STREAMLINE HEALTH: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS (Type 10-Q)

FORWARD-LOOKING STATEMENTS



We make forward-looking statements on this Quarterly Report on Type 10-Q (this
"Report") and in different supplies we file with the SEC or in any other case make public.
This Report, subsequently, comprises statements about future occasions and expectations
that are forward-looking statements inside the that means of Sections 27A of the
Securities Act, as amended, and 21E of the Securities Trade Act of 1934 (the
"Trade Act"). As well as, our senior administration makes forward-looking
statements to analysts, buyers, the media and others. Statements with respect
to anticipated income, revenue, receivables, backlog, shopper attrition,
acquisitions and different development alternatives, sources of funding operations and
acquisitions, the combination of our options, the efficiency of our channel
associate relationships, the sufficiency of accessible liquidity, analysis and
improvement, and different statements of our plans, beliefs or expectations are
forward-looking statements. These and different statements utilizing phrases corresponding to
"anticipate," "imagine," "estimate," "anticipate," "intend," "plan," "venture,"
"goal," "can," "may," "could," "ought to," "will," "would" and related
expressions are also forward-looking statements. Every forward-looking assertion
speaks solely as of the date of the actual assertion. The forward-looking
statements we make aren't ensures of future efficiency, and we now have primarily based
these statements on our assumptions and analyses in gentle of our expertise and
notion of historic traits, present situations, anticipated future
developments and different components we imagine are applicable beneath the
circumstances. Ahead-looking statements by their nature contain substantial
dangers and uncertainties that would considerably have an effect on anticipated outcomes, and
precise future outcomes may differ materially from these described in such
statements. Administration cautions towards placing undue reliance on
forward-looking statements or projecting any future outcomes primarily based on such
statements or current or historic earnings ranges.



Among the many components that would trigger precise future outcomes to vary materially
from our expectations are the dangers and uncertainties described beneath "Danger
Components" and elsewhere in our Annual Report on Type 10-Okay for the fiscal yr
ended January 31, 2021 and in our subsequent filings with the SEC, and embody
amongst others, the next:



  ? aggressive merchandise and pricing;

  ? product demand and market acceptance;

  ? entry into new markets;

  ? new product and companies improvement and commercialization;

? key strategic alliances with suppliers and distribution companions who resell our

some merchandise;

? uncertainty in ongoing relationships with clients because of termination

    rights;

  ? our skill to manage prices;

? availability, high quality and security of merchandise manufactured and companies offered

    by third-party distributors;

  ? the healthcare regulatory surroundings;




21

? potential adjustments in legal guidelines, laws and authorities funding affecting

    the healthcare business;

  ? healthcare data techniques budgets;

  ? availability of healthcare data techniques educated personnel for

the implementation of recent techniques, in addition to the upkeep of current techniques;

  ? the success of {our relationships} with channel companions;

  ? fluctuations in working outcomes;

  ? our future money wants;

  ? the consummation of assets in researching acquisitions, enterprise
    alternatives or financings and capital market transactions;

? the lack to adequately combine previous and future acquisitions into our

    enterprise;

  ? crucial accounting insurance policies and judgments;

  ? adjustments in accounting insurance policies or procedures as could also be required by the

Monetary Accounting Requirements Board or different requirements organizations;

? adjustments in financial, enterprise and market situations impacting well being care

the business and markets during which we function;

? our skill to keep up compliance with the phrases of our credit score services;

and

? our skill to keep up compliance with the continual ranking requirements of the

    Nasdaq Capital Market ("Nasdaq").



A few of these components and dangers have been and could also be additional exacerbated by the COVID-19 pandemic.

Most of those components are past our skill to foretell or management. Any of those
components, or a mix of those components, may materially have an effect on our future
monetary situation or outcomes of operations and the last word accuracy of our
forward-looking statements. There are also different components that we could not
describe (usually as a result of we at present don't understand them to be materials)
that would trigger precise outcomes to vary materially from our expectations.



On August 16, 2021, the Firm entered right into a Buy Settlement to accumulate
Avelead, a acknowledged chief in offering options and companies to enhance
Income Integrity for healthcare suppliers nationwide. The Firm believes
Avelead's options will complement and prolong the worth the Firm can ship
to its clients. The Firm's Quarterly Report on Type 10-Q for the interval
ending October 31, 2021 will embody the monetary outcomes of Avelead. Confer with
Notice 10 - Subsequent Occasions in our unaudited condensed consolidated monetary
statements included in Half I, Merchandise I, "Monetary Statements" for additional
data on the Avelead acquisition.



We expressly disclaim any obligation to replace or revise any forward-looking
statements, whether or not on account of new data, future occasions or in any other case,
besides as required by legislation.



Outcomes of Operations



Revenues



                                   Three Months Ended                             %
($ in 1000's):          July 31, 2021        July 31, 2020      Change      Change

Software program licenses         $             -      $           215        (215 )      (100 )%
Skilled companies                  30                  160        (130 )       (81 )%
Audit companies                        443                  463         (20 )        (4 )%
Upkeep and assist             1,087                1,228        (141 )       (11 )%
Software program as a service               1,308                  821         487          59 %
Whole Revenues            $         2,868      $         2,887         (19 )        (1 )%




                                   Six Months Ended                              %
($ in 1000's):          July 31, 2021       July 31, 2020      Change       Change

Software program licenses         $           135     $           215         (80 )        (37 )%
Skilled companies                 108                 312        (204 )        (65 )%
Audit companies                        947               1,007         (60 )         (6 )%
Upkeep and assist             2,144               2,486        (342 )        (14 )%
Software program as a service               2,485               1,711         774           45 %
Whole Revenues            $         5,819     $         5,731          88            2 %




22






Software program licenses - Proprietary software program income acknowledged for the three- and
six-month durations ended July 31, 2021 decreased by $215,000 and $80,000 from the
prior comparable interval. The Firm is experiencing a shift in enterprise from
perpetual software program licenses to software program as a service. This shift has been
exacerbated by the influence of COVID-19 on our channel companions that promote our
merchandise together with their bigger digital well being report techniques. The Firm
has the flexibility to affect gross sales of those merchandise; nevertheless, the timing is
troublesome to handle as gross sales are primarily the results of our channel companions.
Sure delays in contracting for techniques gross sales are a results of COVID-19. The
Firm continues to be unable to estimate the timing or extent of the influence of
COVD-19 on the Firm's ongoing efficiency relative to perpetual software program
gross sales.



Skilled companies - For the three- and six- month interval ended July 31,
2021, income from skilled companies decreased by $130,000 and $204,000 from
the prior comparable interval. The lower in income from skilled companies
was largely because of the lower in software program gross sales. Traditionally, these
skilled companies have been instantly associated to the software program license gross sales.
Moreover, the shift to a software program as a service ("SaaS") mannequin and away from
software program licensing additionally impacts the Firm's skilled service income as
the associated implementation companies are included as a part of the software program as a
service income reported for the eValuator product over the time period. The Firm
continues to be unable to estimate the timing or extent of the influence of COVD-19
on the Firm's ongoing efficiency relative to skilled companies.



Audit companies - Audit companies income for the three- and six- months ended
July 31, 2021 decreased by $20,000 and $60,000 from the prior comparable interval.
The lower in income was primarily because of one-time audits that occurred
throughout fiscal yr 2020. The Firm's experience, demonstrated and supported by
eValuator, and the truth that our skilled workers is onshore is believed to be
a aggressive benefit with regard to the audit companies. The Firm has a
cheap backlog of recent clients in audit companies and ongoing buyer
audits. The Firm expects the quantity in audit companies will enhance by the tip
of fiscal yr 2021.



Upkeep and assist - Income from upkeep and assist for the three-
and six- months ended July 31, 2021 decreased over the prior comparable interval
by $141,000 and $342,000, respectively. The lower is attributable to the
sundown of our legacy product, scientific analytics, that was acknowledged till the
final clients income resulted in June 2020. There was no additional income
acknowledged from scientific analytics after June 2020.



Software program as a Service (SaaS) - Income from SaaS for the three- and six- months
ended July 31, 2021 elevated by $487,000 and $774,000 from the prior comparable
interval. The rise resulted from new clients of our development product,
eValuator. The Firm's legacy product, Monetary Administration Techniques, has been
comparatively constant. The eValuator SaaS income base ought to proceed to develop
in fiscal yr 2021 as we expertise go-lives on offered eValuator clients, and
gross sales of recent eValuator clients that may go-live later in fiscal yr 2021. We
have skilled slower first contact to contracting timelines on account of
COVID-19. Whereas we now have seen some optimistic exercise, we proceed to be unable to
estimate the influence of COVID-19 on future contracting processes with our
clients.



Value of Gross sales



                                           Three Months Ended                                    %
(in 1000's):                    July 31, 2021        July 31, 2020         Change           Change
Value of software program licenses         $           143      $           125     $         18               14 %
Value {of professional} companies                 261                  269               (8 )             (3 )%
Value of audit companies                        376                  373                3                1 %
Value of upkeep and assist                80                  182             (102 )            (56 )%
Value of software program as a service                 578                  403     
        175               43 %
Whole price of gross sales               $         1,438      $         1,352     $         86                6 %




                                           Six Months Ended                                     %
(in 1000's):                    July 31, 2021       July 31, 2020         Change           Change
Value of software program licenses         $           279     $           202     $         77               38 %
Value {of professional} companies                 475                 510              (35 )             (7 )%
Value of audit companies                        765                 733               32                4 %
Value of upkeep and assist               166                 368             (202 )            (55 )%
Value of software program as a service               1,188                 808              380               47 %
Whole price of gross sales               $         2,873     $         2,621     $
       252               10 %



The rise in general price of gross sales for the three- and six- months ended July
31, 2021 from the comparable prior interval is primarily because of a mixture of will increase
in amortization of software program improvement and variable prices related to
obligations to third-party content material suppliers offset by decreases in wage and
wage associated prices. The Firm positioned bigger quantities of software program improvement
into service within the third and fourth quarter of fiscal yr 2020 which is
leading to greater charges of amortization for fiscal yr 2021. The Firm's
development in Software program as a Service income leads to will increase within the quantities owed
to the third-party content material suppliers.



23







Value of software program licenses mirror amortization of capitalized software program
expenditures. The rise in expense for the three- and six- month interval ended
July 31, 2021 from the comparable prior interval was because of the improve in
amortization of capitalized software program prices for developed performance positioned in
service all through the second-half of fiscal yr 2020 and the primary half of
fiscal yr 2021.


The price of skilled companies consists of compensation and worker advantages and associated bills. These prices remained fixed for the three and 6 month durations ended. July 31, 2021, and the respective comparable durations.



The price of audit companies consists of compensation and advantages for audit companies
personnel, and associated bills. These prices remained constant for the three-
and six- month interval ended July 31, 2021, and the respective comparable
durations.



The price of upkeep and assist consists of compensation and advantages for
shopper assist personnel and the price of third-party content material supplier contracts.
The lower in expense for the three- and six- month interval ended July 31, 2021
from the comparable interval within the prior yr was primarily because of a discount of
wage and wage associated bills for workers that departed the group.
The Firm was in a position to redeploy current assets to mitigate prices to
backfill the vacated positions.



The price of SaaS options is comprised of salaries, amortization of capitalized
software program improvement, and third-party content material supplier prices. The first driver
of the rise in expense for the three- and six- month interval ended July 31,
2021 from the comparable durations within the prior yr was the rise in
amortization of capitalized software program improvement prices for developed
performance positioned in service subsequent to the second quarter of fiscal yr
2020. Amortization of capitalized software program improvement prices for the three- and
six- month durations ended July 31, 2021 have been $333,000 and $699,000, respectively,
as in comparison with $234,000 and $443,000 for the respective comparable prior
durations. A secondary driver of the rise in expense for the three- and six-
month interval ended July 31, 2021 from the comparable interval within the prior yr
was a rise within the variable prices related to obligations to sure
third-party content material suppliers.



Promoting, basic and administrative bills


                                        Three Months Ended                                    %
($ in 1000's):               July 31, 2021        July 31, 2020         Change           Change
Basic and administrative
bills                       $         1,716      $         1,596     $        120                8 %
Gross sales and advertising and marketing bills               799                  688              111               16 %
Whole promoting, basic, and
administrative expense         $         2,515      $         2,284     $        231               10 %




                                        Six Months Ended                                     %
($ in 1000's):               July 31, 2021       July 31, 2020         Change           Change
Basic and administrative
bills                       $         3,451     $         3,052     $        399               13 %
Gross sales and advertising and marketing bills             1,617               1,524               93                6 %
Whole promoting, basic, and
administrative expense         $         5,068     $         4,576     $        492               11 %




Basic and administrative bills consist primarily of compensation and
associated advantages, reimbursable journey and leisure bills associated to our
government and administrative workers, basic company bills, amortization of
intangible belongings, and occupancy prices. The rise usually and
administrative bills for the six months ended July 31, 2021 from the
comparable prior interval is primarily attributed to a rise in inventory
compensation expense {and professional} charges related to the Firm's Particular
Assembly. Inventory compensation expense for the three- and six- month durations ended
July 31, 2021 was $289,000 and $559,000, respectively, as in comparison with $138,000
and $325,000 for the respective comparable prior durations. The Firm has
beforehand introduced accelerated fairness awards for its executives in lieu of
money bonuses. These accelerated fairness awards are inflicting a near-term (12 month)
improve in amortization of inventory compensation for fiscal yr 2021.



Gross sales and advertising and marketing bills consist primarily of compensation and associated
advantages and reimbursable journey and leisure bills associated to our gross sales
and advertising and marketing workers, in addition to promoting and advertising and marketing bills, together with
commerce reveals. Gross sales and advertising and marketing expense for the six months ended July 31, 2021
elevated barely from the comparable prior interval. A rise in salaries,
advantages, and fee expense was primarily offset by decrease skilled charges
within the present reporting interval as in comparison with the identical interval a yr in the past. The
Firm has continued to restrict journey till its staff' security could be extra
assured. There isn't a anticipated date to re-institute journey for its gross sales, and
different personnel. The Firm has been productive utilizing web-based assembly media
to proceed its gross sales and customer support processes.



24






Analysis and improvement


                                        Three Months Ended                                    %
($ in 1000's):               July 31, 2021        July 31, 2020         Change           Change
Analysis and improvement
expense                        $           964      $           509     $        455               89 %
Plus: Capitalized analysis
and improvement price                       328                  653             (325 )            (50 )%
Whole analysis and
improvement price               $         1,292      $         1,162     $        130               11 %




                                        Six Months Ended                                     %
($ in 1000's):               July 31, 2021       July 31, 2020         Change           Change
Analysis and improvement
expense                        $         1,941     $         1,193     $        748               63 %
Plus: Capitalized analysis
and improvement price                       706               1,132         
   (426 )            (38 )%
Whole analysis and
improvement price               $         2,647     $         2,325     $        322               14 %




Analysis and improvement price consists primarily of compensation and associated
advantages, using impartial contractors for particular near-term improvement
initiatives, and allotted occupancy expense. Analysis and improvement expense for
the three-month interval ended July 31, 2021 was greater than that from the prior
comparable interval. The general improve in price is said to extending work
with the Firm's improvement companions to create person interfaces to enhance our
velocity with the eValuator product. The extra price associated to improvement
companions consists of inventory compensation expense of $108,000 and $251,000 for the
three- and six- month durations ended July 31, 2021 as in comparison with $69,000 and
$69,000 for the respective comparable prior durations. The Firm continues to be
extra environment friendly in analysis and improvement with main concentrate on the eValuator
product.



The capitalized analysis and improvement price for the three-month interval ended
July 31, 2021 is decrease than that from the prior comparable interval because the Firm
had a number of vital releases through the first half of fiscal yr 2020 that
consumed extra capitalized time. The Firm expects complete analysis and
improvement bills will proceed to extend barely all through fiscal yr
2021, primarily from the enlargement of labor with improvement companions. The
Firm has included in sure improvement associate agreements a mix of
fairness awards and money as compensation. These extra fairness awards are
inflicting a near-term (12 month) improve in amortization of inventory compensation
for fiscal yr 2021. For the six months ended July 31, 2021 and 2020, as a
share of revenues, complete analysis and improvement prices have been 45% and 41%,
respectively.



Non-routine Prices



                              Three Months Ended
($ in 1000's):    July 31, 2021           July 31, 2020       Change      % Change
Non-routine prices   $           336         $             -     $    336           100 %




                              Six Months Ended
($ in 1000's):    July 31, 2021         July 31, 2020       Change      % Change
Non-routine prices   $           777       $             -     $    777           100 %




For the three months ended July 31, 2021, the Firm incurred roughly
$336,000 in reference to the Avelead acquisition that was accomplished on August
16, 2021. Confer with Notice 10 - Subsequent Occasions in our unaudited condensed
consolidated monetary statements included in Half I, Merchandise I, "Monetary
Statements" for additional data on the Avelead acquisition. For the six
months ended July 31, 2021, the Firm additionally incurred a one-time bonus of
roughly $350,000 to sure key executives for managing the profitable
closing of the Providing, and prices of roughly $427,000 in connection
with
the Avelead acquisition.


Loss on the finish of the membership contract


                                          Six Months Ended
($ in 1000's):                July 31, 2021          July 31, 2020         Change          % Change
Loss on exit from membership
         settlement                $        -            $      105$    (105    )        (100    )%



Confer with Notice 3 - Working Leases in our unaudited condensed consolidated
monetary statements included in Half I, Merchandise I, "Monetary Statements" for
additional particulars with respect to the Firm's former shared workplace association
in Atlanta. Within the six months ended July 31, 2020, we recorded $105,000 in price
associated to the remaining funds required beneath the settlement with the owner
on shared workplace house in Atlanta that was deserted when the Firm entered a
new lease for workplace house in Alpharetta, Georgia.



Different Revenue (Expense)



                                        Three Months Ended
($ in 1000's):               July 31, 2021         July 31, 2020        Change          % Change
Curiosity expense               $            (9 )     $           (13 )   $         4              (31 )%
Different                                       (8 )                 (64 )            56              (88 )%
Forgiveness of PPP mortgage and
accrued curiosity                         2,327                     -           2,327              100 %
Whole different revenue (expense)   $         2,310       $           (77 )   $     2,387            (3100 )%




                                        Six Months Ended
($ in 1000's):               July 31, 2021       July 31, 2020        Change          % Change
Curiosity expense               $           (22 )   $           (27 )   $         5              (19 )%
Different                                        6                 (82 )            88             (107 )%
Forgiveness of PPP mortgage and
accrued curiosity                         2,327                   -           2,327              100 %
Whole different revenue (expense)   $         2,311     $          (109 )   $   
 2,420            (2200 )%




Curiosity expense is primarily associated to the amortization of deferred financing
prices of the Firm's revolving line of credit score facility with Bridge Financial institution. A
minimal quantity of curiosity expense for the six months ended July 31, 2020 was
associated to the Firm's time period mortgage that was repaid from the proceeds of the
Asset Buy Settlement for the ECM Belongings. Different expense for the three-month
month interval ended July 31, 2021 displays any foreign money transaction. Different
expense for the six-month interval ended July 31, 2020 consists of every of (i) a
$50,000 influence for foreign money transaction revaluation, and (ii) $31,000 for
Montefiore valuation adjustment. Forgiveness of PPP mortgage and accrued curiosity
for the three- and six-month interval ended July 31, 2021 displays the monetary
influence of the $2,301,000 PPP mortgage being forgiven, together with the accrued
curiosity of $26,000 being forgiven.



Provision for Revenue Taxes



We recorded an revenue tax advantage of $4,000 and $172,000 for the three months
ended July 31, 2021 and 2020 respectively, and revenue tax expense of $5,000 and
revenue tax advantage of $733,000 for the six months ended July 31, 2021 and 2020,
respectively, which is comprised of estimated federal, state and native revenue
tax provisions. The revenue tax profit for the six months ended July 31, 2020 is
partially off-set by an revenue tax from discontinued operations. The Firm has
a considerable quantity of web working losses for federal and state revenue tax
functions. For the six months ended July 31, 2021, the online revenue tax expense is
reported beneath persevering with operations. Confer with Notice 5 - Revenue Taxes for extra
data on the Firm's adoption of ASU 2019-12.



Use of non-GAAP monetary measures



As a way to present buyers with better perception and permit for a extra
complete understanding of the data utilized by administration and the Board
of Administrators in its monetary and operational decision-making, the Firm has
supplemented the condensed consolidated monetary statements offered on a GAAP
foundation on this Report with the next non-GAAP monetary measures: EBITDA,
Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted EBITDA per diluted share.



These non-GAAP monetary measures have limitations as analytical instruments and
shouldn't be thought of in isolation or as an alternative choice to evaluation of Firm
outcomes as reported beneath GAAP. The Firm compensates for such limitations by
relying totally on our GAAP outcomes and utilizing non-GAAP monetary measures solely
as supplemental information. We additionally present a reconciliation of non-GAAP to GAAP
measures used. Traders are inspired to rigorously evaluation this reconciliation.
As well as, as a result of these non-GAAP measures aren't measures of economic
efficiency beneath GAAP and are inclined to various calculations, these
measures, as outlined by us, could differ from and is probably not similar to
equally titled measures utilized by different firms.



25






EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted EBITDA per Diluted Share



We outline: (i) EBITDA as web earnings (loss) earlier than web curiosity expense, revenue
tax expense (profit), depreciation and amortization; (ii) Adjusted EBITDA as
web earnings (loss) earlier than web curiosity expense, revenue tax expense (profit),
depreciation, amortization, share-based compensation expense, transaction
associated bills and different bills that don't relate to our core operations
corresponding to severances and impairment costs; (iii) Adjusted EBITDA Margin as
Adjusted EBITDA as a share of GAAP web income; and (iv) Adjusted EBITDA
per diluted share as Adjusted EBITDA divided by adjusted diluted shares
excellent. EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted EBITDA
per diluted share are used to facilitate a comparability of our working
efficiency on a constant foundation from interval to interval and supply for a extra
full understanding of things and traits affecting our enterprise than GAAP
measures alone. These measures help administration and the board and could also be helpful
to buyers in evaluating our working efficiency persistently over time as
they take away the influence of our capital construction (primarily curiosity costs),
asset base (primarily depreciation and amortization), objects exterior the management
of the administration group (taxes) and bills that don't relate to our core
operations together with: transaction-related bills (corresponding to skilled and
advisory companies), company restructuring bills (corresponding to severances) and
different working prices which can be anticipated to be non-recurring. Adjusted EBITDA
removes the influence of share-based compensation expense, which is one other
non-cash merchandise. Adjusted EBITDA per diluted share consists of incremental shares in
the share depend which can be thought of anti-dilutive in a GAAP web loss place.



The Board of Administrators and administration additionally use these measures (i) as one of many
main strategies for planning and forecasting general expectations and for
evaluating, on at the very least a quarterly and annual foundation, precise outcomes towards
such expectations; and (ii) as a efficiency analysis metric in figuring out
achievement of sure government and affiliate incentive compensation packages.



Our lender makes use of a measurement that's just like the Adjusted EBITDA measurement
described herein to evaluate our working efficiency. The lender beneath our
Amended Safety Settlement requires supply of compliance studies certifying
compliance with monetary covenants, sure of that are primarily based on a measurement
that's just like the Adjusted EBITDA measurement reviewed by our administration
and Board of Administrators.



EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin aren't measures of liquidity
beneath GAAP or in any other case, and aren't options to money circulate from persevering with
working actions, regardless of the benefits concerning the use and evaluation of
these measures as talked about above. EBITDA, Adjusted EBITDA, Adjusted EBITDA
Margin, and Adjusted EBITDA per diluted share, as disclosed on this Report have
limitations as analytical instruments, and you shouldn't take into account these measures in
isolation or as an alternative choice to evaluation of our outcomes as reported beneath GAAP;
nor are these measures supposed to be measures of liquidity or free money circulate
for our discretionary use. Among the limitations of EBITDA and its variations
are:


? EBITDA doesn’t mirror our money bills or our future money necessities.

capital expenditures or contractual commitments;

? EBITDA doesn’t mirror adjustments or money circulate necessities of our enterprise

capital wants;

? EBITDA doesn’t mirror curiosity expense or money circulate necessities for

service curiosity or principal funds beneath our amended guarantee settlement;

? EBITDA doesn’t mirror revenue tax funds that we could also be required to make;

and

? Though depreciation and amortization are non-cash costs, the belongings being

depreciated and depreciated will usually must be changed sooner or later, and

    EBITDA doesn't mirror any money necessities for such replacements.



Adjusted EBITDA has all of the inherent limitations of EBITDA. To correctly and
prudently consider our enterprise, the Firm encourages readers to evaluation the
GAAP monetary statements included elsewhere on this Report, and never depend on any
single monetary measure to judge our enterprise. We additionally strongly urge readers
to evaluation the reconciliation of those non-GAAP monetary measures to probably the most
comparable GAAP measure on this part, together with the condensed consolidated
monetary statements included above.



26






The next desk reconciles EBITDA and Adjusted EBITDA to web loss from
persevering with operations, and Adjusted EBITDA per diluted share to loss per diluted
share for the three-months ended July 31, 2021 and 2020 (quantities in 1000's,
besides per share information). All the objects included within the reconciliation from
EBITDA and Adjusted EBITDA to web loss and the associated per share calculations
are both recurring non-cash objects, or objects that administration doesn't take into account
in assessing our on-going working efficiency. Within the case of the non-cash
objects, administration believes that buyers could discover it helpful to evaluate the
Firm's comparative working efficiency as a result of the measures with out such
objects are much less inclined to variances in precise efficiency ensuing from
depreciation, amortization and different bills that don't relate to our core
operations and are extra reflective of different components that have an effect on working
efficiency. Within the case of things that don't relate to our core operations,
administration believes that buyers could discover it helpful to evaluate our working
efficiency if the measures are offered with out these things as a result of their
monetary influence doesn't mirror ongoing working efficiency.



                                        Three-Months Ended                         Six Months Ended
  In 1000's, besides per
         share information             July 31, 2021        July 31, 2020        July 31, 2021        July 31, 2020
Adjusted EBITDA
Reconciliation
Loss from persevering with
operations                     $           (71 )    $        (1,163 )$        (2,534 )$        (2,140 )
Curiosity expense                             9                   13                   22                   27
Revenue tax (profit)/
expense                                     (4 )               (172 )                  5                 (733 )
Depreciation                                16                   17                   37                   31
Amortization of capitalized
software program improvement prices                 478                  362                  984                  651
Amortization of intangible
belongings                                     116                  124                  231                  247
Amortization of different prices                126                   78                  242                  153
EBITDA                         $           670      $          (741 )    $        (1,013 )$        (1,764 )
Share-based compensation
expense                                    557                  349                1,122                  613
Non-cash valuation
changes                                  -                   14                    -                   31
Loss on exit of working
lease                                        -                    -                    -                  105
Non-routine prices                          336                    -                  777                    -
Forgiveness of PPP mortgage and
accrued curiosity                        (2,327 )                  -               (2,327 )                  -
Different non-recurring costs                  -                    -                   16                    -
Adjusted EBITDA                $          (764 )    $          (378 )    $        (1,425 )$        (1,015 )
Adjusted EBITDA margin (1)                 (27 )%               (13 )%               (24 )%               (18 )%

Adjusted EBITDA per Diluted
Share Reconciliation
Loss from persevering with
operations per frequent share
- diluted                      $             -      $         (0.04 )    $         (0.06 )    $         (0.07 )
Internet (loss) revenue per frequent
share - diluted                $             -      $         (0.04 )    $         (0.05 )    $          0.08
Adjusted EBITDA per adjusted
diluted share (2)              $         (0.02 )    $         (0.01 )    $         (0.04 )    $         (0.03 )

Diluted weighted common
shares (3)                          41,288,709           30,026,658           39,393,333           29,897,236
Includable incremental
shares - adjusted EBITDA (4)           448,522              394,815              567,665              332,359
Adjusted diluted shares             41,737,231           30,421,473        
  39,960,998           30,229,595





(1) Adjusted EBITDA as a share of GAAP web gross sales.

(2) Adjusted EBITDA per diluted share adjusted for our frequent shares is calculated

in line with the share buyback methodology.

(3) Diluted EPS of our strange shares was calculated utilizing treasury shares

methodology.

(4) The variety of extra shares that may be dilutive in an assumption

that the Firm is worthwhile through the interval thought of, which is just

relevant for a interval throughout which the Firm declares a web loss beneath GAAP. If a

GAAP revenue is made through the durations reported, no extra improve

    shares are assumed.




27






Software of crucial accounting insurance policies



The preparation of economic statements in conformity with GAAP requires
administration to make estimates and judgments that have an effect on the reported quantities of
belongings and liabilities, disclosure of contingent belongings and liabilities on the
date of the monetary statements and the reported quantity of income and bills
through the reporting interval. Administration considers an accounting coverage to be
crucial if the accounting coverage requires administration to make significantly
troublesome, subjective or advanced judgments about issues which can be inherently
unsure. A abstract of our crucial accounting insurance policies is included in Notice 2
to our consolidated monetary statements in our Annual Report on Type 10-Okay for
the fiscal yr ended January 31, 2021. In the course of the interval ended July 31, 2021,
the Firm adopted ASU 2019-12. Confer with Notice 5 - Revenue Taxes for extra
data. There have been no materials adjustments to the crucial accounting
insurance policies disclosed in our Annual Report on Type 10-Okay for the fiscal yr ended
January 31, 2021.


Liquidity and capital assets



The Firm's liquidity relies upon quite a few components together with: (i) the
timing and quantity of income and assortment of contractual quantities from
clients, (ii) quantities invested in analysis and improvement and capital
expenditures, and (iii) the extent of working bills, all of which might fluctuate
considerably from quarter to quarter. The Firm's main money necessities
embody common cost of payroll and different enterprise bills, principal and
curiosity funds on debt and capital expenditures. Capital expenditures
usually embody laptop {hardware} and laptop software program to assist inside
improvement efforts or SaaS information heart infrastructure. Operations are funded
with money generated by operations and borrowings beneath credit score services.



On February 25, 2021, the Firm entered into an underwriting settlement with
Craig-Hallum Capital Group LLC, as the only managing underwriter, regarding
the underwritten public providing of an mixture of 10,062,500 shares of the
Firm's frequent inventory, par worth $0.01 per share, which included 1,312,500
shares of frequent inventory offered pursuant to the underwriter's train of an possibility
to buy extra shares of frequent inventory to cowl over-allotments (the
"Providing"). The value to the general public within the Providing was $1.60 per share of
frequent inventory. The gross proceeds to the Firm from the Providing have been
roughly $16.1 million, earlier than deducting underwriting reductions,
commissions and estimated providing bills. The Providing closed on March 2,
2021. The Firm believes that money flows from operations, the money from the
Providing and accessible credit score services are sufficient to fund present
obligations for the following twelve months from issuance of those monetary
statements. Money and money equal balances at July 31, 2021 and January 31,
2021 have been roughly $15,847,000 and $2,409,000, respectively. Continued
enlargement could require the Firm to tackle extra debt or elevate capital
via issuance of equities, or a mix of each. There could be no
assurance the Firm will be capable to elevate the capital required to fund additional
enlargement.



The Firm has liquidity via the Second Amended Mortgage and Safety Settlement
described in additional element in Notice 10 - Subsequent Occasions in our unaudited
condensed consolidated monetary statements included in Half I, Merchandise I,
"Monetary Statements". The Firm has a brand new time period mortgage facility within the most
principal quantity of $10,000,000. Quantities excellent beneath the Second Amended
Mortgage and Safety Settlement bear curiosity at a every year charge equal to the Prime
Price (as printed in The Wall Road Journal) plus 1.5%, with a Prime "ground"
charge of three.25%. Pursuant to the Second Amended Mortgage and Safety Settlement, the
Firm's current $3,000,000 revolving credit score facility with Bridge Financial institution was
terminated. On the time of the discontinuance, there was no excellent stability
on the revolving credit score facility. The Firm may even be required to pay
customary charges and bills.



The Second Amended Mortgage and Safety Settlement has a five-year time period, and the
most principal quantity was superior in a single-cash advance on or concerning the
deadline. Curiosity accrued beneath the Second Amended Mortgage and Safety
Settlement is due month-to-month, and the Firm shall make month-to-month interest-only
funds via the one-year anniversary of the deadline. From the primary
anniversary of the deadline via the maturity date, the Firm shall
make month-to-month funds of principal and curiosity with the remaining excellent
principal stability and all accrued however unpaid curiosity due in full on the
maturity date. Proceeds of the time period mortgage can be used (i) to fund sure charges
and bills related to the Second Amended Mortgage and Safety Settlement,
(ii) replenish the Firm's stability sheet for funds made in reference to
the acquisition of Avelead (which such acquisition closed on August 16, 2021),
and (iii) for strange working capital necessities and different basic company
wants. The time period mortgage is secured by all, or considerably all, belongings of the
Firm, its subsidiaries, and sure of its associates.



The Second Amended Mortgage and Safety Settlement consists of customary monetary
covenants, together with the necessities that the Firm obtain sure EBITDA
ranges and glued protection ratios and keep sure money balances and sure
recurring income ranges. The Second Amended Mortgage and Safety Settlement additionally
consists of unfavourable covenants, topic to exceptions, which restrict transfers,
capital expenditures, indebtedness, sure liens, investments, acquisitions,
inclinations of belongings, restricted funds and the enterprise actions of the
Firm, in addition to customary representations and warranties, affirmative
covenants and occasions of default, together with cross defaults and a change of
management default. The road of credit score is also topic to customary prepayment
necessities.



28







The Coronavirus Assist, Aid, and Financial Safety Act, often known as the CARES
Act, was signed into legislation on March 17, 2020. Amongst different issues, the Cares Act
offered for a enterprise mortgage program often called the Paycheck Safety Act
("PPP"). Firms are in a position to borrow, via the SBA, as much as two months of
payroll. The Firm acquired roughly $2,301,000 via the SBA for the
PPP mortgage program. These funds have been utilized by the Firm to fund payroll
through the COVID-19 pandemic and keep away from additional staffing reductions through the
slowdown. The mortgage required principal funds, starting after the seventh
month-to-month anniversary, and was required to be absolutely paid in two years. The PPP
mortgage bore an rate of interest of 1.0% every year.



In the course of the six months ended July 31, 2021, the Firm has acquired authorized notification that the principal quantity of the PPP mortgage of $ 2,301,000 and accrued curiosity from $ 26,000 had been absolutely forgiven.



Important money obligations



(in 1000's)    July 31, 2021       January 31, 2021
Time period mortgage (1)    $             -     $            2,301





(1) The stability of the time period mortgage at January 31, 2021 is the Firm’s PPP mortgage.

Working money circulate actions


                                                            Six months Ended
(in 1000's)                                      July 31, 2021       July 31, 2020
Internet loss from persevering with operations                $        (2,534 )$        (2,140 )
Non-cash changes to web loss                               288         

1,045

Money influence of adjustments in belongings and liabilities               709                (876 )
Internet money utilized in working actions              $        (1,537 )   $   
    (1,971 )




Using money from working actions is because of the loss from operations for
the three and 6 month durations ended July 31, 2021, offset with forgiveness of
the PPP mortgage within the quantity of $2,301,000 and accrued curiosity of $26,000, as
effectively as sure non-recurring price paid within the first quarter of fiscal yr
2020. We had roughly $600,000 of non-recurring price accrued on the finish of
fiscal yr 2019, that have been funded within the first quarter ended April 30, 2020.
These have been inclusive of roughly $300,000 of severance liabilities for an
worker rationalization that occurred on January 31, 2020.



Investing treasury actions


                                                     Six months Ended
(in 1000's)                               July 31, 2021       July 31, 2020
Purchases of property and gear         $            (3 )   $           (34 )
Proceeds from gross sales of ECM Belongings                       800              

11 288

Capitalized software program improvement prices                 (706 )            (1,094 )
Internet money offered by investing actions   $            91     $        10,160
The lower within the money offered by investing actions within the six months
ended July 31, 2021 over the prior comparable interval is primarily because of the
proceeds from our sale of the ECM Belongings. In the course of the three months ended July 31,
2021, escrowed funds of $800,000 related to the sale of the ECM Belongings have been
launched to the Firm. Confer with Notice 8 - Discontinued Operations for extra
data on the sale of the ECM Belongings. Operationally, the Firm has a extra
targeted effort on the spend for software program improvement initiatives. See dialogue
and evaluation in "Analysis and improvement prices" above. The proceeds from the
sale of the ECM Belongings are web of direct transaction bills.



29






Financing of treasury actions


                                                            Six months Ended
(in 1000's)                                      July 31, 2021       July 31, 2020
Proceeds from issuance of frequent inventory             $        16,100     $   

Funds for prices instantly attributable to the
issuance of frequent inventory                                    (1,318 )       

Proceeds of time period mortgage payable                                    -         

2 301

Funds associated to settlement of worker
shared primarily based awards                                           (291 )       

Fee for deferred financing prices                           (38 )       

Principal repayments on time period mortgage                                -              (4,000 )
Different                                                           (5 )               (58 )
Internet money offered by (utilized in) financing
actions                                         $        14,448$        (1,757 )
The money offered by financing actions within the six months ended July 31, 2021,
was primarily from the general public Providing of the Firm's frequent inventory, which
closed on March 2, 2021. Confer with Notice 6 - Fairness for extra data.
The money utilized in financing actions within the six months ended July 31, 2020 was
primarily the results of the compensation of the Firm's time period mortgage on February 24,
2020, upon the closing of the sale of the ECM Belongings. The Firm was required
to repay the time period mortgage at shut and funding of the sale of the ECM Belongings.
Moreover, the Firm filed for, and acquired, a PPP mortgage within the quantity of
$2,301,000. Confer with Notice 4 - Debt.

© Edgar on-line, supply Previews

About Edith J.

Check Also

NURIX THERAPEUTICS: Administration Dialogue and Evaluation of Monetary Situation and Outcomes of Operations (Type 10-Q)

The next dialogue and evaluation of our monetary situation and outcomes of operations needs to …