Executive will be entitledto no severance or other post- termination benefits. (d) Termination by the Company without Good Cause or by Executive for Good Reason. TheCompany may terminate this Agreement and Executive’s employment at any time, including for reasons otherthan Good Cause (as “Good Cause” is defined in Section 11(c) above), Executive may terminate hisemployment at any time, including for Good Reason, or the Company may elect not to renew the Term. For thepurposes herein, “Good Reason” will mean (i) a material diminution of Executive’s base salary; (ii) a materialdiminution in Executive’s authority, duties, or responsibilities; or (iii) any other action or inaction thatconstitutes a material breach of the terms of this Agreement; provided that Executive’s termination will not betreated as for Good Reason unless Executive provides the Company with notice of the existence of thecondition claimed to constitute Good Reason within 45 days of the initial existence of such condition and theCompany fails to remedy such condition within 30 days following the Company’s receipt of such notice. In theevent that (i) the Company terminates the employment of Executive during the Term for reasons otherthan for Good Cause, death or Continued Disability or (ii) Executive terminates employment for Good Reason,then the Company will pay Executive the sum of (A) accrued but unpaid salary through the termination date,and payments of any bonuses and commission earned and payable for up to 90 days following the terminationdate (as paid in accordance with the normal practices of the Company), (B) expenses incurred by Executiveprior to his termination date for which Executive is entitled to reimbursement under (and paid in accordancewith) Section 4 herein, and (C) provided that Executive is not in default of his obligations under Section 7, 8,or 9 herein, an amount equal to six months’37795120 Exbase salary ((A) through (C), being hereinafter referred to, collectively, as the “Separation Benefits”). In suchevent, the payments described in (C) in the preceding sentence will be made following Executive’s execution(and non-revocation) of a form of general release of claims as is acceptable to the Board or the Committee ifthe general release form is provided to the Executive within one month of the Executive’s date oftermination, in accordance with the normal payroll practices of the Company; provided that the portion of theseverance payment described in clause (C) above that exceeds the “separation pay limit,” if any, will be paidto the Executive in a lump sum payment within thirty (30) days following the date of Executive’stermination of employment (or such earlier date following the date of Executive’s termination of employment,if any, as may be required under applicable wage payment laws), but in no event later than the fifteenth (15th) day of the third (3rd) month following the Executive’s date of termination. The “separation pay limit” willmean two (2) times the lesser of: (1) the sum of Executive's annualized compensation based upon the annualrate of pay for services provided to the Company for the calendar year immediately preceding the calendar yearin which Executive's date of termination of employment occurs (adjusted for any increase during that calendaryear that was expected to continue indefinitely if Executive had not terminated employment); and (2) themaximum dollar amount of compensation that may be taken into account under a tax-qualified retirement planunder Code Section 401(a)(17) for the year in which his termination of employment occurs. The lump-sumpayment to be made to Executive pursuant to this Section 11(d) is intended to be exempt from Code Section409A under the exemption found in Regulation Section 1.409A-1(b)(4) for short-term deferrals. The remainingportion of the severance payment described in clause (C) above will be paid in periodic installments over the15-month period commencing on the first post-termination payroll date following expiration of the revocationperiod described above and will be paid in accordance with the normal payroll practices of the Company.Notwithstanding the foregoing, in no event will such remaining portion of the severance payment described inclause (C) above be paid to Executive later than December 31 of the second calendar year following thecalendar year in which Executive's date of termination of employment occurs. The payments to be made toExecutive pursuant to the immediately preceding sentence are intended to be exempt from Code Section 409Aunder the exemption found in Regulation Section 1.409A-1(b)(9)(iii) for separation pay plans (i.e., the so-called“two times” pay exemption). For the sake of clarity, no election by the Company not to renew the Term willtrigger any rights to severance or other benefits. (e) Payment of COBRA Premiums. In the event that the Company terminates Executive’semployment for any reason other than Good Cause or Executive terminates his employment for Good Reason,then, provided that Executive timely elects to receive continued coverage under the Company’s group medicaland dental insurance plans pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1986, asamended (“COBRA”), for the period commencing on the date of Executive’s termination and continuinguntil the earlier of the end of the six-month period following his termination date or the first of the monthimmediately following the Company’s receipt of notice from Executive terminating such coverage,Executive (and any qualified dependents) will be entitled to coverage under such plans (as may be amendedduring the period of coverage) in which Executive was participating immediately prior to the date of histermination of employment (the “COBRA Coverage”). The cost of the premiums for such coverage will beborne by the Company, except that Executive will reimburse the Company for premiums becoming due eachmonth with respect to such coverage in an amount equal to the difference between the amount of suchpremiums and the portion thereof currently being paid by Executive. Executive’s portion of such premiums willbe payable by the first of each month commencing the first month following the month in which his terminationof employment occurs. The period during which Executive is being provided with health insurance under thisAgreement at the Company’s expense will be credited against Executive’s period of COBRA coverage, if any.Further, if at any time during the period Executive is entitled to premium payments under this Section 11(e),Executive becomes entitled to receive health insurance from a subsequent employer, the Company’s obligationto continue premium payments to Executive shall terminate immediately. 12.ADVICE TO PROSPECTIVE EMPLOYERS 37795120 ExIf Executive seeks or is offered employment by any other company, firm or person during hisemployment or during the post- termination restricted periods, he will notify the prospective employer of theexistence and terms of the non-competition and confidentiality agreements set forth in Sections 7 and 9 of thisAgreement. Executive may disclose the language of Sections 7 and 9 but may not disclose the remainder ofthis Agreement. 13.CHANGE IN CONTROL (a) In the event of a Change in Control (as defined herein) of the Company, (i) all stock options, restricted stock, andall other equity awards granted to Executive prior to the Change in Control will immediately vest in full, (ii) if, within 90 days priorto a Change in Control, the Company terminates the employment of Executive for reasons other than for Good Cause, death orContinued Disability, or Executive terminates employment for Good Reason, then, the Company will (x) pay the Executive the sumof (A) accrued but unpaid salary through the termination date (paid in accordance with the normal practices of the Company), (B)expenses incurred by Executive prior to his termination date for which Executive is entitled to reimbursement under (and paid inaccordance with) Section 4 herein, and (C) provided that Executive is not in default of his obligations under Section 7, 8, or 9 herein, an amount equal to twelve months’ base salary ((A) through (C), being hereinafter referred to, collectively, as the “Changein Control Separation Benefits”) and (y) provide the COBRA Coverage, and all other stock options, restricted stock, and otherequity awards granted to Executive will immediately vest in full as of the date of termination and will remain exercisable until theearlier of the end of the applicable option period or one hundred and eighty (180) days from the date of Executive’s termination ofemployment, and (iii) if, within 12 months following a Change in Control, the Company terminates the employment of Executivefor reasons other than for Good Cause, death or Continued Disability or Executive terminates employment for Good Reason, then(a) the Company will provide the Change in Control Separation Benefits and the COBRA Coverage, and (b) all stock options,restricted stock, and other equity awards granted to Executive will immediately vest in full as of thedate of termination and will remain exercisable until the earlier of the end of the applicable option period or one hundred and eighty(180) days from the date of Executive’s termination of employment. In the event Executive seeks to terminate his employment forGood Reason, such termination will not be treated for purposes of this Section 13 as a termination for Good Reason unlessExecutive provides the Company with notice of the existence of the condition claimed to constitute Good Reason within 90 days ofthe initial existence of such condition and the Company fails to remedy such condition within 30 days following the Company’sreceipt of such notice. (b) For purposes of this Agreement, “Change in Control” means any of the following events: (i) A change in control of the direction and administration of the Company’s business of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation14A promulgated under the Exchange Act, as in effect on the date hereof and any successor provision ofthe regulations under the Exchange Act, whether or not the Company is then subject to such reportingrequirements; or (ii) Any “person” (as such term is used in Section 13(d) and Section 14(d)(2) of theExchange Act but excluding any employee benefit plan of the Company) is or becomes the “beneficialowner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of theCompany representing more than one half of the combined voting power of the Company’soutstanding securities then entitled to vote for the election of directors; or (iii) The Company sells all or substantially all of the assets of the Company; or (iv) The consummation of a merger, reorganization, consolidation or similar businesscombination that constitutes a change in control as defined in the Company’s 2013 Second Amendedand37795120 ExRestated Stock Incentive Plan or other successor stock plan or results in the occurrence of any eventdescribed in Sections 13(b) (i), (ii) or (iii) above. (c) Notwithstanding anything to the contrary contained in this Agreement, in the event anyamounts payable hereunder would be considered to be excess parachute payments for purposes of the amountpayable following the occurrence of a Change of Control that is treated as a “change in the ownership oreffective control” of the Company or “in the ownership of a substantial portion of the assets” of the Companyfor purposes of Code Sections 280G and 4999, those payments that are treated for purposes of Code Section280G as being contingent on a “change in the ownership or effective control” (as that phrase is used forpurposes of Code Section 280G) of the Company will be reduced, if and to the extent necessary, so that nopayments under this Agreement are treated as excess parachute payments. 14.ACKNOWLEDGEMENTS The Company and Executive each hereby acknowledge and agree as follows: (a) The covenants, restrictions, agreements and obligations set forth herein are founded uponvaluable consideration, and, with respect to the covenants, restrictions, agreements and obligations set forth inSections 7, 8 and 9 hereof, are reasonable in duration, the activities proscribed, and geographic scope; (b) In the event of a breach or threatened breach by Executive of any of the covenants, restrictions,agreements and obligations set forth in Sections 7, 8 or 9 hereof, monetary damages or the other remedies at lawthat may be available to the Company for such breach or threatened breach will be inadequate and, withoutprejudice to the Company’s right to pursue any other remedies at law or in equity available to it for such breach orthreatened breach, including, without limitation, the recovery of damages fromExecutive, the Company will be entitled to injunctive relief from a court of competent jurisdiction or the arbitrator;and (c) The time period, proscribed activities, and geographical area set forth in Section 9 hereof areeach divisible and separable, and, in the event that the covenants not to compete contained therein are judiciallyheld invalid or unenforceable as to such time period, scope of activities, or geographical area, they will bevalid and enforceable to such extent and in such geographical area(s) and for such time period(s) which thecourt determines to be reasonable and enforceable. Executive agrees that in the event any court of competentjurisdiction determines that the above covenants are invalid or unenforceable to join with the Company inrequesting that court to construe the applicable provision by limiting or reducing it so as to be enforceable tothe extent compatible with the then applicable law. Furthermore, any period of restriction or covenant hereinstated will not include any period of violation or period of time required for litigation to enforce suchrestriction or covenant. 15.NOTICES Any notice or communication required or permitted hereunder will be given in writing and will besufficiently given if delivered personally or sent by telecopy to such party addressed as follows:(a)In the case of the Company, if addressed to it as follows:Streamline Health Solutions, Inc.1175 Peachtree Street NE10 FloorAtlanta, Georgia 30361Attn: Chief Executive Officer 37795120 thEx(b) In the case of Executive, if addressed to Executive at the most recent address on file with theCompany. Any such notice delivered personally will be deemed to have been received on the dateof such delivery. Any address for the giving of notice hereunder may be changed bynotice in writing. 16.ASSIGNMENT, SUCCESSORS AND ASSIGNS This Agreement will inure to the benefit of and be binding upon the parties hereto and their respectivelegal representatives, successors and assigns. The Company may assign or otherwise transfer its rights underthis Agreement to any successor or affiliated business or corporation (whether by sale of stock, merger,consolidation, sale of assets or otherwise), but this Agreement may not be assigned, nor may his dutieshereunder be delegated, by Executive. In the event that the Company assigns or otherwise transfers its rightsunder this Agreement to any successor or affiliated business or corporation (whether by sale of stock, merger,consolidation, sale of assets or otherwise), for all purposes of this Agreement, the “Company” will then bedeemed to include the successor or affiliated business or corporation to which the Company, assigned orotherwise transferred its rights hereunder. 17.MODIFICATION This Agreement may not be released, discharged, abandoned, changed or modified in any manner,except by an instrument in writing signed by each of the parties hereto. 18.SEVERABILITY The invalidity or unenforceability of any particular provision of this Agreement will not affect any otherprovisions hereof, and the parties will use their best efforts to substitute a valid, legal and enforceable provision,which, insofar as practical, implements the purpose of this Agreement. If the parties are unable to reach suchagreement, then the provisions will be modified as set forth in Section 14(c) above. Any failure to enforce anyprovision of this Agreement will not constitute a waiver thereof or of any other provision hereof. 19.COUNTERPARTS This Agreement may be signed in counterparts (and delivered via facsimile transmission or by digitallyscanned signature delivered electronically), and each of such counterparts will constitute an original documentand such counterparts, taken together, will constitute one and the same instrument. 20.ENTIRE AGREEMENT This constitutes the entire agreement among the parties with respect to the subject matter of thisAgreement and supersedes all prior and contemporaneous agreements, understandings, and negotiations,whether written or oral, with respect to such subject matter. 21.DISPUTE RESOLUTION Except as set forth in Section 14 above, any and all disputes arising out of or in connection with theexecution, interpretation, performance or non-performance of this Agreement or any agreement or otherinstrument between, involving or affecting the parties (including the validity, scope and enforceability of thisarbitration clause), will be submitted to and resolved by arbitration. The arbitration will be conducted pursuantto the terms of the Federal Arbitration Act and the Employment Arbitration Rules and Mediation Procedures of37795120 Exthe American Arbitration Association. Either party may notify the other party at any time of the existence of acontroversy potentially requiring arbitration by certified mail, and the parties will attempt in good faith toresolve their differences within fifteen (15) days after the receipt of such notice. If the dispute cannot beresolved within the fifteen-day period, either party mayfile a written demand for arbitration with the American Arbitration Association. The place of arbitration will bemutually agreed by the parties. /s/ DD/s/ DS Initialed by ExecutiveInitialed by the Company 22.GOVERNING LAW; FORUM SELECTION The provisions of this Agreement will be governed by and interpreted in accordance with the internallaws of the State of Georgia and the laws of the United States applicable therein. Executive acknowledges andagrees that Executive is subject to personal jurisdiction in state and federal courts in Fulton County, Georgia,and waives any objection thereto. 23.CODE SECTION 409A Notwithstanding any other provision in this Agreement to the contrary, if and to the extent that CodeSection 409A is deemed to apply to any benefit under this Agreement, it is the general intention of theCompany that such benefits will, to the extent practicable, comply with, or be exempt from, Code Section409A, and this Agreement will, to the extent practicable, be construed in accordance therewith. Deferrals ofbenefits distributable pursuant to this Agreement that are otherwise exempt from Code Section 409A in amanner that would cause Code Section 409A to apply will not be permitted unless such deferrals followCode Section 409A. In the event that the Company (or a successor thereto) has any stock which is publiclytraded on an established securities market or otherwise and Executive is determined to be a “specifiedemployee” (as defined under Code Section 409A), any payment that is deemed to be deferred compensationunder Code Section 409A to be made to the Executive upon a separation from service may not be made beforethe date that is six months after Executive’s separation from service (or death, if earlier). To the extent thatExecutive becomes subject to the six-month delay rule, all payments that would have been made to Executive during the six months following his separation from service that are not otherwise exempt from Code Section409A, if any, will be accumulated and paid to Executive during the seventh month following his separationfrom service, and any remaining payments due will be made in their ordinary course as described in thisAgreement. For the purposes herein, the phrase “termination of employment” or similar phrases will beinterpreted in accordance with the term “separation from service” as defined under Code Section 409A if and tothe extent required under Code Section 409A. Further, (i) in the event that Code Section 409A requires that anyspecial terms, provisions or conditions be included in this Agreement, then such terms, provisions andconditions will, to the extent practicable, be deemed to be made a part of this Agreement, and (ii) terms used inthis Agreement will be construed in accordance with Code Section 409A if and to the extent required. Further,in the event that this Agreement or any benefit thereunder will be deemed not to comply with Code Section409A, then neither the Company, the Board, the Committee nor its or their designees or agents will be liable toany participant or other person for actions, decisions or determinations made in good faith. 24.WITHHOLDING. The Company may withhold from any amounts payable under this Agreement such federal, state, local orforeign taxes as will be required to be withheld pursuant to any applicable law or regulation. [Signature page follows.] IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto effective as of thedate first above written. STREAMLINE HEALTH SOLUTIONS, INC.By: /s/ David Sides2/18/2019David W. Sides President and Chief Executive Officer EXECUTIVE By: /s/ David Driscoll2/18/2019David A. Driscoll 37795120  EXHIBIT A TO EMPLOYMENT AGREEMENT (“AGREEMENT”) DATED AS OF FEBRUARY [18],2019, BETWEEN STREAMLINE HEALTH SOLUTIONS, INC. AND DAVID A. DRISCOLL --COMPENSATION AND BENEFITS 1. Start Date. Executive’s start date will be February 18, 2019. 2.Base Salary. Base Salary will be paid at an annualized rate of $250,000, which will be subject toannual review and adjustment by the Compensation Committee or the Board but will not be reducedbelow $250,000 without the consent of Executive. Such amounts will be payable to Executive inaccordance with the normal payroll practices of the Company. 3.Annual Bonus. Target annual bonus and target goals will be set by the Compensation Committee annuallyand based on a combination of individual and Company performance. Target annual bonus (prorated forany partial period) will be $100,000.00. The annual bonus will be paid pursuant to such conditions as areestablished by the Compensation Committee and, to the extent payable under a bonus plan, subject tosuch terms and conditions as may be set out in such plan. The annual bonus will, if payable, be paid incash nolater than March 14 of the fiscal year following the fiscal year during which Executive’s right to the annualbonus vests. 4.Benefits. Executive will be eligible to participate in the Company’s benefit plans on the same termsand conditions as provided for other Company executives, subject to all terms and conditions of suchplans as they may be amended from time to time and will accrue vacation days and personal daystotaling an aggregate of 20 days per annum prorated for 2019. 5. Grant of Restricted Stock. Executive will receive the following grants of equity incentives: (a)An inducement grant of 75,000 restricted shares of common stock, par value $0.01 per share, uponyour hire date referred to in paragraph 1 above. The vesting of such shares will be in threesubstantially equal annual installments over the first three years of employment. Such grant will bemade pursuant to and otherwise subject to the terms and conditions of the Company’s SecondAmended and Restated 2013 Stock Incentive Plan and the related restricted stock grant agreement. 6.Management Override. Executive will be eligible for a management override of 1.5% on all salesmade by the Company on an Annual Contract Value basis that will paid consistent with the Company’sannual Regional Vice President of Sales team incentive as updated from time-to-time. 37795120 Exhibit 21.1 STREAMLINE HEALTH SOLUTIONS, INC.SUBSIDIARIES OF STREAMLINE HEALTH SOLUTIONS, INC.Name Jurisdiction ofIncorporation % OwnedStreamline Health, Inc. Ohio 100% Exhibit 23.1Consent of Independent Registered Public Accounting FirmWe consent to the incorporation by reference in the Registration Statements (Nos. 333-183899, 333-166843, 333-190045) on Form S-3 and (Nos. 333-18625, 333-20761, 333-20763, 333-20765, 333-28055, 333-125393, 333-174775, 333-184959, 333-188763, 333-188764, 333-208752, 333-220953) on Form S-8 of Streamline Health Solutions, Inc. of ourreport dated April 22, 2019, relating to our audit of the consolidated financial statements and the financial statementschedule of Streamline Health Solutions, Inc. and subsidiary, which appears in this Annual Report on Form 10-K ofStreamline Health Solutions, Inc. for the year ended January 31, 2019./s/ RSM US LLPAtlanta, GeorgiaApril 22, 2019Exhibit 31.1STREAMLINE HEALTH SOLUTIONS, INC.CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF2002I, David W. Sides, certify that:I have reviewed this annual report on Form 10-K 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 factnecessary to make the statements made, in light of the circumstances under which such statements were made, not misleadingwith 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 allmaterial respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periodspresented in this report;The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls andprocedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (asdefined 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 underour supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is madeknown to us by others within those entities, particularly during the period in which this report is being prepared;Designed such internal controls over financial reporting, or caused such internal controls over financial reporting to bedesigned under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generally accepted accounting principles;Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusionsabout the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based onsuch evaluation; andDisclosed in this report any changes in the registrant’s internal control over financial reporting that occurred during theregistrant’s most recent fiscal quarter that has materially affected or is reasonably expected to materially affect the registrant’sinternal control over financial reporting; andThe registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control overfinancial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or personsperforming the equivalent functions):All significant deficiencies and material weaknesses in the design or operation of internal control over financial reportingwhich are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financialinformation; andAny fraud, whether or not material, that involves management or other employees who have a significant role in theregistrant’s internal controls over financial reporting. April 22, 2019/s/ David W. Sides Chief Executive Officer and President Exhibit 31.2STREAMLINE HEALTH SOLUTIONS, INC.CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF2002I, Thomas J. Gibson, certify that:I have reviewed this annual report on Form 10-K 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 factnecessary to make the statements made, in light of the circumstances under which such statements were made, not misleadingwith 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 allmaterial respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periodspresented in this report;The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls andprocedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (asdefined 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 underour supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is madeknown to us by others within those entities, particularly during the period in which this report is being prepared;Designed such internal controls over financial reporting, or caused such internal controls over financial reporting to bedesigned under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generally accepted accounting principles;Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusionsabout the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based onsuch evaluation; andDisclosed in this report any changes in the registrant’s internal control over financial reporting that occurred during theregistrant’s most recent fiscal quarter that has materially affected or is reasonably expected to materially affect the registrant’sinternal control over financial reporting; andThe registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control overfinancial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or personsperforming the equivalent functions):All significant deficiencies and material weaknesses in the design or operation of internal control over financial reportingwhich are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financialinformation; andAny fraud, whether or not material, that involves management or other employees who have a significant role in theregistrant’s internal controls over financial reporting.April 22, 2019/s/ Thomas J. Gibson Chief Financial Officer Exhibit 32.1STREAMLINE HEALTH SOLUTIONS, INC.CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THESARBANES-OXLEY ACT OF 2002I, David W. Sides, 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:The annual report on Form 10-K of the Company for the annual period ended January 31, 2019 (the “Report”) fully complieswith the requirements of section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C 78m); andThe information contained in the Report fairly presents, in all material respects, the financial condition and results ofoperations of the Company./s/ David W. Sides Chief Executive Officer and PresidentApril 22, 2019A signed original of this written statement required by Section 906 has been provided to the Company and will be retainedby the Company and furnished to the Securities and Exchange Commission or its staff upon request.Exhibit 32.2STREAMLINE HEALTH SOLUTIONS, INC.CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THESARBANES-OXLEY ACT OF 2002I, Thomas J. Gibson, Chief Financial Officer of Streamline Health Solutions, Inc. (the “Company”), certify, pursuant toSection 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C Section 1350, that:The annual report on Form 10-K of the Company for the annual period ended January 31, 2019 (the “Report”) fully complieswith the requirements of section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C 78m); andThe information contained in the Report fairly presents, in all material respects, the financial condition and results ofoperations of the Company./s/ Thomas J. Gibson Chief Financial OfficerApril 22, 2019 A signed original of this written statement required by Section 906 has been provided to the Company and will be retainedby the Company and furnished to the Securities and Exchange Commission or its staff upon request.

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