UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from __________ to ____________
Commission File Number:
STREAMLINE HEALTH SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive offices) (Zip Code)
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| | |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
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 emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ | Accelerated filer ☐ | | Smaller reporting company |
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial 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
The number of shares outstanding of the Registrant’s Common Stock, $0.01 par value per share, as of December 16, 2024, was
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Part I. |
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Item 1. |
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Condensed Consolidated Balance Sheets at October 31, 2024 (unaudited) and January 31, 2024 |
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Notes to Unaudited Condensed Consolidated Financial Statements |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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Item 4. |
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Part II. |
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Item 1. | Legal Proceedings | |
Item 1A. |
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Item 2. |
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Item 3. | Defaults Upon Senior Securities | 49 |
Item 4. | Mine Safety Disclosures | 49 |
Item 5. | Other Information | 49 |
Item 6. |
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Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
STREAMLINE HEALTH SOLUTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(rounded to the nearest thousand dollars, except share and per share information)
October 31, 2024 | January 31, 2024 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | $ | ||||||
Accounts receivable, net of allowance for credit losses of $ and $ , respectively | ||||||||
Contract receivables | ||||||||
Prepaid and other current assets | ||||||||
Total current assets | ||||||||
Non-current assets: | ||||||||
Property and equipment, net of accumulated amortization of $ and $ respectively | ||||||||
Capitalized software development costs, net of accumulated amortization of $ and $ , respectively | ||||||||
Intangible assets, net of accumulated amortization of $ and $ , respectively | ||||||||
Goodwill | ||||||||
Other | ||||||||
Total non-current assets | ||||||||
Total assets | $ | $ |
See accompanying notes to condensed consolidated financial statements.
STREAMLINE HEALTH SOLUTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(rounded to the nearest thousand dollars, except share and per share information)
October 31, 2024 | January 31, 2024 | |||||||
(Unaudited) | ||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | $ | ||||||
Accrued expenses | ||||||||
Current portion of term loan | ||||||||
Deferred revenues | ||||||||
Acquisition earnout liability | ||||||||
Total current liabilities | ||||||||
Non-current liabilities: | ||||||||
Term loan, net of current portion and deferred financing costs | ||||||||
Line of credit | ||||||||
Notes payable, net of deferred financing costs | ||||||||
Deferred revenues, less current portion | ||||||||
Total non-current liabilities | ||||||||
Total liabilities | ||||||||
Commitments and contingencies – Note 8 | ||||||||
Stockholders’ equity: | ||||||||
Common stock, $ par value per share, shares authorized; and shares issued and outstanding, respectively | ||||||||
Additional paid in capital | ||||||||
Accumulated deficit | ( | ) | ( | ) | ||||
Total stockholders’ equity | ||||||||
Total liabilities and stockholders’ equity | $ | $ |
See accompanying notes to condensed consolidated financial statements.
STREAMLINE HEALTH SOLUTIONS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(rounded to the nearest thousand dollars, except share and per share information)
Three Months Ended October 31, | Nine Months Ended October 31, | |||||||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||||||
Revenues: | ||||||||||||||||
Software as a service | $ | $ | $ | $ | ||||||||||||
Maintenance and support | ||||||||||||||||
Professional fees and licenses | ||||||||||||||||
Total revenues | ||||||||||||||||
Operating expenses: | ||||||||||||||||
Cost of software as a service | ||||||||||||||||
Cost of maintenance and support | ||||||||||||||||
Cost of professional fees and licenses | ||||||||||||||||
Selling, general and administrative expense | ||||||||||||||||
Research and development | ||||||||||||||||
Impairment of goodwill | ||||||||||||||||
Impairment of long-lived assets | ||||||||||||||||
Total operating expenses | ||||||||||||||||
Operating loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Other (expense) income: | ||||||||||||||||
Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Valuation adjustments | ( | ) | ||||||||||||||
Other | ( | ) | ||||||||||||||
Loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Income tax benefit | ||||||||||||||||
Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Basic and Diluted Earnings Per Share: | ||||||||||||||||
Net loss per common share – basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Weighted average number of common shares – basic and diluted |
See accompanying notes to condensed consolidated financial statements.
STREAMLINE HEALTH SOLUTIONS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(rounded to the nearest thousand dollars, except share information)
Additional | Total | |||||||||||||||||||
Common stock | Common stock | paid in | Accumulated | stockholders’ | ||||||||||||||||
(Shares) | (Amount) | capital | deficit | equity | ||||||||||||||||
Balance at January 31, 2024 | $ | $ | $ | ( | ) | $ | ||||||||||||||
Restricted stock issued | ( | ) | ||||||||||||||||||
Restricted stock forfeited | ( | ) | ||||||||||||||||||
Surrender of shares | ( | ) | ( | ) | ( | ) | ||||||||||||||
Share-based compensation | — | |||||||||||||||||||
Issuance of common stock | ||||||||||||||||||||
Offering expenses | — | ( | ) | ( | ) | |||||||||||||||
Net loss | — | ( | ) | ( | ) | |||||||||||||||
Balance at April 30, 2024 | $ | $ | $ | ( | ) | $ | ||||||||||||||
Restricted stock issued | ( | ) | ||||||||||||||||||
Restricted stock forfeited | ( | ) | ||||||||||||||||||
Surrender of shares | ( | ) | ( | ) | ( | ) | ||||||||||||||
Share-based compensation | — | |||||||||||||||||||
Cashless exercise of warrants | ||||||||||||||||||||
Warrant liability reclassification | — | |||||||||||||||||||
Net loss | — | ( | ) | ( | ) | |||||||||||||||
Balance at July 31, 2024 | $ | $ | $ | ( | ) | $ | ||||||||||||||
Restricted stock issued | ( | ) | ||||||||||||||||||
Restricted stock forfeited | ( | ) | ||||||||||||||||||
Surrender of shares | ( | ) | ||||||||||||||||||
Share-based compensation | — | |||||||||||||||||||
Net loss | — | ( | ) | ( | ) | |||||||||||||||
Balance at October 31, 2024 | $ | $ | $ | ( | ) | $ |
Additional | Total | |||||||||||||||||||
Common stock | Common stock | paid in | Accumulated | stockholders’ | ||||||||||||||||
(Shares) | (Amount) | capital | deficit | equity | ||||||||||||||||
Balance at January 31, 2023 | $ | $ | $ | ( | ) | $ | ||||||||||||||
Restricted stock issued | ( | ) | ||||||||||||||||||
Restricted stock forfeited | ( | ) | ||||||||||||||||||
Surrender of shares | ( | ) | ( | ) | ( | ) | ||||||||||||||
Share-based compensation | — | |||||||||||||||||||
Adoption of ASU 2016-13 | ||||||||||||||||||||
Net loss | — | ( | ) | ( | ) | |||||||||||||||
Balance at April 30, 2023 | $ | $ | $ | ( | ) | $ | ||||||||||||||
Restricted stock issued | ||||||||||||||||||||
Restricted stock forfeited | ( | ) | ||||||||||||||||||
Surrender of shares | ( | ) | ( | ) | ( | ) | ||||||||||||||
Share-based compensation | — | |||||||||||||||||||
Net loss | — | ( | ) | ( | ) | |||||||||||||||
Balance at July 31, 2023 | $ | $ | $ | ( | ) | $ | ||||||||||||||
Restricted stock issued | ||||||||||||||||||||
Restricted stock forfeited | ( | ) | ||||||||||||||||||
Surrender of shares | ( | ) | ( | ) | ( | ) | ||||||||||||||
Share-based compensation | — | |||||||||||||||||||
Net loss | — | ( | ) | ( | ) | |||||||||||||||
Balance at October 31, 2023 | $ | $ | $ | ( | ) | $ |
See accompanying notes to condensed consolidated financial statements.
STREAMLINE HEALTH SOLUTIONS, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(rounded to the nearest thousand dollars)
Nine Months Ended October 31, | ||||||||
2024 | 2023 | |||||||
Net loss | $ | ( | ) | $ | ( | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation and amortization | ||||||||
Accrued interest expense - notes payable | ||||||||
Valuation adjustments | ( | ) | ||||||
Benefit for deferred income taxes | ( | ) | ||||||
Share-based compensation expense | ||||||||
Impairment of goodwill | ||||||||
Impairment of long-lived assets | ||||||||
Provision for credit losses | ( | ) | ||||||
Changes in assets and liabilities: | ||||||||
Accounts and contract receivables | ||||||||
Other assets | ( | ) | ( | ) | ||||
Accounts payable | ||||||||
Accrued expenses and other liabilities | ( | ) | ( | ) | ||||
Deferred revenue | ( | ) | ( | ) | ||||
Net cash used in operating activities | ( | ) | ( | ) | ||||
Cash flows from investing activities: | ||||||||
Purchases of property and equipment | ( | ) | ||||||
Capitalization of software development costs | ( | ) | ( | ) | ||||
Net cash used in investing activities | ( | ) | ( | ) | ||||
Cash flows from financing activities: | ||||||||
Repayment of bank term loan | ( | ) | ( | ) | ||||
Repayment of line of credit | ( | ) | ||||||
Proceeds from issuance of common stock | ||||||||
Proceeds from notes payable | ||||||||
Proceeds from line of credit | ||||||||
Payments of acquisition earnout liabilities | ( | ) | ||||||
Payments for deferred financing costs | ( | ) | ||||||
Repurchase of common shares to satisfy employee tax withholding | ( | ) | ( | ) | ||||
Net cash provided (used in) by financing activities | ( | ) | ||||||
Net decrease in cash and cash equivalents | ( | ) | ( | ) | ||||
Cash and cash equivalents at beginning of period | ||||||||
Cash and cash equivalents at end of period | $ | $ |
See accompanying notes to condensed consolidated financial statements.
STREAMLINE HEALTH SOLUTIONS, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
October 31, 2024
NOTE 1 — BASIS OF PRESENTATION
Streamline Health Solutions, Inc. and each of its wholly-owned subsidiaries, Streamline Health, LLC, Avelead Consulting, LLC, Streamline Consulting Solutions, LLC and Streamline Pay & Benefits, LLC, (collectively, unless the context requires otherwise, “we,” “us,” “our,” “Streamline,” or the “Company”), operate in one segment as a provider of healthcare information technology solutions and associated services. The Company provides these capabilities through the licensing of its Coding & Clinical Documentation Improvement (CDI) solutions, eValuator coding analysis platform, RevID, and other workflow software applications and the use of such applications by software as a service (“SaaS”). The Company also provides audit services to help clients optimize their internal clinical documentation and coding functions, as well as implementation and consulting services to complement its software solutions. The Company’s software and services enable hospitals and integrated healthcare delivery systems in the United States and Canada to capture, store, manage, route, retrieve and process patient clinical, financial and other healthcare provider information related to the patient revenue cycle.
The accompanying unaudited condensed consolidated financial statements have been prepared by us pursuant to the rules and regulations applicable to quarterly reports on Form 10-Q of the U.S. Securities and Exchange Commission (the “SEC”). Certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to those rules and regulations, although we believe that the disclosures made are adequate to make the information not misleading. The condensed consolidated financial statements include the accounts of Streamline Health Solutions, Inc. and each of its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. In the opinion of the Company’s management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the condensed consolidated financial statements have been included. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s most recent annual report on Form 10-K. Operating results for the three and nine months ended October 31, 2024, are not necessarily indicative of the results that may be expected for the fiscal year ending January 31, 2025.
The Company has
All amounts in the condensed consolidated financial statements, notes and tables have been rounded to the nearest thousand dollars, except share and per share amounts, unless otherwise indicated. All references to a fiscal year refer to the fiscal year commencing February 1 in that calendar year and ending on January 31 of the following calendar year.
Going Concern
The Company’s financial statements are prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of obligations in the normal course of business. To date, the Company has not generated sufficient revenues to allow it to generate cash flow from operations and the Company anticipates the need for additional liquidity in the next twelve months. The Company has historically accumulated losses and used cash from its financing activities to supplement its operations. The Company’s current forecast projects the Company may not be able to maintain compliance with certain of its financial covenants under its current credit agreement with the term loan lender in the next twelve months. Further, our recent private placement notes payables have cross-default conditions with the senior term loan debt. These conditions raise substantial doubt about the ability of the Company to continue as a going concern within one year after the date that the financial statements are issued.
In view of these matters, continuation as a going concern is dependent upon the Company’s ability to achieve cash from operations and raise additional debt or equity capital to fund its ongoing operations.
As of October 31, 2024, the Company had approximately $
The financial statements do not include any adjustments to the amount and classification of assets and liabilities that may be necessary should the Company not continue as a going concern.
Reverse Stock Split
On September 25, 2024, the Company filed a Certificate of Amendment to the Company’s Certificate of Incorporation to effect a 1-for-
The Reverse Stock Split did not change the Company's authorized number of shares of common stock. The Reverse Stock Split did not change the par value of the common stock, therefore, the Company recorded an increase to additional paid in capital of $
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Our significant accounting policies are presented in “Note 2 – Significant Accounting Policies” in the Annual Report on Form 10-K for fiscal year 2023. Users of financial information for interim periods are encouraged to refer to the notes to the consolidated financial statements contained in the Annual Report on Form 10-K when reviewing interim financial results.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. On an ongoing basis, management evaluates its estimates and judgments, including those related to the recognition of revenue, share-based compensation, capitalization of software development costs, intangible assets, the allowance for credit losses, contingent consideration, and income taxes. Actual results could differ from those estimates.
Fair Value of Financial Instruments
The Financial Accounting Standards Board’s (“FASB”) authoritative guidance on fair value measurements establishes a framework for measuring fair value. This guidance enables the reader of the financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values. Under this guidance, assets and liabilities carried at fair value must be classified and disclosed in one of the following three categories:
Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3: Unobservable inputs that are not corroborated by market data.
The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value based on the short-term maturity of these instruments. Cash and cash equivalents are classified as Level 1. The acquisition earnout liability transferred out of Level 3 as of April 30, 2024.
The table below provides information on the fair value of our liabilities on a recurring basis:
Quoted | Significant | |||||||||||||||
Prices in | Other | Significant | ||||||||||||||
Active | Observable | Unobservable | ||||||||||||||
Total Fair | Markets | Inputs | Inputs | |||||||||||||
Value | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
At January 31, 2024 | ||||||||||||||||
Acquisition earnout liability (1) | $ | $ | $ | $ |
(1) | On March 27, 2024, the Company issued the shares of its common stock owed as part of the acquisition earnout liability related to the acquisition of Avelead Consulting, LLC (“Avelead”). The remaining obligation related to the acquisition earnout liability is to be settled in cash (refer to Note 3 – Business Combinations for more information). At that time, the acquisition earnout liability no longer qualified as a Level 3 fair value calculation and was transferred out. As of that date, the Company recorded a valuation adjustment of $ |
The table below provides the Level 3 roll-forward on the fair value of our acquisition earnout liability for the nine months ended October 31, 2024. There was no Level 3 roll-forward activity for the three months ended October 31, 2024.
Nine-months ended | ||||
October 31, 2024 | ||||
Beginning balance | $ | |||
Settlement – common stock | ( | ) | ||
Settlement – cash | ( | ) | ||
Realized loss | ||||
Transfer out | ( | ) | ||
Ending balance | $ |
The value of the Company’s acquisition earnout liability at October 31, 2024, represents the remaining cash obligation of $
The fair value of the Company’s term loan under its Second Amended and Restated Loan and Security Agreement (as amended and modified, the “Second Amended and Restated Loan Agreement”) was determined through an analysis of the interest rate spread from the date of closing the loan ( August 2021) to the date of the most recent balance sheets, October 31, 2024 and January 31, 2024. The term loan bears interest at a per annum rate equal to the Prime Rate (as published in The Wall Street Journal) plus
The estimated fair value of the Company’s notes payable under its private placement notes payables was determined through an analysis of the interest rate spread from the date of closing of the private placement ( February 7, 2024) to the date of the most recent balance sheet, October 31, 2024. The Company estimated the yield of a 30-month treasury by interpolating the yields of the 1-month through 10-year treasury yields on February 7, 2024 (the “Issuance Date”) and the measurement date. A High Yield Index Option Adjusted Spread, as published by the Federal Reserve Bank of St. Louis, for the same dates was added to the treasury yield spread to calculate a High-Yield Spread Adjusted 30-Month Rate. This provided an estimated change to the effective interest rate spread of approximately
The estimated fair value of the warrant liability is calculated using a Black-Scholes pricing model. The model input uses the warrant strike prices of $
Using this methodology, the Company recorded an opening warrant liability of $
Revenue Recognition
We derive revenue from the sale of internally-developed software, either by licensing for local installation or by a SaaS delivery model, through the Company’s direct sales force or through third-party resellers. Licensed, locally-installed software customers on a perpetual model utilize the Company’s support and maintenance services for a separate fee, whereas term-based locally installed license fees and SaaS fees include support and maintenance. We also derive revenue from professional services that support the implementation, configuration, training and optimization of the applications, as well as audit services and consulting services.
We recognize revenue in accordance with Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers, under the core principle of recognizing revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Certain contracts may include aspects of variable consideration as it relates to performance guarantees and service level agreements. Significant judgment is required to determine the standalone selling price (“SSP”) for each performance obligation, impact of variable consideration on total contract price, the amount allocated to each performance obligation and whether it depicts the amount that the Company expects to receive in exchange for the related product and/or service.
Disaggregation of Revenue
The following table provides information about disaggregated revenue by type and nature of revenue stream:
Three Months Ended | Nine Months Ended | |||||||||||||||
October 31, 2024 | October 31, 2023 | October 31, 2024 | October 31, 2023 | |||||||||||||
Over time revenue | $ | $ | $ | $ | ||||||||||||
Point in time revenue | ||||||||||||||||
Total revenue | $ | $ | $ | $ |
The Company includes revenue categories of (i) SaaS, (ii) maintenance and support, (iii) professional services, and (iv) audit services as over time revenue. For point in time revenue, the performance obligation is recognized as the point in time when the obligation is fully satisfied. The Company includes software licenses as point in time revenue.
Contract Receivables and Deferred Revenues
The Company receives payments from customers based upon contractual billing schedules. Contract receivables include amounts related to the Company’s contractual right to consideration for completed performance obligations not yet invoiced. Deferred revenue includes payments received in advance of performance under the contract. The Company’s contract receivables and deferred revenue are reported on an individual contract basis at the end of each reporting period. Contract receivables are classified as current or noncurrent based on the timing of when we expect to bill the customer. Deferred revenue is classified as current or noncurrent based on the timing of when we expect to recognize revenue. During the three and nine months ended October 31, 2024, the Company recognized approximately $
Deferred costs (costs to fulfill a contract and contract acquisition costs)
The Company defers the direct costs, which include salaries and benefits, for professional services related to SaaS contracts as a cost to fulfill a contract. These deferred costs will be amortized on a straight-line basis over the period of expected benefit which is the contractual term. As of October 31, 2024 and January 31, 2024, the Company had deferred costs of $
Contract acquisition costs, which consist of sales commissions paid or payable, are considered incremental and recoverable costs of obtaining a contract with a customer. Sales commissions for initial and renewal contracts are deferred and then amortized on a straight-line basis over the contract term. As a practical expedient, the Company expenses sales commissions as incurred when the amortization period of related deferred commission costs is expected to be one year or less.
As of October 31, 2024 and January 31, 2024, deferred commission costs paid and payable, which are included on the consolidated balance sheets within other non-current assets totaled $
Allowance for Credit Losses
The Company estimates current expected credit losses based on historical credit loss rates and applied an increase to account for future economic conditions. The changes in the Company’s allowance for credit losses is as follows:
January 31, 2024 | CECL Adoption | Provision adjustments | Write-offs & Recoveries | October 31, 2024 | ||||||||||||||||
Allowance for credit losses | $ | $ | ( | ) | $ |
January 31, 2023 | CECL Adoption | Provision adjustments | Write-offs & Recoveries | October 31, 2023 | ||||||||||||||||
Allowance for credit losses | $ | $ | ( | ) | $ | $ | $ |
Equity Awards
The Company accounts for share-based payments based on the grant-date fair value of the awards with compensation cost recognized as expense over the requisite service period, and forfeitures are recognized as incurred. For awards to non-employees, the Company recognizes compensation expense in the same manner as if the entity had paid cash for the goods or services. The Company incurred total compensation expense related to share-based awards for the three and nine months ended October 31, 2024, of $
The fair value of stock options granted are estimated at the date of grant using a Black-Scholes option pricing model. Option pricing model input assumptions such as expected term, expected volatility and risk-free interest rate impact the fair value estimate. These assumptions are subjective and are generally derived from external (such as, risk-free rate of interest) and historical data (such as, volatility factor and expected term). Future grants of equity awards accounted for as share-based compensation could have a material impact on reported expenses depending upon the number, value and vesting period of future awards.
The Company issues restricted stock awards in the form of Company common stock. The fair value of these awards is based on the market closing price per share on the grant date. For the three and nine months ended October 31, 2024, the Company issued
Market-Based Awards
For awards with a market condition, the Company adjusts the grant date fair value for the condition. The Company used separate Monte Carlo valuation models, as of the grant date, to determine the expected length and fair value of this particular award. Both models used the Company's historical equity volatility, current stock price, and hurdle target price for vesting. The service period model also included an assumption for the Company's 10-year normalized risk-free rate. The associated compensation expense is recognized provided the service condition is provided regardless of whether the market condition is satisfied.
On July 18, 2024, the Company, as a component of the Board awards discussed above, executed a Restricted Stock Agreement (the “Restricted Stock Agreement”) to issue
On September 4, 2024, the Restricted Stock Agreement was amended to rescind
Warrants
The Company reviews the specific terms for its warrants and applies the authoritative FASB guidance under ASC topics 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”) to account for the warrants as either equity-classified or liability-classified instruments. This review identifies if the warrants are freestanding financial instruments under ASC 480, should be defined as a liability under ASC 480, and whether the warrants meet all requirements of ASC 815 to be classified as equity, including whether the warrants are indexed to the Company’s own common stock, if there are conditions where warrant holders could potentially require “net cash settlement” in a circumstance that would be outside of the Company’s control, among other conditions for equity classification. This assessment requires the use of professional judgment and is conducted at the time of warrant issuance plus as of each subsequent quarterly period end date while the warrants are outstanding.
For the issued or modified warrants that qualify for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the condensed consolidated Statements of Operations as "valuation adjustments." The fair value of the warrants is estimated using a Black-Scholes pricing model.
Income Taxes
Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and for tax credit and loss carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. In assessing net deferred tax assets, the Company considers whether it is more likely than not that some or all of the deferred tax assets will not be realized. The Company establishes a valuation allowance when it is more likely than not that all or a portion of deferred tax assets will not be realized. Refer to Note 6 – Income Taxes for further details.
The Company provides for uncertain tax positions and the related interest and penalties based upon management’s assessment of whether certain tax positions are more likely than not to be sustained upon examination by tax authorities. The Company believes it has appropriately accounted for any uncertain tax positions as of October 31, 2024.
Net Loss Per Common Share
The Company presents basic and diluted earnings per share (“EPS”) data for the Company’s common stock.
The Company’s warrants, unvested restricted stock awards, and options are considered non-participating securities because holders are not entitled to non-forfeitable rights to dividends or dividend equivalents during the vesting term or while unexercised. Diluted EPS for the Company’s common stock is computed using the treasury stock method.
The following is the calculation of the basic and diluted net loss per share of common stock for the three and nine months ended October 31, 2024 and 2023:
Three Months Ended | Nine Months Ended | |||||||||||||||
October 31, 2024 | October 31, 2023 | October 31, 2024 | October 31, 2023 | |||||||||||||
Basic and diluted loss per share: | ||||||||||||||||
Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Basic and diluted net loss per share of common stock | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Weighted average shares outstanding – basic and diluted (1)(2) |
(1) | Includes the effect of vested and excludes the effect of unvested restricted shares of common stock, which are considered non-participating securities. As of October 31, 2024 and 2023, there were |
| |
(2) | Diluted net loss per share excludes the effect of shares that are anti-dilutive. For the three and nine months ended October 31, 2024, diluted earnings per share excludes |
Restructuring
On October 16, 2023, the Company announced it was executing a strategic restructuring (the "Strategic Restructuring") designed to reduce expenses while maintaining the Company’s ability to expand its SaaS business. The Strategic Restructuring initiatives included a reduction in force, resulting in the termination of
(in thousands) | ||||||||||||||||||||||||
As of October 31, 2024 | ||||||||||||||||||||||||
Accrued Balance as of | 2024 | 2024 | Accrued Balance as of | Total Costs | Total | |||||||||||||||||||
January 31, 2024 | Expenses to Date | Cash Payments | October 31, 2024 | Incurred to Date | Expected Costs | |||||||||||||||||||
Severance expense | ||||||||||||||||||||||||
Cost of sales | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Selling, general, and administrative | ( | ) | ||||||||||||||||||||||
Research and development | ||||||||||||||||||||||||
Total severance expense | $ | $ | $ | ( | ) | $ | $ | $ | ||||||||||||||||
Professional fees | ||||||||||||||||||||||||
Total | $ | $ | $ | ( | ) | $ | $ | $ |
(in thousands) | ||||||||||||||||
Accrued Balance as of | 2023 | 2023 | Accrued Balance as of | |||||||||||||
January 31, 2023 | Expenses to Date | Cash Payments | October 31, 2023 | |||||||||||||
Severance expense | ||||||||||||||||
Cost of sales | $ | $ | $ | $ | ||||||||||||
Selling, general, and administrative | ||||||||||||||||
Research and development | ||||||||||||||||
Total severance expense | $ | $ | $ | $ | ||||||||||||
Professional fees | ||||||||||||||||
Total | $ | $ | $ | $ |
Non-Cash Items
For the three and nine months ended October 31, 2024 and 2023, the Company recorded a change in capitalized software purchased with stock, totaling $
For the nine months ended October 31, 2024, the Company settled the second year acquisition earnout liability in connection with the Avelead acquisition with the issuance of common shares in the amount of $
Recent Accounting Pronouncements Not Yet Adopted
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which improves guidance around the disclosures about a public entity’s reportable segments and additional details about a reportable segment’s expenses. ASU 2023-07 is effective for all public entities for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company’s adoption of ASU 2023-07 will be effective in the annual report for the fiscal year ending January 31, 2025. The adoption of this ASU is not expected to have a material impact on our consolidated financial statements or disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which enhance the transparency and decision usefulness of income tax disclosures. For public entities, ASU 2023-09 is effective for annual periods beginning after December 15, 2024. The adoption of this ASU is not expected to have a material impact on our consolidated financial statements or disclosures.
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which improves financial reporting by requiring public entities to disclose additional information about specific expense categories in the notes of the financial statements at interim and annual reporting period. ASU 2024-03 is effective for all public entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. The adoption of this ASU is expected to improve reporting and does not have an overall material impact on our financial disclosures.
NOTE 3 — BUSINESS COMBINATION
Avelead Acquisition
The Company acquired all the equity interests of Avelead Consulting, LLC (“Avelead”) as part of the Company’s strategic expansion into the acute-care health care revenue cycle management industry (the “Transaction”). The Transaction was completed on August 16, 2021.
As of January 31, 2024, the estimated aggregate value of the second year earnout consideration was $
NOTE 4 — OPERATING LEASES
We determine whether an arrangement is a lease at inception. Right-of-use assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the expected lease term. Since our lease arrangements do not provide an implicit rate, we use our incremental borrowing rate for the expected remaining lease term at commencement date for new and existing leases in determining the present value of future lease payments. Operating lease expense is recognized on a straight-line basis over the lease term.
The Company has moved to a virtual office model and does not have a physical office space. Membership agreements and daily space rentals are leveraged by the Company when groups need to meet in person with the costs expensed as incurred. For the three and nine months ended October 31, 2024 and 2023, the Company recorded $
Alpharetta Office Lease
On October 1, 2021, the Company entered into an agreement with a third-party to sublease its office space in Alpharetta, Georgia. The sublease term was for
The Company entered into a lease for office space in Alpharetta, Georgia, on March 1, 2020. The lease terminated on March 31, 2023. At inception, the Company recorded a right-of use asset of $
Suwanee Office Lease
Upon acquiring Avelead on August 16, 2021 (refer to Note 3 – Business Combination), the Company assumed an operating lease agreement for the corporate office space of Avelead. The lessor is an entity controlled by one of the Sellers and that Seller is a former employee of the Company. The initial
NOTE 5 — DEBT
Outstanding principal balances consisted of the following at October 31, 2024:
October 31, 2024 | January 31, 2024 | |||||||
Term loan | $ | $ | ||||||
Financing cost payable | ||||||||
Less: Deferred financing cost | ( | ) | ( | ) | ||||
Total | ||||||||
Less: Current portion of term loan | ( | ) | ( | ) | ||||
Non-current portion of term loan | $ | $ |
October 31, 2024 | January 31, 2024 | |||||||
Notes payable and accrued interest | $ | $ | ||||||
Less: Discount on notes payable | ( | ) | ||||||
Less: Deferred financing costs | ( | ) | ||||||
Total | ||||||||
Less: Current portion of notes payable | ||||||||
Non-current portion of notes payable | $ | $ |
Term Loan and Revolving Line of Credit
On November 29, 2022, the Company executed a Second Modification to Second Amended and Restated Loan Agreement (the “Second Modification”). The Second Modification includes an expansion of the Company’s total borrowing to include a $
Under the Second Amended and Restated Loan Agreement, the Company has a term loan facility with an initial maximum principal amount of $
The Company executed a Third Modification and Waiver to Second Amended and Restated Loan Agreement (the “Third Modification”) and a Fourth Modification to Second Amended and Restated Loan Agreement (the “Fourth Modification”) on February 7, 2024 and April 5, 2024, respectively (collectively, the “Third and Fourth Modifications”). The Third and Fourth Modifications reestablished the customary financial covenants for the Second Amended and Restated Loan Agreement as follows:
● | Minimum Adjusted EBITDA. Commencing with the quarter ending January 31, 2024, the Company shall maintain Adjusted EBITDA, measured on a quarterly basis as of the last day of each fiscal quarter, in an amount not less than the amounts (or, in the case of amounts set forth in parentheses, no worse than the amounts) set forth under the heading “Minimum Adjusted EBITDA” as of, and for each of the dates appearing adjacent to such “Minimum Adjusted EBITDA.” |
Minimum | ||||
Quarter Ending | Adjusted EBITDA | |||
January 31, 2024 | $ | ( | ) | |
April 30, 2024 | ( | ) | ||
July 31, 2024 | ( | ) | ||
October 31, 2024 | ( | ) | ||
January 31, 2025 |
● | Maximum ARR Net Leverage Ratio. The Company's ARR Net Leverage Ratio, measured on a quarterly basis as of the last day of each fiscal quarter, shall not be greater than the amount set forth under the heading “Maximum ARR Net Leverage Ratio” as of, and for each of the dates appearing adjacent to such “Maximum ARR Net Leverage Ratio.” |
Maximum | ||||
ARR Net Leverage | ||||
Quarter Ending | Ratio | |||
April 30, 2024 | | |||
July 31, 2024 | | |||
October 31, 2024 | | |||
January 31, 2025 | |
● | Maximum Debt to Adjusted EBITDA Ratio. Commencing with the quarter ending April 30, 2025, the Company's Maximum Debt to Adjusted EBITDA Ratio, measured on a quarterly basis as of the last day of each fiscal quarter for the trailing four (4) quarter period then ended, shall not be greater than the amount set forth under the heading “Maximum Debt to Adjusted EBITDA Ratio” as of, and for each of the dates appearing adjacent to such “Maximum Debt to Adjusted EBITDA Ratio.” |
Maximum | ||||
Debt to Adjusted | ||||
EBITDA | ||||
Quarter Ending | Ratio | |||
April 30, 2025 | | |||
July 31, 2025 | | |||
October 31, 2025 | | |||
January 31, 2026 and on the last day of each quarter thereafter | |
● | Fixed Charge Coverage Ratio. Commencing with the quarter ending April 30, 2025, the Company shall maintain a Fixed Charge Coverage Ratio of not less than |
On November 13, 2024, the Company executed the Fifth Modification to Second Amended and Restated Loan and Security Agreement (the “Fifth Modification”) that amended, among other things, the Minimum Adjusted EBITDA and Maximum ARR Net Leverage Ratio covenants. Refer to Note 11 – Subsequent Events for additional information regarding the Fifth Modification.
The Second Amended and Restated Loan Agreement also includes customary negative covenants, subject to exceptions, which limit transfers, capital expenditures, indebtedness, certain liens, investments, acquisitions, dispositions of assets, restricted payments, and the business activities of the Company, as well as customary representations and warranties, affirmative covenants and events of default, including a cross default provision with the Second Amended and Restated Loan Agreement and a change of control default provision. The line of credit also is subject to customary prepayment requirements. Substantially all the assets of the Company are collateralized by the Second Amended and Restated Loan Agreement. For the period ended October 31, 2024, the Company was not in compliance with certain covenants under the Second Amended and Restated Loan and Security Agreement. Subsequent to the period ended October 31, 2024, the Company entered into the Fifth Modification, whereby certain covenants were modified. As a result, the Company was in compliance with all modified debt covenants. However, the Company’s current forecast projects the Company may not be able to maintain compliance with certain of its financial covenants under the Second Amended and Restated Loan Agreement in the future. Refer to Note 1 – Basis of Presentation for detail regarding the Company’s assessment as a going concern.
The Company records costs related to the maintenance of the Second Amended and Restated Loan Agreement as deferred financing costs, net of the term loan. These deferred financing costs are being amortized over the remaining term of the loan. The Company has incurred $
Debt Private Placement
On February 1, 2024, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with certain accredited investors, including certain directors and officers of the Company (collectively, the “Investors”), pursuant to which the Company agreed to sell to the Investors unsecured subordinated promissory notes (the “Notes”) in the aggregate principal amount of $
Notes Payable
The Notes bear interest at a rate of
The Notes also include customary negative covenants, subject to exceptions, which limit dispositions of assets and the business activities of the Company, as well as customary representations and warranties, affirmative covenants and events of default, including a cross default provision with the Second Amended and Restated Loan Agreement and a change of control default provision.
The rights of each Investor to receive payments under the Notes are subordinate to the rights of Western Alliance Bank (“WAB”), pursuant to a subordination agreement which the Investors entered into with WAB concurrently with the Debt Private Placement.
The Company allocated the original total proceeds at inception from the Debt Private Placement and Common Stock Private Placement (refer to Note 7 – Equity) across the securities issued in connection with the offerings. The Company has recorded the Notes at a relevant residual fair value of $
Warrants
The Warrants have an exercise price of $
The Notes and the Warrants described above were offered in a private placement under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and/or Regulation D promulgated thereunder and, along with the common stock underlying the Warrants, were "restricted securities" under the Securities Act or applicable state securities laws. Accordingly, the Notes, the Warrants and the common stock underlying the Warrants may not be offered or sold in the United States absent registration with the SEC or an applicable exemption from such registration requirements and in accordance with applicable state securities laws. The securities were offered and sold to “accredited investors” as that term is defined in Rule 501(a) under the Securities Act.
The Warrants contain a registration rights provision for the Company to provide the Warrant holder with registered common stock upon their exercise of a Warrant. If the Company is not able to deliver registered common stock for exercised Warrants that results in the Warrant holder acquiring registered common stock, then the Warrant holder has the discretion to request the Company remit cash compensation up to the corresponding purchase price. Accordingly, the Company determined the feature required liability accounting treatment upon issuance. On May 7, 2024, the Company filed a Registration Statement on Form S-3 (Registration No. 333-279190), as amended by that certain Pre-Effective Amendment No. 1 to Form S-3 filed on May 24, 2024 (collectively, the “Registration Statement”), for purpose of registering for resale
The Company allocated the total proceeds from the Debt Private Placement and Common Stock Private Placement (refer to Note 7 – Equity) across the securities issued in connection with offerings. The Company recorded an initial liability of $
NOTE 6 — INCOME TAXES
Income tax expense was $
The Company has recorded $
The Company and its subsidiaries are subject to U.S. federal income tax as well as income taxes in multiple state and local jurisdictions. The Company has concluded all U.S. federal tax matters for years through January 31, 2020. All material state and local income tax matters have been concluded for years through January 31, 2019. The Company is no longer subject to IRS examination for periods prior to the tax year ended January 31, 2020; however, carryforward losses that were generated prior to the tax year ended January 31, 2020, may still be adjusted by the IRS if they are used in a future period.
NOTE 7 — EQUITY
Common Stock Private Placement
On February 6, 2024, the Company completed the sale of
The common stock described above was offered in a private placement under Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder and has not been registered under the Securities Act or applicable state securities laws. Accordingly, such common stock may not be offered or sold in the United States absent registration with the SEC or an applicable exemption from such registration requirements and in accordance with applicable state securities laws. The common stock was offered and sold to an “accredited investor” as that term is defined in Rule 501(a) under the Securities Act.
The Company allocated the total proceeds of the Common Stock Private Placement across the underlying components. As a result, $
Registration of Shares Issued to 180 Consulting
On June 28, 2023, the Company filed a Registration Statement on Form S-3 (Registration No. 333-272993) for purpose of registering for resale
On May 7, 2024, the Company filed a Registration Statement on Form S-3 (Registration No. 333-279190), as amended by that certain Pre-Effective Amendment No. 1 to Form S-3 filed on May 24, 2024, for purpose of registering for resale
2024 Omnibus Incentive Compensation Plan
At the 2024 Annual Meeting of Stockholders held on June 13, 2024, the Company’s stockholders approved the Streamline Health Solutions, Inc. 2024 Omnibus Incentive Compensation Plan (the “2024 Plan”). The 2024 Plan replaced the Streamline Health Solutions, Inc. Third Amended and Restated 2013 Stock Incentive Plan (as amended, the “2013 Plan”). The Compensation Committee of the Board of Directors administers the 2024 Plan and approves the grant and terms of awards (consistent with the terms of the 2024 Plan).
The 2024 Plan permits the grant of any or all of the following types of awards to grantees: stock options, including non-qualified options and incentive stock options (“ISOs”); stock appreciation rights (“SARs”); restricted stock; deferred stock and restricted stock units; performance units and performance shares; dividend equivalents; and other stock-based awards. Eligible grantees include employees, officers, non-employee consultants and non-employee directors of the Company and its affiliates. A total of
NOTE 8 — COMMITMENTS AND CONTINGENCIES
Consulting Agreement with 180 Consulting, LLC
On March 19, 2020, the Company entered into a Master Services Agreement (the “MSA”) with 180 Consulting, pursuant to which 180 Consulting has provided and will continue to provide a variety of consulting services in support of eValuator products including product management, operational consulting, staff augmentation, internal systems platform integration and software engineering services, among others, through separate executed statements of work (“SOWs”). On September 20, 2021, the Company entered into a separate MSA in support of Avelead products. As of December 2023, all outstanding SOWs under both MSAs were effectively replaced by two new SOWs. As of October 31, 2024, there were three active SOWs under the eValuator MSA. One of the active SOWs includes the ability to earn stock at a conversion rate to be calculated 20 days after the execution of the related SOW. The MSA includes a termination clause upon a 90-day written notice. While no related party has a direct or indirect material interest in this MSA or the related SOWs, individuals providing services to the Company under the MSA and the SOWs may share workspace and administrative costs with 121G Consulting, LLC (“121G”). Mr. Green is a “member” of 121G, and, accordingly, has a financial interest in that entity. 180 Consulting earned
Inclusive of the MSA executed with 180 Consulting are SOWs that provide for the Company to sublicense software through 180 Consulting that is owned by 121G. This is a services agreement for access to software that assists the Company in implementing and integrating with our clients’ technology. The license agreement is designed such that there is no material financial benefit that accrues to 121G. 180 Consulting licenses the software from 121G at cost. The Company paid approximately $
Litigation
We are, from time to time, a party to various legal proceedings and claims, which arise in the ordinary course of business. We are not aware of any legal matters that are reasonably possible to have a material adverse effect on the Company’s condensed consolidated results of operations, financial position or cash flows.
NOTE 9 - RELATED PARTY TRANSACTIONS
Avelead Office Lease
The Company acquired Avelead on August 16, 2021. Accordingly, the Company assumed a lease for corporate office space from one of the selling shareholders of Avelead who was employed by the company through August 2023. This lease term ended February 2023. For the nine months ended October 31, 2024 and 2023, the Company recorded rent expense of $
Debt Private Placement
The following related parties participated in the Debt Private Placement (Refer to Note 5 – Debt for additional information):
Name of Investor | Investment Amount | Warrants Granted | ||||||
121G, LLC (1) | $ | |||||||
Matthew W. Etheridge (2) | ||||||||
Jonathan R. Phillips (3) | ||||||||
The Ferayorni Family Trust (4) |
(1) The securities held in the account of 121G, LLC (“121G”) may be deemed to be beneficially owned by Wyche “Tee” Green, III, the managing member of 121G. Mr. Green serves as Executive Chairman of the Company and is a member of the Board.
(2) Mr. Etheridge became a member of the Board subsequent to the closing of the Debt Private Placement.
(3) Mr. Phillips is a member of the Board.
(4) The securities held in the account of The Ferayorni Family Trust may be deemed to be beneficially owned by Justin J. Ferayorni as co-trustee of The Ferayorni Family Trust. Mr. Ferayorni is a member of the Board.
Common Stock Private Placement
On February 6, 2024, the Company completed the sale of
NOTE 10 - GOODWILL AND INTANGIBLE ASSETS
Goodwill represents the excess cost over fair value of the net assets of acquired businesses and is not amortized. The Company performs an impairment assessment of goodwill annually during the fourth quarter of its fiscal year with a valuation date of November 1, or more frequently if a triggering event occurs.
The Company’s intangible assets consist of client relationships, acquired and developed technology, and trade names. These assets are recorded at cost, less accumulated amortization and impairment, if any. All the Company’s intangible assets are definite lived and amortized on a straight-line basis over their estimated useful lives. Subsequent testing of intangible assets is conducted when a triggering event occurs that would indicate impairment may exist.
During the quarter ended October 31, 2024, the Company's market capitalization fell below the Company's carrying value of equity for a prolonged period of time (the “2024 Triggering Event”). Based on the 2024 Triggering Event, the Company identified indicators of possible impairment and initiated testing using a valuation date of October 31, 2024. The impairment tests were conducted under guidance of ASC Topic 360, Impairment and Disposal of Long-Lived Assets (“ASC 360”) for certain long-lived assets, including capitalized contract costs, developed technology, client relationships and trade names, and in accordance with ASC Topic 350, Intangibles – Goodwill and Other (“ASC 350”) with respect to the reporting unit’s goodwill.
In October 2023, the Company was notified by a legacy client of its intent to not renew its contract as of its end date on December 31, 2023. The Company also announced the acceleration of its Strategic Restructuring that was designed to reduce costs while maintaining the Company’s ability to expand its SaaS business. Both the client termination and the execution of the Strategic Restructuring were announced on October 16, 2023. Following these announcements, the Company’s share price declined significantly (collectively, the