UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~October~~April 3130, ~~2024~~2025

☐	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: 000-28132

STREAMLINE HEALTH SOLUTIONS, INC.

(Exact name of registrant as specified in its charter)

Delaware

31-1455414

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

2400 Old Milton Pkwy., Box 1353

Alpharetta, GA 30009

(Address of principal executive offices) (Zip Code)

(888) 997-8732

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.01 par value per share		STRM		Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

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). Yes ☒ No ☐

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 ☐	Non-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 ☐ No ☒

The number of shares outstanding of the Registrant’s Common Stock, $0.01 par value per share, as of ~~December~~June 1612, ~~2024~~2025, was 4,~~273~~356,~~175~~062.

Table of Contents

TABLE OF CONTENTS

		Page
Part I.	FINANCIAL INFORMATION	3
Item 1.	CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	3
	Condensed Consolidated Balance Sheets at October 31, 2024 (unaudited) and January 31, 2024	3
	Condensed Consolidated Balance Sheets at April 30, 2025 (unaudited) and January 31, 2025	3
	Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended October 31, 2024 and 2023	5
	Unaudited Condensed Consolidated Statements of Operations for the three months ended April 30, 2025 and 2024	5
	Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended October 31, 2024 and 2023	6
	Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the three months ended April 30, 2025 and 2024	6
	Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended October 31, 2024 and 2023	7
	Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended April 30, 2025 and 2024	7
	Notes to Unaudited Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3028
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4644
Item 4.	Controls and Procedures	4644
Part II.	OTHER INFORMATION	4745
Item 1.	Legal Proceedings	4745
Item 1A.	Risk Factors	4745
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4947
Item 3.	Defaults Upon Senior Securities	4947
Item 4.	Mine Safety Disclosures	4947
Item 5.	Other Information	4947
Item 6.	Exhibits	5048
	Signatures	5149

Table of Contents

PART I. FINANCIAL INFORMATION

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
	April 30, 2025		January 31, 2025
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	~~754~~1,449,000	$	32,~~190~~183,000
Accounts receivable, net of allowance for credit losses of $59,000 and $86,000, respectively		2,824,000		4,237,000
Accounts receivable, net of allowance for credit losses of $59,000 and $59,000, respectively		4,184,000		1,585,000
Contract receivables		1637,~~248,~~000		~~780~~1,571,000
Prepaid and other current assets		~~567~~310,000		~~629~~438,000
Total current assets		56,~~393~~580,000		85,~~836~~777,000
Non-current assets:
Property and equipment, net of accumulated amortization of $328,000 and $291,000 respectively		52,000		88,000
Property and equipment, net of accumulated amortization of $144,000 and $110,000 respectively		45,000		49,000
Capitalized software development costs, net of accumulated amortization of $9,368,000 and $7,960,000, respectively		5,165,000		5,798,000
Capitalized software development costs, net of accumulated amortization of $7,092,000 and $6,762,000, respectively		4,778,000		4,850,000
Intangible assets, net of accumulated amortization of $5,246,000 and $4,019,000, respectively		10,844,000		12,071,000
Intangible assets, net of accumulated amortization of $6,064,000 and $5,655,000, respectively		10,026,000		10,435,000
Goodwill		13,276,000		13,276,000
Other		1,~~236~~122,000		1,~~666~~192,000
Total non-current assets		3029,~~573~~247,000		3229,~~899~~802,000
Total assets	$	35,~~966~~827,000	$	4135,~~735~~579,000

See accompanying notes to condensed consolidated financial statements.

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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
	April 30, 2025			January 31, 2025
	(Unaudited)
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,~~610~~547,000		$	1,~~253~~541,000
Accrued expenses		1,~~518~~626,000			21,~~023~~921,000
Current portion of term loan		2,250,000			1,500,000
Term loan, net of deferred financing costs		7,277,000			7,709,000
Deferred revenues		6,095,000			7,112,000
Line of credit		2,000,000			1,000,000
Acquisition earnout liability		377,000			1,794,000
Notes payable, net of deferred financing costs		4,703,000			4,415,000
Total current liabilities		11,850,000			13,682,000
Deferred revenues		7,126,000			6,099,000
Acquisition earnout liability		377,000			377,000
Total current liabilities		24,656,000			23,062,000
Non-current liabilities:
Term loan, net of current portion and deferred financing costs		5,883,000			7,566,000
Deferred revenues, less current portion		116,000			240,000
Line of credit		—			1,500,000
Total non-current liabilities		116,000			240,000
Notes payable, net of deferred financing costs		4,129,000			—
Total liabilities		24,772,000			23,302,000
Deferred revenues, less current portion		190,000			173,000
Total non-current liabilities		10,202,000			9,239,000
Total liabilities		22,052,000			22,921,000
Commitments and contingencies – Note 8
Stockholders’ equity:
Common stock, $0.01 par value per share, 85,000,000 shares authorized; 4,265,821 and 3,929,446 shares issued and outstanding, respectively		43,000			39,000
Common stock, $0.01 par value per share, 85,000,000 shares authorized; 4,324,091 and 4,264,482 shares issued and outstanding, respectively		43,000			43,000
Additional paid in capital		~~137~~138,~~588~~515,000			~~134~~138,~~474~~092,000
Accumulated deficit		(~~123~~127,~~717~~503,000	)		(~~115~~125,~~699~~858,000	)
Total stockholders’ equity		1311,~~914~~055,000			1812,~~814~~277,000
Total liabilities and stockholders’ equity	$	35,~~966~~827,000		$	4135,~~735~~579,000

See accompanying notes to condensed consolidated financial statements.

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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,
	Three Months Ended April 30,
	2024			2023			2024			2023
	2025			2024
Revenues:
Software as a service	$	23,~~933~~359,000		$	32,~~924~~723,000		$	~~8,734,000~~		$	~~10,630,000~~
Maintenance and support		~~878~~737,000			1890,~~070,~~000			~~2,651,000~~			~~3,327,000~~
Professional fees and licenses		~~608~~714,000			1717,~~139,~~000			~~1,841,000~~			~~3,278,000~~
Total revenues		4,~~419~~810,000			64,~~133~~330,000			~~13,226,000~~			~~17,235,000~~
Operating expenses:
Cost of software as a service		1,~~512~~380,000			1,~~677~~348,000			~~4,356,000~~			~~5,159,000~~
Cost of maintenance and support		4232,000			~~129~~42,000			~~127,000~~			~~250,000~~
Cost of professional fees and licenses		~~831~~808,000			1887,~~072,~~000			~~2,558,000~~			~~3,202,000~~
Selling, general and administrative expense		2,~~880~~788,000			43,~~122~~192,000			~~9,060,000~~			~~12,079,000~~
Research and development		1903,~~134,~~000			1,~~304~~111,000			~~3,569,000~~			~~4,310,000~~
Impairment of goodwill		—			9,813,000			—			9,813,000
Total operating expenses		5,911,000			6,580,000
Impairment of long-lived assets		—			963,000			—			963,000
Operating loss		(1,101,000	)		(2,250,000	)
Total operating expenses		6,399,000			19,080,000			19,670,000			35,776,000
Other (expense) income:
Operating loss		(1,980,000	)		(12,947,000	)		(6,444,000	)		(18,541,000	)
Interest expense		(543,000	)		(465,000	)
Other (expense) income:
Valuation adjustments		—			(24,000	)
Interest expense		(496,000	)		(266,000	)		(1,457,000	)		(781,000	)
Other		(1,000	)		—
Valuation adjustments		—			1,182,000			(115,000	)		1,905,000
Loss before income taxes		(1,645,000	)		(2,739,000	)
Other		—			—			(2,000	)		31,000
Income tax benefit		—			—
Loss before income taxes		(2,476,000	)		(12,031,000	)		(8,018,000	)		(17,386,000	)
Net loss	$	(1,645,000	)	$	(2,739,000	)
Income tax benefit		—			120,000			—			59,000
Basic and Diluted Earnings Per Share:
Net loss	$	(2,476,000	)	$	(11,911,000	)	$	(8,018,000	)	$	(17,327,000	)
Net loss per common share – basic and diluted	$	(0.40	)	$	(0.71	)
Basic and Diluted Earnings Per Share:
Weighted average number of common shares – basic and diluted		4,128,029			3,881,606
Net loss per common share – basic and diluted	$	(0.61	)	$	(3.15	)	$	(2.01	)	$	(4.61	)
Weighted average number of common shares – basic and diluted		4,055,268			3,780,689			3,981,406			3,756,420

See accompanying notes to condensed consolidated financial statements.

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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		3,929,446		$	39,000	$	134,474,000		$	(115,699,000	)	$	18,814,000
Balance at January 31, 2025		4,264,482		$	43,000	$	138,092,000		$	(125,858,000	)	$	12,277,000
Restricted stock issued		8174,~~000~~928			~~1,000~~—		~~(1,000~~—	)		—			—
Restricted stock forfeited		(34,~~224~~007	)		—		—			—			—
Surrender of shares		(911,~~273~~312	)		—		(6733,000	)		—			(6733,000	)
Share-based compensation		—			—		~~529~~456,000			—			~~529~~456,000
Issuance of common stock		123,502			1,000		769,000			—			770,000
Net loss		—			—		—			(1,645,000	)		(1,645,000	)
Offering expenses		—			—		(4,000	)		—			(4,000	)
Balance at April 30, 2025		4,324,091		$	43,000	$	138,515,000		$	(127,503,000	)	$	11,055,000
Net loss		—			—		—			(2,739,000	)		(2,739,000	)
Balance at April 30, 2024		4,121,451		$	41,000	$	135,700,000		$	(118,438,000	)	$	17,303,000
Restricted stock issued		113,769			1,000		(1,000	)		—			—
Restricted stock forfeited		(18,817	)		—		—			—			—
Surrender of shares		(3,452	)		—		(10,000	)		—			(10,000	)
Share-based compensation		—			—		571,000			—			571,000
Cashless exercise of warrants		7,317			—		—			—			—
Warrant liability reclassification		—			—		837,000			—			837,000
Net loss		—			—		—			(2,803,000	)		(2,803,000	)
Balance at July 31, 2024		4,220,268		$	42,000	$	137,097,000		$	(121,241,000	)	$	15,898,000
Restricted stock issued		54,801			1,000		(1,000	)		—			—
Restricted stock forfeited		(8,445	)		—		—			—			—
Surrender of shares		(803	)		—		—			—			—
Share-based compensation		—			—		492,000			—			492,000
Net loss		—			—		—			(2,476,000	)		(2,476,000	)
Balance at October 31, 2024		4,265,821		$	43,000	$	137,588,000		$	(123,717,000	)	$	13,914,000

						Additional						Total
	Common stock			Common stock		paid in			Accumulated			stockholders’
	(Shares)			(Amount)		capital			deficit			equity
Balance at January 31, 2023		3,837,560		$	38,000	$	132,511,000		$	(97,038,000	)	$	35,511,000
Balance at January 31, 2024		3,929,446		$	39,000	$	134,474,000		$	(115,699,000	)	$	18,814,000
Restricted stock issued		7981,~~061~~000			1,000		(1,000	)		—			—
Restricted stock forfeited		(13,~~893~~224	)		—		—			—			—
Surrender of shares		(59,~~888~~273	)		—		(~~179~~67,000	)		—			(~~179~~67,000	)
Share-based compensation		—			—		~~595~~529,000			—			~~595~~529,000
Adoption of ASU 2016-13		—			—		—			36,000			36,000
Issuance of common stock		123,502			1,000		769,000			—			770,000
Net loss		—			—		—			(2,901,000	)		(2,901,000	)
Offering expenses		—			—		(4,000	)		—			(4,000	)
Balance at April 30, 2023		3,908,840		$	39,000	$	132,926,000		$	(99,903,000	)	$	33,062,000
Net loss		—			—		—			(2,739,000	)		(2,739,000	)
Restricted stock issued		25,714			—		—			—			—
Balance at April 30, 2024		4,121,451		$	41,000	$	135,700,000		$	(118,438,000	)	$	17,303,000
Restricted stock forfeited		(5,133	)		—		—			—			—
Surrender of shares		(3,337	)		—		(73,000	)		—			(73,000	)
Share-based compensation		—			—		630,000			—			630,000
Net loss		—			—		—			(2,515,000	)		(2,515,000	)
Balance at July 31, 2023		3,926,084		$	39,000	$	133,483,000		$	(102,418,000	)	$	31,104,000
Restricted stock issued		11,736			—		—			—			—
Restricted stock forfeited		(15,940	)		—		—			—			—
Surrender of shares		(2,535	)		—		(19,000	)		—			(19,000	)
Share-based compensation		—			—		577,000			—			577,000
Net loss		—			—		—			(11,911,000	)		(11,911,000	)
Balance at October 31, 2023		3,919,345		$	39,000	$	134,041,000		$	(114,329,000	)	$	19,751,000

See accompanying notes to condensed consolidated financial statements.

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STREAMLINE HEALTH SOLUTIONS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(rounded to the nearest thousand dollars)

	Nine Months Ended October 31,
	Three Months Ended April 30,
	2024			2023
	2025			2024
Net loss	$	(81,~~018~~645,000	)	$	(172,~~327~~739,000	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		31,~~594~~042,000			31,~~264~~120,000
Accrued interest expense - notes payable		~~507~~189,000			—152,000
Valuation adjustments		~~115,000~~—			(124,~~905,~~000	)
Benefit for deferred income taxes		—			(104,000	)
Share-based compensation expense		430,000			499,000
Share-based compensation expense		1,483,000			1,626,000
Impairment of goodwill		—			9,813,000
Impairment of long-lived assets		—			963,000
Provision for credit losses		(58,000	)		—
Changes in assets and liabilities:
Accounts and contract receivables		(1,~~003~~665,000	)		417,~~299,~~000
Other assets		~~(116~~66,000	)		(65100,000	)
Accounts payable		~~357~~6,000			~~109~~(161,000	)
Accrued expenses and other liabilities		(~~505~~295,000	)		(~~417~~262,000	)
Deferred revenue		(1903,000~~,000~~	)		(2251,~~417,~~000	)
Net cash used in operating activities		(2969,~~638,~~000	)		(21,~~161~~199,000	)
Cash flows from investing activities:
Purchases of property and equipment		—			(47,000	)
Capitalization of software development costs		(232,000	)		(232,000	)
Capitalization of software development costs		(667,000	)		(1,562,000	)
Net cash used in investing activities		(232,000	)		(232,000	)
Net cash used in investing activities		(667,000	)		(1,609,000	)
Cash flows from financing activities:
Repayment of bank term loan		(1500,000~~,000~~	)		(~~500~~250,000	)
Repayment of line of credit		~~(1,500,000~~—	)		—(1,500,000	)
Proceeds from issuance of common stock		~~100,000~~—			—100,000
Proceeds from notes payable		~~4,400,000~~—			—4,400,000
Proceeds from line of credit		—1,000,000			~~500,000~~—
Payments of acquisition earnout liabilities		~~(886,000~~—	)		—(447,000	)
Payments for deferred financing costs		~~(168,000~~—	)		—(16,000	)
Repurchase of common shares to satisfy employee tax withholding		(7733,000	)		(~~271~~67,000	)
Net cash provided (used in) by financing activities		869,000			(271,000	)
Net cash provided by financing activities		467,000			2,220,000
Net decrease in cash and cash equivalents		(2734,~~436,~~000	)		(4789,~~041,~~000	)
Cash and cash equivalents at beginning of period		32,~~190~~183,000			63,~~598~~190,000
Cash and cash equivalents at end of period	$	~~754~~1,449,000		$	23,~~557~~979,000

See accompanying notes to condensed consolidated financial statements.

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STREAMLINE HEALTH SOLUTIONS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~October~~April 3130, ~~2024~~2025

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 condensed 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~~April 3130, ~~2024~~2025, are not necessarily indicative of the results that may be expected for the fiscal year ending January 31, ~~2025~~2026.

The Company has one operating segment and one reporting unit due to the singular nature of our products, product development and distribution process, and client base as a provider of computer software-based solutions and services for acute-care healthcare providers.

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~~that ~~Company may~~it ~~not~~is beprobable ~~able~~that tothe Company will not 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.

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As of ~~October~~ April 3130, ~~2024~~2025, the Company had approximately $~~12.3~~14 million of total outstanding debt associated with its term loan, line of credit and private placement notes payables, ~~$2.3 million of~~ which is classified as a current liability. The Company’s ability to refinance its existing debt is based upon credit markets and economic forces that are outside of its control. There can be no assurance that the Company will be successful in raising additional capital or that such capital, if available, will be on terms that are acceptable to the Company. As a result, management concluded that substantial doubt exists about our ability to continue as a going concern.

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-15 reverse stock split pursuant to which each 15 shares of the Company’s issued and outstanding common stock immediately prior to the effective time, which was 12:01 am Eastern Daylight Time on October 4, 2024, were combined into one share of the Company’s common stock, without effecting a change to the par value per share of Common Stock. The Company’s common stock began trading on a split-adjusted basis when the market opened on October 4, 2024.

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 $551,000 as of January 31, 2024 and an offsetting adjustment to the carrying value of common stock. No fractional shares were issued in connection with the Reverse Stock Split, and stockholders who would otherwise have been entitled to receive a fractional share instead received a cash payment equal to the fraction of a share of common stock in lieu of such fractional share. Proportionate adjustments were made to the number of shares authorized under the Company’s equity incentive plans, the number of shares subject to any award or purchase right under the Company’s equity incentive plans, and the exercise price or purchase price with respect to any stock option award or purchase right under the Company’s equity incentive plans. All shares of the Company’s common stock, stock-based instruments and per-share data included in these condensed consolidated financial statements have been retrospectively adjusted as though the Reverse Stock Split has been effected prior to all periods presented. All of the Company's equity incentive plans included existing conversion language in the event of a stock split and thus did not result in modification accounting or additional incremental expense as a result of this transaction.

Agreement and Plan of Merger with Mist Holding Co.

On May 29, 2025, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Mist Holding Co., a Delaware corporation and the parent company of Hayes Management Consulting LLC d/b/a MDaudit (“Parent”), and MD BE Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Parent (“Merger Sub”), pursuant to which, upon the terms and subject to the conditions set forth therein, Merger Sub will merge with and into the Company, with the Company continuing as the surviving corporation and becoming a wholly owned subsidiary of Parent (the “Merger”). Refer to Note 10, Subsequent Events for additional information about the Merger.

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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~~2024. Users of financial information for interim periods are encouraged to refer to the notes to the condensed consolidated financial statements contained in the Annual Report on Form 10-K when reviewing interim financial results.

Segments

The Company operates as a single operating segment. The Company’s chief operating decision maker is one individual and has the role of Chief Executive Officer (the "CODM"). The CODM reviews financial information including operating results and assets on a consolidated basis, accompanied by the Company's revenue consistent with the categories presented below. For information about how the Company derives revenue, as well as the Company’s accounting policies, refer to Note 2—Significant Accounting Policies. The CODM uses consolidated net income to assess performance, evaluate cost optimization, and allocate financial, capital and personnel resources. This measure is used in the annual operating plan and forecasting process as well as ongoing decisions driven by the monthly reviews of the plan versus actual results. The following table sets forth significant expense categories and other specified amounts included in consolidated net loss that are reviewed by the CODM, or are otherwise regularly provided to the CODM, for the three months ended April 30, 2025 and 2024:

	Fiscal Year
	2025			2024
Revenues:
Software as a service	$	3,359,000		$	2,723,000
Maintenance and support		737,000			890,000
Professional fees and licenses		714,000			717,000
Total revenues		4,810,000			4,330,000
Operating expenses:
Cost of Sales(1)		1,692,000			1,633,000
General & Administrative(1)		1,537,000			1,727,000
Sales & Marketing(1)		552,000			720,000
Research & Development(1)		803,000			951,000
Stock Based Compensation		430,000			499,000
Depreciation & amortization expense		874,000			1,018,000
Other operating expenses(2)		23,000			32,000
Total operating expenses		5,911,000			6,580,000
Operating loss		(1,101,000	)		(2,250,000	)
Other income (expense):
Interest expense		(543,000	)		(465,000	)
Valuation adjustments		—			(24,000	)
Other		(1,000	)		—
Loss before income taxes		(1,645,000	)		(2,739,000	)
Income tax benefit (expense)		—			—
Net Loss	$	(1,645,000	)	$	(2,739,000	)

(1)Excludes share-based compensation, depreciation, and amortization.

(2)Other operating expenses primarily consists of severance related expenses.

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

Value

(Level 1)

(Level 2)

(Level 3)

At January 31, 2024

Acquisition earnout liability (1)

1,794,000

—

1,794,000

(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 $159,000 using the value of the shares issued adjusted for a discount for lack of marketability. See the table below for the roll-forward of values including the amount transitioned out of Level 3.

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The table below provides the Level 3 roll-forward on the fair value of our acquisition earnout liability for the ~~nine~~three months ended ~~October~~April 3130, 2024. There was no Level 3 roll-forward activity for the three months ended ~~October~~April 3130, ~~2024~~2025.

	Nine-months ended
	Three-months ended
	October 31, 2024
	April 30, 2024
Beginning balance	$	1,794,000
Settlement – common stock		(690,000	)
Settlement – cash		(447,000	)
Realized loss		159,000
Transfer out		(817,000	)
Ending balance	$	—

The value of the Company’s acquisition earnout liability at ~~October~~April 3130, ~~2024~~2025, represents the remaining cash obligation of $377,000. The Company reached an agreement with the former owners of Avelead to settle the cash obligation by making periodic payments. The remaining outstanding amounts were originally contractually due by October 31, 2024.

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~~April 3130, ~~2024~~2025 and January 31, ~~2024~~2025. The term loan bears interest at a per annum rate equal to the Prime Rate (as published in The Wall Street Journal) plus 1.5%, with a Prime “floor” rate of 3.25%. The prime rate is variable and, thus accommodates changes in the market interest rate. However, the interest rate spread (the 1.5% added to the Prime Rate) is fixed. We estimated the impact of the changes in the interest rate spread by analogizing the effect of the change in the published “Corporate Bond Rates,” reduced for any changes in the market interest rate. This provided us with an estimated change to the interest rate spread of approximately 0.5% from the date we entered the Second Amended and Restated Loan Agreement for the term loan. The fair value of the Company's term loan as of ~~October~~April 3130, ~~2024~~2025 and January 31, ~~2024~~2025, was estimated to be $6,838,000 and $7,~~821~~330,000, respectively, or a discount to book value of $162,000 and $171,000, respectively. The fair value of the line of credit as of April 30, 2025 and January 31, 2025, was estimated to be $81,~~807~~984,000 and $991,000, respectively, or a discount to book value of $~~179~~16,000 and $~~193~~9,000, respectively. The fair value of the Company's term loan and line of credit represents a Level 2 measurement.

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~~ January 31, ~~2024~~2025. 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 0.98% less than the Issuance Date. The fair value of the Company's notes payable as of ~~October~~April 30, 2025 and January 31, ~~2024~~2025, was estimated to be $4,~~096~~703,000 and $4,357,000, respectively, or a discount to book value of $333,700 and $58,000, respectively. The fair value of the Company's notes payable represents a Level 2 measurement.

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 $5.70 and $5.85, market prices on the measurement dates ($5.10 as of February 7, 2024, $4.50 as of April 30, 2024, and $4.95 as of May 7, 2024) plus assumptions and model inputs for expected term, historical 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). The warrants carry a term of 48 months and the Company assumes they are held until expiration. The risk-free rate was determined from the U.S. Treasury published daily treasury yields corresponding with the remaining expected term which ranged between 4% - 5%. The Company’s common stock volatility was estimated between 91% - 92% utilizing its historical average closing price for preceding trading days equal to expected term remaining.

Using this methodology, the Company recorded an opening warrant liability of $881,000 as of February 7, 2024. Re-measurements as of April 30, 2024 and May 7, 2024 are reflected under the “Valuation adjustments” header on the condensed consolidated statement of operations as a valuation gain of $44,000 for the nine months ending October 31, 2024. There was no valuation adjustment recorded in the three months ended October 31, 2024. As of May 7, 2024, the Company had eliminated the potential cash settlement feature that caused liability accounting ensuring the warrants will be settled with shares, and accordingly, the warrants met the criteria for equity classification and reclassified $837,000 to paid in capital after a final re-measurement.

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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

April 30, 2025

April 30, 2024

Over time revenue

4,~~419~~810,000

64,~~133~~195,000

~~13,091,000~~

~~17,161,000~~

Point in time revenue

—

—135,000

~~135,000~~

~~74,000~~

Total revenue

4,~~419~~810,000

64,~~133~~330,000

~~13,226,000~~

~~17,235,000~~

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~~April 3130, ~~2024~~2025, the Company recognized approximately $12,~~253~~701,000 ~~and $5,878,000, respectively,~~ in revenue from deferred revenues outstanding as of January 31, ~~2024~~2025. Revenue allocated to remaining performance obligations was $3028,~~068~~988,000 as of ~~October~~April 3130, ~~2024~~2025, of which the Company expects to recognize approximately 4648% over the next 12 months and the remainder thereafter.

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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~~April 3130, ~~2024~~2025 and January 31, ~~2024~~2025, the Company had deferred costs of $6863,000 and $7765,000, respectively, net of accumulated amortization of $~~147~~79,000 and $~~102~~67,000, respectively. Amortization expense of these costs was $4412,000 and $5920,000 for the ~~nine~~ three months ended ~~October~~April 3130, ~~2024~~2025 and ~~2023~~2024, respectively, and is included in cost of SaaS in the condensed consolidated statements of operations. ~~For the three months ended October 31, 2024 and 2023, the Company had amortization expense of $11,000 and $24,000, respectively.~~

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~~April 3130, ~~2024~~2025 and January 31, ~~2024~~2025, deferred commission costs paid and payable, which are included on the consolidated balance sheets within other non-current assets totaled $1,~~157~~059,000 and $1,~~461~~127,000, respectively. Amortization expense associated with deferred sales commissions, which is included in selling, general and administrative expense in the condensed consolidated statements of operations, was $~~141~~119,000 and $~~129~~140,000 for the three months ended ~~October~~April 3130, ~~2024~~2025 and ~~2023, respectively. For the nine months ended October 31,~~ 2024 ~~and 2023~~, ~~the amortization expense associated with deferred sales commissions was $450,000 and $383,000,~~ respectively. ~~For the three and nine months ended October 31, 2024, the Company recorded an impairment of $93,000~~ ~~for deferred commission costs. For the three and nine months ended October 31, 2023, the Company recorded an impairment of $35,000 for deferred commission costs.~~

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
	January 31, 2025		Provision adjustments		Write-offs & Recoveries			April 30, 2025
Allowance for credit losses	$	8659,000	$	—		~~(58,000~~—	)	$	3159,000	$	~~59,000~~

January 31, 2023

CECL Adoption

Provision adjustments

Write-offs & Recoveries

October 31, 2023

January 31, 2024

Provision adjustments

Write-offs & Recoveries

April 30, 2024

Allowance for credit losses

~~132~~86,000

~~(36,000~~—

)

—31,000

—117,000

~~96,000~~

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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~~April 3130, ~~2024,~~2025 of $~~451~~430,000 ~~and $1~~,~~483,000~~ ~~respectively,~~ net of $4126,000 ~~and $109,000, respectively,~~ of capitalized non-employee stock compensation, compared to share-based compensation expense of $~~517~~499,000 ~~and $1,626,000, respectively,~~ net of $6030,000 ~~and $176,000, respectively,~~ of capitalized non-employee stock compensation, for the three ~~and nine~~ months ended ~~October~~April 3130, ~~2023~~2024.

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~~April 3130, ~~2024~~2025, the Company issued ~~333 and 181~~12,~~321~~000 shares of restricted common stock, ~~respectively,~~ compared to 280,~~999~~991 ~~and 92,562~~ shares of restricted common stock for the three ~~and nine~~ months ended ~~October~~April 3130, ~~2023~~2024, respectively. The Company expenses the compensation cost of these awards as the restriction period lapses.

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 awards ~~Board~~to ~~awards~~the board of directors of the Company (the “Board”) discussed above, executed a Restricted Stock Agreement (the “Restricted Stock Agreement”) to issue 13,333 shares of restricted stock with a market vesting condition to a member of the Board. The shares will vest on the date the stock closes at a fair market value of at least $26.25 per share.

On September 4, 2024, the Restricted Stock Agreement was amended to rescind 6,666 shares of restricted stock. The remaining shares will vest in full upon the stock closing at a fair market value of at least $26.25 per share, but no earlier than July 18, 2025. The award modification was reevaluated using the same Monte Carlo valuation model and input as the original grant with a change to account for the minimum vesting period. The impacts of the modification were immaterial.

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.

The warrants initially met the classification of liability as of the origination date on February 7, 2024. In the second quarter of fiscal 2024, the warrants met the requirements of equity classification, and a final valuation of the fair value of the warrant liability was performed and recorded. 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 $5.70 and $5.85, the market prices on the measurement dates ($5.10 as of February 7, 2024, $4.50 as of April 30, 2024, and $4.95 as of May 7, 2024) plus assumptions and model inputs for expected term, historical 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). The warrants carry a term of 48 months, and the Company assumes they are held until expiration. The risk-free rate was determined from the U.S. Treasury published daily treasury yields corresponding with the remaining expected term which ranged between 4% - 5%. The Company’s common stock volatility was estimated between 91% - 92% utilizing its historical average closing price for preceding trading days equal to expected term remaining.

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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~~April 3130, ~~2024~~2025.

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~~April 3130, ~~2024~~2025 and ~~2023~~2024:

	Three Months Ended						~~Nine Months Ended~~
	October 31, 2024			October 31, 2023			October 31, 2024			October 31, 2023
	April 30, 2025			April 30, 2024
Basic and diluted loss per share:
Net loss	$	(21,~~476~~645,000	)	$	(112,~~911~~739,000	)	$	~~(8,018,000~~	)	$	~~(17,327,000~~	)
Basic and diluted net loss per share of common stock	$	(0.6140	)	$	(30.1571	)	$	~~(2.01~~	)	$	~~(4.61~~	)
Weighted average shares outstanding – basic and diluted (1)(2)		4,~~055~~128,~~268~~029			3,~~780~~881,~~689~~606			~~3,981,406~~			~~3,756,420~~

(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~~April 3130, ~~2024~~2025 and ~~2023~~2024, there were ~~220~~218,~~327~~352 and ~~132~~179,~~013~~164 unvested restricted shares of common stock outstanding, respectively.

(2)

Diluted net loss per share excludes the effect of shares that are anti-dilutive. For the three ~~and nine~~ months ended ~~October~~April 3130, ~~2024~~2025, diluted earnings per share excludes 43,~~396~~530 outstanding stock options, ~~220~~218,~~327~~352 unvested restricted shares of common stock, and 237,027 shares of common stock issuable through the exercise of warrants. For the three ~~and nine~~ months ended ~~October~~April 3130, ~~2023~~2024, diluted earnings per share excludes 274,~~919~~400 outstanding stock options, ~~and 132~~179,~~013~~164 unvested restricted shares of common stock, and 267,728 shares of common stock issuable through the exercise of warrants.

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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 26 employees, or approximately 24% of the Company’s workforce. To execute the Strategic Restructuring, the Company incurred one-time restructuring costs associated with the workforce reduction of $759,000, and the Company has recognized all expenses associated with the Strategic Restructuring as of the end of fiscal 2023. The costs pertain to severance and other employee termination-related costs and various professional fees the Company required to assist with execution of the Strategic Restructuring. ~~For the nine months ended October 31, 2024, there were no costs incurred or accrued related to the Strategic Restructuring.~~ The following is a reconciliation of the Strategic Restructuring liability reflected on the Company’s ~~condensed~~ consolidated balance sheet under “accrued expenses.” for the three months ended April 30, 2024. The accrued balance was paid out prior to January 31, 2025.

	(in thousands)
										As of October 31, 2024
	Accrued Balance as of		2024		2024			Accrued Balance as of
	Accrued Balance as of		2024		2024			Accrued Balance as of		Total Costs		Total
	January 31, 2024		Expenses to Date		Cash Payments			April 30, 2024
	January 31, 2024		Expenses to Date		Cash Payments			October 31, 2024		Incurred to Date		Expected Costs
Severance expense
Severance expense
Cost of sales	$	—	$	—	$	—		$	—
Cost of sales	$	—	$	—	$	—		$	—	$	154	$	154
Selling, general, and administrative		74		—		(65	)		9
Selling, general, and administrative		74		—		(74	)		—		350		350
Research and development		—		—		—			—
Research and development		—		—		—			—		227		227
Total severance expense	$	74	$	—	$	(65	)	$	9
Total severance expense	$	74	$	—	$	(74	)	$	—	$	731	$	731
Professional fees		—		—		—			—
Professional fees		—		—		—			—		28		28
Total	$	74	$	—	$	(65	)	$	9
Total	$	74	$	—	$	(74	)	$	—	$	759	$	759

	(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	$	—	$	154	$	—	$	154
Selling, general, and administrative		—		350		—		350
Research and development		—		227		—		227
Total severance expense	$	—	$	731	$	—	$	731
Professional fees		—		18		—		18
Total	$	—	$	749	$	—	$	749

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Non-Cash Items

For the three ~~and nine~~ months ended ~~October~~April 3130, ~~2024~~2025 and ~~2023~~2024, the Company recorded a change in capitalized software purchased with stock, totaling $4126,000 and $~~109~~30,000, ~~and $60,000 and $176,000,~~ respectively, as non-cash items as it relates to non-cash investing activities in the ~~condensed~~ consolidated statements of cash flow.

For the ~~nine~~three months ended ~~October~~April 3130, 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 $690,000, issued warrants in the amount of $881,000 as debt discounts, settled the warrant liability of $837,000 with an equity based warrant, deferred financing costs for the Notes (refer to Note 5 – Debt) in the amount of $20,000 that was capitalized and paid in fiscal year 2023, and professional fees for the Common Stock Private Placement (refer to Note 7 – Equity) in the amount of $4,000, respectively, as non-cash items as it relates to financing activities in the condensed consolidated statements of cash flows. The Company did not have any similar non-cash financing activities in the ~~nine~~three months ended ~~October~~April 3130, ~~2023~~2025.

Recent Accounting Pronouncements Not Yet Adopted

In ~~November~~ December 2023, the FASB issued ASU 2023-0709, Income ~~Segment~~Taxes ~~Reporting~~ (Topic ~~280~~ 740): Improvements to ~~Reportable~~Income ~~Segment~~Tax Disclosures, which ~~improves~~enhance ~~guidance around~~ the ~~disclosures~~transparency ~~about~~and adecision ~~public~~usefulness ~~entity’s~~of ~~reportable~~income ~~segments~~tax ~~and~~disclosures. ~~additional~~For ~~details~~public ~~about~~entities, ~~a reportable segment’s expenses.~~ ASU 2023-07 09 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 condensed consolidated financial statements or disclosures.

In ~~December~~ November ~~2023~~2024, the FASB issued ASU ~~2023~~ 2024-0903, Income Statement - Reporting Comprehensive Income ~~Taxes~~- ~~(Topic~~Expense ~~740~~Disaggregation Disclosures (Subtopic 220-40): ~~Improvements~~Disaggregation toof Income ~~Tax~~Statement ~~Disclosures~~Expenses, which ~~enhance~~improves ~~the~~financial ~~transparency~~reporting ~~and~~by ~~decision~~requiring ~~usefulness~~public entities to disclose additional information about specific expense categories in the notes of ~~income~~the ~~tax~~financial ~~disclosures.~~statements ~~For~~at ~~public~~interim ~~entities,~~and ~~ASU~~annual ~~2023-09~~reporting period. ASU 2024-03 is effective for all public entities for annual reporting periods beginning after December 15, ~~2024.~~2026, and interim reporting periods beginning after December 15, 2027. The adoption of this ASU is ~~not~~ expected to improve reporting and is not expected to have aan overall 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.

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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 $1,794,000. On March 27, 2024, the Company issued 105,958 unregistered securities in the form of restricted common stock, par value $0.01 per share, with respect to the second year earnout consideration. For the three ~~and nine~~ months ended ~~October~~April 3130, 2025 and 2024, the Company made cash payments of $~~200,000~~0 and $~~887~~447,000 respectively, related to the second year earnout consideration. The remaining outstanding amounts were originally contractually due by October 31, 2024. The remaining cash liability is reflected on the Company’s ~~condensed~~ consolidated balance sheet as “acquisition earnout liability” and totaled $377,000 as of ~~October~~April 3130, ~~2024~~2025.

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~~April 3130, ~~2024~~2025 and ~~2023~~2024, the Company recorded $92,000 and $257,000, respectively, ~~and~~ ~~$6,000 and $16,000, respectively,~~ related to such office space rentals.

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 18 months, which coincided with the Company’s underlying lease (see below). The Company received $292,000 from the sublessee over the term of the sublease. The sublease did not relieve the Company of its original obligation under the lease, and therefore the Company did not adjust the operating lease right-of-use asset and related liability. The sublease terminated on March 31, 2023. For the nine months ended October 31, 2024 and 2023, the Company recorded $0 and $32,000, respectively, as other income related to the sublease. There was no income related to the sublease in the three months ended October 31, 2024 and 2023.

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 $540,000, and related current and long-term operating lease obligation in the accompanying consolidated balance sheet. The Company used a discount rate of 6.5% to determine the lease liability. For the nine months ended October 31, 2024 and 2023, the Company had lease operating costs of approximately $0 and $32,000, respectively. There was no expense related to lease operating costs in the three months ended October 31, 2024 and 2023.

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 36-month term lease commenced March 1, 2019, and expired on February 28, 2022. The Company previously renewed the lease for an additional 12-month term which expired February 28, 2023, and was not renewed. For the nine months ended October 31, 2024 and 2023, the Company recorded rent expense of $0 and $6,000, respectively. There was no expense recorded for the three months ended October 31, 2024 and 2023.

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NOTE 5 — DEBT

Outstanding principal balances consisted of the following at ~~October~~April 3130, ~~2024~~2025:

	October 31, 2024			January 31, 2024
	April 30, 2025			January 31, 2025
Term loan	$	87,000,000		$	97,~~000~~500,000
Financing cost payable		~~177~~307,000			~~135~~245,000
Less: Deferred financing cost		(4430,000	)		(6936,000	)
Total		87,~~133~~277,000			97,~~066~~709,000
Less: Current portion of term loan		(27,~~250~~277,000	)		(17,~~500~~709,000	)
Non-current portion of term loan	$	~~5,883,000~~—		$	~~7,566,000~~—

	October 31, 2024			January 31, 2024
	April 30, 2025			January 31, 2025
Notes payable and accrued interest	$	45,~~907~~283,000		$	—5,095,000
Less: Discount on notes payable		(~~642~~489,000	)		—(573,000	)
Less: Deferred financing costs		(~~136~~91,000	)		—(107,000	)
Total		4,~~129~~703,000			—4,415,000
Less: Current portion of notes payable		—(4,703,000	)		—(4,415,000	)
Non-current portion of notes payable	$	~~4,129,000~~—		$	—

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 $2,000,000 non-formula revolving line of credit. The revolving line of credit will be co-terminus with the term loan and matures on August 26, 2026. Amounts outstanding under the line of credit portion of the Second Amended and Restated Loan Agreement bear interest at a per annum rate equal to the Prime Rate (as published in The Wall Street Journal) plus 1.5%, with a Prime “floor” rate of 3.25%. The Second Modification amended certain financial covenants in the Second Amended and Restated Loan Agreement.

Under the Second Amended and Restated Loan Agreement, the Company has a term loan facility with an initial maximum principal amount of $10,000,000. Amounts outstanding under the Second Amended and Restated Loan Agreement bear interest at a per annum rate equal to the Prime Rate (as published in The Wall Street Journal) plus 1.5%, with a Prime “floor” rate of 3.25%. The Second Amended and Restated Loan Agreement has a five-year term, and the maximum principal amount was advanced in a single-cash advance on or about the original closing date ( August 2021). Interest is due monthly, and the Company shall make monthly interest-only payments through the one-year anniversary of the original closing date. Under the Second Amended and Restated Loan Agreement, principal repayments are required of $500,000 in the second year, $1,000,000 in the third year, $2,000,000 in the fourth year, and $3,000,000 in the fifth year with the remaining outstanding principal balance and all accrued but unpaid interest due in full on the maturity date. The Second Amended and Restated Loan Agreement may also require early repayments if certain conditions are met.

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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 Loan Agreement. 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. On March 27, 2025, the Company and certain of its subsidiaries entered into a Sixth Modification and Waiver (the “Sixth Modification”) to the Loan Agreement with Western Alliance Bank and amended certain financial covenants as follows:

● ~~Minimum~~Maximum ~~Adjusted~~ARR ~~EBITDA~~Net Leverage Ratio. Commencing with the ~~quarter~~month ~~ending~~ended ~~January~~February 3128, ~~2024~~2025, ~~the~~Borrowers’ ~~Company~~ARR ~~shall~~Net ~~maintain~~Leverage ~~Adjusted EBITDA~~Ratio, measured on a ~~quarterly~~monthly basis as of the last day of each ~~fiscal quarter~~month, inshall ~~an amount~~ not ~~less~~be ~~than~~greater ~~the amounts (or, in the case of amounts set forth in parentheses, no worse~~ than the ~~amounts)~~amount set forth under the heading “~~Minimum~~Maximum ~~Adjusted~~ARR ~~EBITDA~~Net Leverage Ratio” as of, and for each of the dates appearing adjacent to such “~~Minimum~~Maximum ~~Adjusted~~ARR ~~EBITDA.~~Net Leverage Ratio”.

	Minimum
	Maximum
Quarter Ending	Adjusted EBITDA
	ARR Net Leverage
January 31, 2024	$	(5,750,000	)
Month Ending	Ratio
April 30, 2024		(4,560,000	)
February 28, 2025		0.67 to 1.00
July 31, 2024		(2,960,000	)
March 31, 2025		0.67 to 1.00
October 31, 2024		(1,500,000	)
April 30, 2025		0.67 to 1.00
January 31, 2025		430,000
May 31, 2025		0.67 to 1.00
June 30, 2025 and on the last day of each month thereafter		0.50 to 1.00

● 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		0.50 to 1.00
July 31, 2024		0.45 to 1.00
October 31, 2024		0.40 to 1.00
January 31, 2025		0.35 to 1.00

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● Maximum Debt to Adjusted EBITDA Ratio. Commencing with the quarter ending ~~April~~July 3031, 2025, ~~the~~Borrowers’ ~~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		3.50 to 1.00
July 31, 2025		3.50 to 1.00
July 31, 2025		3.00 to 1.00
October 31, 2025		3.00 to 1.00
October 31, 2025		2.50 to 1.00
January 31, 2026		2.50 to 1.00
January 31, 2026 and on the last day of each quarter thereafter		2.00 to 1.00
April 30, 2026 and on the last day of each quarter thereafter		2.00 to 1.00

● Fixed Charge Coverage Ratio. Commencing with the quarter ending ~~April~~July 3031, 2025, ~~the~~Borrowers ~~Company~~ shall maintain a Fixed Charge Coverage Ratio of not less than 1.20 to 1.00, measured on a quarterly basis as of the last day of each fiscal quarter for the trailing four (4) quarter period then ended.

~~On November~~● 13Minimum Adjusted EBITDA. Commencing with the month ending February 28, ~~2024~~2025, ~~the~~Borrowers ~~Company~~shall ~~executed~~maintain Adjusted EBITDA, measured on a monthly basis as of the ~~Fifth~~last ~~Modification~~day toof ~~Second~~each ~~Amended~~month, ~~and~~in ~~Restated~~an ~~Loan~~amount ~~and~~not ~~Security~~less ~~Agreement~~than the amounts (or, in the ~~“Fifth~~case ~~Modification”)~~of ~~that~~amounts ~~amended,~~set ~~among~~forth ~~other~~in ~~things~~parentheses, ~~the~~ ~~Minimum~~no ~~Adjusted~~worse ~~EBITDA~~than ~~and~~the ~~Maximum~~amounts) ~~ARR~~set ~~Net~~forth ~~Leverage~~under ~~Ratio~~the ~~covenants.~~heading ~~Refer~~“Minimum ~~to Note~~Adjusted 11EBITDA” –as ~~Subsequent~~of, ~~Events~~and for ~~additional~~each ~~information~~of ~~regarding~~ the ~~Fifth~~dates ~~Modification~~appearing adjacent to such “Minimum Adjusted EBITDA. ”

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.

	Minimum Adjusted
Month Ending	EBITDA
February 28, 2025	$	(225,000	)
March 31, 2025	$	(460,000	)
April 30, 2025	$	(300,000	)
May 31, 2025	$	(250,000	)
June 30, 2025	$	—

The ~~Company~~Loan ~~records~~Agreement ~~costs~~also ~~related~~includes customary negative covenants, subject to ~~the~~exceptions, ~~maintenance~~which limit transfers, capital expenditures, indebtedness, certain liens, investments, acquisitions, dispositions of ~~the~~assets, ~~Second~~restricted ~~Amended~~payments, and ~~Restated~~the ~~Loan~~business ~~Agreement~~activities of the Company, as ~~deferred~~well ~~financing~~as ~~costs~~customary representations and warranties, ~~net~~affirmative covenants and events of ~~the~~default, ~~term~~including ~~loan~~cross defaults and a change of control default. ~~These~~The ~~deferred~~line ~~financing~~of ~~costs~~credit ~~are~~also ~~being~~is ~~amortized~~subject ~~over~~to ~~the~~customary ~~remaining~~prepayment ~~term~~requirements. Substantially all the assets of the ~~loan~~Company are collateralized by the Loan Agreement. ~~The~~For ~~Company~~the ~~has~~period ~~incurred~~ended April ~~$250~~30,~~000~~ 2025, the Company was in ~~financing~~compliance ~~costs~~with ~~which~~the ~~become~~financial ~~payable~~covenants atunder the ~~earlier~~Loan ofAgreement. ~~the~~The ~~term~~Company ~~date~~has ofdetermined ~~the~~that ~~loan,~~it oris ~~pre-payment.~~probable ~~These~~that ~~costs~~a ~~are~~covenant may not be ~~being~~achieved ~~accreted~~in the next 12 months, ~~through~~and ~~interest~~as ~~expense~~such, tothe Company has reclassified the ~~full~~Term ~~value~~Loan ofand ~~the~~Revolving ~~$250,000~~Line ~~over~~of ~~the~~Credit ~~remaining~~balances ~~term~~as current as of January ~~the~~31, ~~loan~~2025 and April 30, 2025.

The Company recorded $20,000 in deferred financing costs related to the Second Modification. These deferred financing costs are being amortized over the remaining term of the loan. The Company also incurred $50,000 in financing costs related to the Second Modification and $300,000 related to the Fifth Modification at the earlier of the term date of the loan, or pre-payment. These costs are being accreted, through interest expense, to the full value of the $550,000 over the remaining term of the loan. The full value of $550,000 includes the $200,000 costs incurred in connection with the Loan Agreement.

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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 $4.4 million and warrants (the “Warrants”) to purchase up to an aggregate of 267,728 shares of the Company’s common stock in a private placement (the “Debt Private Placement”). The closing of the Debt Private Placement occurred on February 7, 2024 (the “Closing Date”).

Notes Payable

The Notes bear interest at a rate of 15% per annum and mature on August 7, 2026 (the “Maturity Date”). All accrued and unpaid interest on the Notes will be capitalized and added to the outstanding principal balance of the Notes and will be payable in cash on the Maturity Date. The Company may redeem the Notes, in whole or in part, prior to the Maturity Date without any premium or penalty. In the event the Company prepays any portion of the then outstanding principal balance of the Notes on or before the twelve (12) month anniversary of the Closing Date, in addition to such prepayment of the principal balance, the Company must pay to the Investors a prepayment fee (in accordance with the each Investor’s pro-rata share of the Notes) in an amount equal to the amount of interest that would have accrued but for the prepayment from the date of such prepayment through such twelve (12) month anniversary of the Closing Date.

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 $3,538,000, consisting of the $4,400,000 face value of the notes and $862,000 discount. The Company allocated $183,000 in issuance costs. The discount is being accreted and the financing costs amortized as interest expense over the term of the Notes using the effective interest method.

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Warrants

The Warrants have an exercise price of $5.70 (except for Warrants issued to the Company’s directors and officers which have an exercise price of $5.85), are immediately exercisable, and will expire on the fourth anniversary of the Closing Date. The Warrants are subject to customary adjustments for certain transactions affecting the Company’s capitalization. The terms of the Warrants preclude a holder thereof from exercising such holder’s Warrants, and the Company from giving effect to such exercise, if after giving effect to the issuance of common stock upon such exercise, the holder (together with the holder’s affiliates and any other persons acting as a group together with the holder or any of the holder’s affiliates) would beneficially own in excess of 9.99% of the number of shares of common stock outstanding immediately after giving effect to the issuance of common stock upon such exercise.

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 267,728 shares of common stock underlying the Warrants. The Registration Statement was declared effective by the SEC on June 10, 2024. The filing of the Registration Statement eliminated the potential cash settlement feature that caused liability accounting ensuring the Warrants will be settled with shares, and accordingly, the Warrants met the criteria for equity classification and reclassified them to paid in capital after a final re-measurement.

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 $881,000 for the Warrants at fair value using a Black-Scholes model. The Company immediately recognized $46,000 in issuance costs as expense related to the agreements for the Warrants. ~~For~~During the ~~three~~second ~~months~~quarter ~~ended July~~of ~~31,~~fiscal 2024, the Company reclassified the $837,000 remeasured value of the Warrants as additional paid in capital on the ~~condensed~~ consolidated Balance Sheet.

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NOTE 6 — INCOME TAXES

Income tax expense was $0 for the ~~nine~~three months ended ~~October~~April 3130, ~~2024,~~2025 ~~compared~~and ~~to income tax benefit of $59~~2024,~~000~~ ~~in the prior year comparable period~~respectively. The effective income tax rate on continuing operations of approximately 0% differs from our combined federal and state statutory rate of 24% primarily due to the full valuation allowance the Company currently maintains on its net deferred tax asset.

The Company has recorded $~~346~~331,000 ~~and $340,000~~ in reserves for uncertain tax positions as of ~~October~~ April 3130, ~~2024~~2025 and January 31, ~~2024~~2025, respectively.

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~~2021. All material state and local income tax matters have been concluded for years through January 31, ~~2019~~2020. The Company is no longer subject to IRS examination for periods prior to the tax year ended January 31, ~~2020~~2021; however, carryforward losses that were generated prior to the tax year ended January 31, ~~2020~~2021, 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 17,543 shares of the Company’s common stock to Matthew W. Etheridge at a purchase price of $5.70 per share for an aggregate purchase price of $100,000 (the “Common Stock Private Placement”). Mr. Etheridge became a director of the Company subsequent to the closing of the Debt Private Placement.

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, $77,000 of net proceeds, comprised of $81,000 of the proceeds less $4,000 of issuance costs, were recorded for the Common Stock Private Placement as equity.

Registration of Shares Issued to 180 Consulting

On ~~June~~May 287, ~~2023~~2024, the Company filed a Registration Statement on Form S-3 (Registration No. 333-~~272993~~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 2637,~~275~~647 shares of common stock issued to 180 Consulting, ~~LLC~~Inc. (“180 Consulting”). The Registration Statement was declared effective by the SEC on ~~July~~June 10, ~~2023~~2024.

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 37,647 shares of common stock issued to 180 Consulting. The Registration Statement was declared effective by the SEC on June 10, 2024.

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 449,260 shares of common stock were initially available for issuance under the 2024 Plan.

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NOTE 8 — COMMITMENTS AND CONTINGENCIES

Consulting Agreement with 180 Consulting, LLC

On March 19, 2020, the Company entered into athat certain Master Services Agreement and Non-Disclosure Agreement with 180 Consulting, as amended by that certain First Amendment to Master Services and Non-Disclosure Agreement, dated as of February 1, 2021 (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~~April 3130, ~~2024~~2025, there were ~~three~~ two active SOWs under the eValuator MSA. One of the active SOWs ~~includes~~included, as of April 30, 2025, the ability to earn stock at a conversion rate to be calculated 20 days after the execution of the related SOW. ~~The~~As ~~MSA~~of April ~~includes~~30, 2025, the MSA included 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 8530,~~221~~774 and 2327,~~879~~910 shares for the ~~nine~~three months ended ~~October~~April 3130, ~~2024~~2025 and ~~2023~~2024, respectively, and has earned an aggregate of ~~183~~249,~~875~~355 shares of the Company’s common stock through ~~October~~April ~~31, 2024. For the three months ended October 31, 2024 and 2023, 180 Consulting earned~~ 30,~~753~~ ~~and 6,669 shares, respectively~~2025. For services rendered by 180 Consulting during the three ~~and nine~~ months ended ~~October~~April 3130, ~~2024,~~2025 ~~the Company incurred fees of $642,000~~ and $12024,~~965,000.~~ ~~The~~the Company incurred fees of $~~639~~554,000 and $2539,~~558,~~000 ~~for services rendered by 180 Consulting during the three and nine months ended October 31~~, ~~2023,~~ respectively. For the three ~~and nine~~ months ended ~~October~~April 3130, ~~2024,~~2025 ~~the Company recorded capitalized non-employee stock compensation of $41,000~~ and ~~$109~~2024,~~000.~~ ~~The~~the Company recorded capitalized non-employee stock compensation of $6026,000 and $~~176~~30,000, ~~for the three and nine months ended October 31, 2023,~~ respectively. The Company paid fees of $~~582~~600,000 and $1376,~~472,~~000 for services rendered by 180 Consulting during the three ~~and nine~~ months ended ~~October~~April 3130, ~~2024,~~2025 ~~respectively. For the three~~ and ~~nine months ended October 31~~2024, ~~2023, the Company paid fees of $626,000 and $2,354,000,~~ respectively~~, for services rendered by 180 Consulting~~.

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 $~~230~~257,000 and $~~453~~141,000~~, and $87,000 and $468,000~~ for the SOWs that include the sublicense agreement for the three ~~and nine~~ months ended ~~October~~April 3130, ~~2024~~2025 and ~~2023~~2024, respectively, which are included in the aforementioned totals above.

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.

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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 $0 and $6,000, respectively. There was no expense recorded in the three months ended October 31, 2024 and 2023. Refer to Note 3 – Business Combination for additional information.

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)	$	1,000,000		59,829
Matthew W. Etheridge (2)		1,000,000		61,403
Jonathan R. Phillips (3)		50,000		2,991
The Ferayorni Family Trust (4)		500,000		29,914

(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 17,543 shares of the Company’s common stock to Matthew Etheridge at a purchase price of $5.70 per share for an aggregate purchase price of $100,000. Mr. Etheridge became a director of the Company subsequent to the closing of the Debt Private Placement.

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NOTE 10 - ~~GOODWILL~~SUBSEQUENT ~~AND INTANGIBLE ASSETS~~EVENTS

~~Goodwill~~Agreement ~~represents the excess cost over fair value of the net assets of acquired businesses~~ and isPlan ~~not amortized. The Company performs an impairment assessment~~ of ~~goodwill~~Merger ~~annually during the fourth quarter of its fiscal year~~ with aMist ~~valuation~~Holding ~~date of November 1, or more frequently if a triggering event occurs~~Co.

~~The~~On May ~~Company’s~~29, ~~intangible~~2025, ~~assets~~the ~~consist~~Company ofentered ~~client~~into ~~relationships,~~the ~~acquired~~Merger ~~and~~Agreement ~~developed~~with ~~technology,~~Parent and ~~trade~~Merger ~~names.~~Sub, ~~These~~pursuant ~~assets~~to ~~are recorded at cost~~which, ~~less~~upon ~~accumulated~~the ~~amortization~~terms and ~~impairment,~~subject ifto ~~any. All~~ the ~~Company’s~~conditions ~~intangible~~set ~~assets~~forth ~~are~~therein, ~~definite~~Merger ~~lived~~Sub ~~and~~will ~~amortized~~merge onwith aand ~~straight-line~~into ~~basis~~the ~~over~~Company, ~~their~~with ~~estimated~~the ~~useful~~Company ~~lives.~~continuing ~~Subsequent~~as ~~testing~~the ofsurviving ~~intangible~~corporation ~~assets~~and isbecoming ~~conducted when~~ a ~~triggering~~wholly ~~event~~owned ~~occurs~~subsidiary ~~that~~of ~~would indicate impairment may exist~~Parent.

~~During~~At the ~~quarter~~effective ~~ended October~~time ~~31,~~of ~~2024~~the Merger, ~~the~~each ~~Company's~~share ~~market~~of ~~capitalization~~common ~~fell~~stock ~~below~~of the Company's ~~carrying~~issued ~~value~~and outstanding as of ~~equity~~immediately ~~for~~prior ato ~~prolonged~~the ~~period~~effective time of ~~time~~the Merger (other than (i) any shares held by the ~~“2024~~Company ~~Triggering~~as ~~Event”). Based~~treasury stock and not held on ~~the~~behalf ~~2024~~of ~~Triggering~~third ~~Event~~parties, ~~the~~any ~~Company~~shares ~~identified~~owned ~~indicators~~by ofParent ~~possible~~or ~~impairment~~Merger Sub and ~~initiated~~any ~~testing~~shares ~~using~~owned aby ~~valuation~~any ~~date~~direct or indirect wholly owned subsidiary of ~~October~~ 31Parent or Merger Sub, ~~2024.~~and ~~The~~(ii) ~~impairment~~any ~~tests~~shares ~~were~~held ~~conducted~~by ~~under~~holders ~~guidance~~who ofhave ~~ASC~~not ~~Topic~~voted ~~360,~~in ~~Impairment~~favor ~~and~~of ~~Disposal~~the adoption of ~~Long-Lived~~the ~~Assets~~Merger Agreement (~~“ASC~~or ~~360”)~~consented ~~for~~thereto ~~certain~~in ~~long-lived~~writing and ~~assets,~~who ~~including~~are ~~capitalized~~entitled ~~contract~~to ~~costs~~demand, ~~developed~~and ~~technology~~who have perfected a demand, ~~client~~for ~~relationships~~appraisal ~~and~~rights ~~trade~~of ~~names,~~such ~~and~~shares in accordance with ~~ASC~~Section ~~Topic~~262 ~~350~~of the General Corporation Law of the State of Delaware, ~~Intangibles~~as may –be ~~Goodwill~~amended ~~and~~from ~~Other~~time ~~(“ASC~~to ~~350”~~time), ~~with~~will ~~respect~~automatically tobe cancelled and converted into the ~~reporting~~right ~~unit’s~~to ~~goodwill~~receive the Merger Consideration.

~~In October~~The ~~2023,~~Merger ~~the~~is ~~Company~~subject ~~was~~to ~~notified~~certain bycustomary aconditions, ~~legacy~~including, ~~client~~among ofothers: ~~its~~(i) ~~intent~~the toreceipt ~~not~~of ~~renew~~the ~~its~~vote ~~contract~~in asfavor of ~~its~~the ~~end~~adoption ~~date~~of ~~on December~~the ~~31,~~Merger ~~2023.~~Agreement ~~The~~by ~~Company~~the ~~also~~holders ~~announced~~of two-thirds of the ~~acceleration~~outstanding shares of ~~its Strategic~~common ~~Restructuring~~stock ~~that~~of ~~was~~the ~~designed~~Company entitled to ~~reduce~~vote ~~costs~~thereon ~~while~~(the ~~maintaining~~“Requisite Company Stockholder Approval”) at a meeting of the Company’s ~~ability~~stockholders to(the ~~expand~~“Company ~~its~~Stockholders ~~SaaS~~Meeting”); ~~business.~~(ii) ~~Both~~no ~~the~~court ~~client~~or ~~termination~~governmental ~~and~~authority ~~the~~having ~~execution~~enacted ofany ~~the~~law ~~Strategic~~or ~~Restructuring~~order ~~were~~that ~~announced~~restrains, ~~on October 16~~enjoins, ~~2023.~~renders ~~Following~~illegal ~~these~~or ~~announcements,~~otherwise prevents the ~~Company~~consummation of the Merger; (iii) each parties’s ~~share~~representations ~~price~~and ~~declined~~warranties ~~significantly~~are ~~(collectively~~accurate, ~~the~~subject ~~“2023~~to ~~Triggering~~customary ~~Events”~~materiality standards; and (iv). ~~Based~~each onparty ~~the~~shall ~~2023~~have ~~Triggering~~performed ~~Events,~~in ~~the~~all ~~Company~~material ~~identified~~respects ~~indicators~~its ofobligations ~~possible~~under ~~impairment~~the ~~and~~Merger ~~initiated~~Agreement. ~~testing~~Additionally, ~~using~~Parent’s aobligation ~~valuation~~to ~~date~~close ~~of October~~the ~~31,~~Merger ~~2023.~~is ~~The~~subject ~~impairment~~to ~~tests~~the ~~were~~condition ~~conducted~~that ~~under~~there ~~guidance~~has ofnot ~~ASC~~occurred ~~360~~a ~~for~~material ~~certain~~adverse ~~long-lived~~effect ~~assets,~~(as ~~including~~defined ~~capitalized~~in ~~contract~~the ~~costs,~~Merger ~~developed~~Agreement) ~~technology,~~with ~~client~~respect ~~relationships~~to ~~and~~the ~~trade~~Company ~~names,~~since ~~and~~the indate ~~accordance~~of ~~with~~the ~~ASC~~Merger ~~350~~Agreement.

~~Goodwill~~The Merger Agreement provides for certain termination rights, including, among others, the right of the parties to terminate the Merger Agreement (i) by mutual written consent; (ii) if the Merger has not been consummated as of December 31, 2025 (the “Outside Date”); (iii) if the Requisite Company Stockholder Approval is not obtained; (iv) if there is any final and non-appealable law or order that permanently restrains, enjoins, renders illegal or otherwise permanently prevents the consummation of the Merger; and (v) if the other party breaches its representations, warranties, covenants or agreements and such breach would result in the failure of a closing condition in favor of the other party, in each case, subject to a cure period set forth in the Merger Agreement. In addition, the Company may terminate the Merger Agreement in order for the Board to cause or permit the Company to enter into an Alternative Acquisition Agreement (as defined in the Merger Agreement) with respect to a Superior Proposal (as defined in the Merger Agreement), and Parent may terminate the Merger Agreement if the Board changes its recommendation in favor of the Merger Agreement.

The ~~Company~~Merger ~~has~~Agreement further provides that, upon ~~one~~termination ~~reporting~~of ~~unit~~the ~~for~~Merger ~~purposes~~Agreement under certain specified circumstances, the Company will be required to pay Parent a termination fee of ~~evaluation~~$950,000, including if the Company terminates the Merger Agreement to enter into an Alternative Acquisition Agreement with respect to a Superior Proposal, Parent terminates the Merger Agreement because the Board changes its recommendation in favor of ~~goodwill.~~the ~~Impairment~~Merger ~~testing~~Agreement, ~~was~~or ~~performed~~either ~~under~~party terminates the ~~guidance~~Merger Agreement because the Merger has not been consummated as of ~~ASC~~the ~~350~~Outside ~~and~~Date ~~utilized~~or the Requisite Company Stockholder Approval is not obtained, in each case, at a ~~discounted~~time ~~debt-free~~that ~~net~~Parent ~~cash~~also ~~flow~~had ~~(“DCF”)~~a ~~method~~right ~~under~~to terminate the ~~income~~Merger ~~approach~~Agreement ~~and~~for the ~~market~~Board ~~capitalization~~changing ~~method~~its ~~(“MCM”)~~recommendation ~~under~~in favor of the ~~market~~Merger ~~approach~~Agreement. ~~The~~This ~~sum~~termination offee will also be payable by the ~~weighted~~Company ~~values~~if ofthe ~~each~~Merger ~~method~~Agreement ~~was~~is ~~used~~terminated under certain circumstances and, prior to ~~derive~~such termination, an alternative acquisition proposal has been made public (or otherwise become publicly known) or announced to the ~~fair~~Company ~~value~~or the Board and has not been withdrawn publicly without qualification at least five business days prior to the Company Stockholders Meeting or prior to the date of termination, and within twelve (12) months after such termination, the Company’s ~~equity~~consummates a transaction contemplated by an alternative acquisition proposal or enters into an Alternative Acquisition Agreement.

~~The~~Voting MCM calculates the aggregate market value of the Company based on the total number of shares outstanding and the current market price of the shares as of the valuation date. Data on similar mergers and acquisitions within healthcare technology are observed to determine control premium that represents a stock premium percentage offered by an acquirer to a public company. The control premium applied to the aggregate market value represents MCM calculated fair value.Agreements

~~The~~On May ~~DCF~~29, ~~incorporates~~2025, concurrently with the ~~use~~execution and delivery of ~~projected~~the ~~financial~~Merger ~~information~~Agreement, certain officers and adirectors ~~discount~~of ~~rate~~the ~~using~~Company aand ~~weighted~~their ~~average~~respective ~~cost~~affiliates ofentered ~~capital~~into Voting and Support Agreements with ~~cost~~Parent (each, a “Voting Agreement”). Pursuant to the Voting Agreements, each of ~~equity~~such ~~estimated~~officers ~~based~~and ondirectors of the ~~capital~~Company ~~asset~~and ~~pricing~~their ~~model.~~respective ~~The~~affiliates ~~cash-flow~~have ~~projections~~agreed, ~~are~~among ~~based~~other onthings, ~~financial~~to ~~forecasts~~vote ~~developed~~all shares owned by ~~management~~them ~~that~~(i) ~~include~~in ~~forecasts~~favor of ~~future~~the ~~operating~~approval ~~results~~and ~~based~~adoption onof ~~internal~~the ~~budgets~~Merger Agreement and ~~strategic~~the ~~plans~~transactions contemplated thereby, any other matters necessary for the consummation of the Merger, and any other matters necessary for the consummation of the Merger and any adjournment or postponement of the Company Stockholders Meeting if there are not sufficient votes for there to ~~invest~~be a quorum or for the approval and adoption of the Merger Agreement, and (ii) against any alternative acquisition proposal from a third party, any action or proposal in ~~working~~furtherance ~~capital~~of such an acquisition proposal, and any other actions that are intended to, ~~support~~or ~~anticipated~~would ~~revenue~~reasonably ~~growth.~~be ~~External~~expected ~~factors~~to, ~~and~~result ~~business~~in the conditions ~~are~~to ~~considered~~the closing of the Merger not being satisfied or a breach by ~~management~~the ~~when~~Company ~~setting~~of the ~~long-term~~Merger ~~growth~~Agreement, ~~rates.~~change ~~The~~in ~~selected~~the ~~discount~~capitalization ~~rate~~of ~~considers~~the Company or the ~~risk~~voting ~~and~~rights ~~nature~~of the Company’s securities, or otherwise impede, interfere with, delay, discourage, adversely affect or inhibit the timely consummation of the ~~reporting~~Merger; ~~unit~~provided, however, that nothing in the Voting Agreements shall affect any actions taken by such stockholder or any of such stockholder’s ~~cash~~affiliates ~~flows~~(or ~~and~~any ~~the~~officer, ~~rates~~director or employee thereof) solely in his or her capacity as a director or officer of ~~return~~the ~~market~~Company ~~participants~~or ~~would~~from ~~require~~complying with his or her fiduciary obligations solely to ~~invest~~the ~~their~~extent ~~capital~~acting in such Person’s capacity as a director or officer of the Company.

~~Based~~The onVoting Agreements terminate upon the ~~impairment~~earliest ~~test~~of ~~following~~ the ~~2024~~effective ~~Triggering~~time ~~Event~~of the Merger, the ~~Company~~valid ~~concluded~~termination ~~that~~of the Merger Agreement in accordance with its ~~goodwill~~terms, ~~was~~the ~~not~~mutual ~~impaired~~written asagreement of ~~October~~ ~~31,~~Parent ~~2024.~~and ~~Based~~the onapplicable stockholder to terminate the ~~impairment~~Voting ~~test following~~Agreement, and the ~~2023~~date ~~Triggering~~on ~~Events~~which, subject to the ~~Company~~terms ~~concluded~~of ~~that~~the ~~its~~Voting ~~goodwill~~Agreements, ~~was~~the ~~impaired~~applicable asstockholder delivers written notice to Parent of ~~October~~ ~~31,~~such ~~2023~~stockholder’s election, ~~based~~in onits ~~the~~sole ~~weighted~~discretion, ~~combination~~to ofterminate the ~~DCF~~Voting ~~and~~Agreement ~~MCM~~following ~~value~~any ~~estimates~~amendment ~~which~~or ~~resulted~~modification into athe ~~calculated~~Merger ~~fair~~Agreement ~~value~~that ~~lower~~reduces ~~than~~ the ~~equity~~amount ~~carrying~~of ~~value.~~the ~~The~~Merger ~~Company~~Consideration, ~~recorded~~changes anthe ~~impairment~~form of ~~goodwill~~any inof the ~~amount~~Merger ofConsideration ~~$9,813,000 reported~~or asotherwise ~~“Goodwill~~modifies ~~Impairment”~~the onterms ~~its~~of ~~Condensed~~the ~~Consolidated~~Merger ~~Statement~~Agreement ofin ~~Operations~~a ~~for~~manner that is materially adverse to the ~~nine-month~~Company’s ~~period~~stockholders ~~ended October~~as ~~31,~~a ~~2023~~whole.

Amended and Restated Master Services and Non-Disclosure Agreement with 180 Consulting

In connection with the Merger and the delisting of the Shares from the Nasdaq Capital Market that is anticipated to occur in connection therewith, on May 29, 2025, the Company entered into an Amended and Restated Master Services and Non-Disclosure Agreement (including the related amended and restated statements of work, the “A&R Consulting Agreement”) with 180 Consulting. The A&R Consulting Agreement amends and restates the MSA, under which 180 Consulting has provided and is providing certain software development services and licensing certain software to the Company, as set forth in the related statements of work, in exchange for both cash and equity compensation.

The A&R Consulting Agreement amends and restates the MSA and the related statements of work in their entirety to, among other things, (i) provide for certain compensation to 180 Consulting to be paid in cash in lieu of the issuance of shares of Company common stock, (ii) modify the term of 180 Consulting’s services thereunder and (iii) provide certain other rights for each of the parties thereto. The initial term of the A&R Consulting Agreement is through March 31, 2026, after which the A&R Consulting Agreement will automatically renew for successive twelve-month periods unless terminated by the parties thereto. Either party thereto may terminate the services under the A&R Consulting Agreement for any reason upon ninety days to six months advance notice (depending on the service), except that 180 Consulting will not be permitted to terminate any such services prior to the end of the initial term.

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The changes in the carrying amount of goodwill were as follows for the nine-month period ended October 31, 2023:

	Nine Months Ended
	October 31, 2023
Balance as of January 31, 2023	$	23,089,000
Impairment		(9,813,000	)
Balance as of October 31, 2023	$	13,276,000

Intangible Assets

ASC 360 defines a multi-step process to test long-lived assets, including intangible assets, for recoverability that if failed would indicate impairment. First, the Company must consider whether indicators of impairment of long-lived assets are present, which the Company determined the 2023 Triggering Events in conjunction with preparation of its financial statements for the three and nine months ended October 31, 2023, provided such indication.

Next, the Company must review the long-lived assets to define asset group(s) that would reflect the lowest level of assets to which discrete cash flows are identifiable. In performing this review, the Company identified that the long-lived asset “client relationships” related to Avelead should be classified as abandoned (the “Abandoned Asset”) with the Company determining that it no longer has plans to provide the corresponding consulting service. The Abandoned Asset’s carrying value would need to be set to its salvage value which would be zero given no future cash flows.

The Company determined the lowest level of discrete cash flows is at the reporting unit level, and all remaining long-lived assets (excluding the Abandoned Asset) and goodwill would represent its only asset group. Recoverability is assessed by comparing that the sum of the discrete undiscounted cash flows exceeds the carrying value of the asset group. The undiscounted cash flow projections are based on the primary asset in the asset group that include forecasts of future operating results based on internal budgets and strategic plans to investment in working capital to support anticipated revenue growth.

The undiscounted cash flows for the long-lived assets were above the carrying amounts indicating that the long-lived asset group is recoverable and no further impairment to long-lived assets exists as of October 31, 2023. For the three-month period ended October 31, 2023, the Company recorded $963,000 as “Impairment of long-lived assets” on its Condensed Consolidated Statement of Operations to adjust the Abandoned Asset to its salvage value of zero. There was no impairment to long-lived assets for the three-month period ending October 31, 2024.

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NOTE 11- SUBSEQUENT EVENTS

Loan Modification

On November 13, 2024, the Company executed the Fifth Modification to Second Amended and Restated Loan and Security Agreement. The Fifth Modification updated the definition of “Adjusted EBITDA” and amended certain financial covenants as follows:

a. Maximum ARR Net Leverage Ratio. Commencing with the month ended September 30, 2024, Borrowers’ ARR Net Leverage Ratio, measured on a monthly basis as of the last day of each month, 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
Month Ending	Ratio
September 30, 2024		0.68 to 1.00
October 31, 2024		0.66 to 1.00
November 30, 2024		0.64 to 1.00
December 31, 2024		0.60 to 1.00
January 31, 2025		0.35 to 1.00
April 30, 2025		0.35 to 1.00

b. Minimum Adjusted EBITDA. Commencing with the month ended September 30, 2024, Borrowers shall maintain Adjusted EBITDA, measured on a monthly basis as of the last day of each month, 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
Month Ending	Adjusted EBITDA
September 30, 2024	$	(225,000	)
October 31, 2024		(500,000	)
November 30, 2024		(150,000	)
December 31, 2024		(100,000	)
January 31, 2025 and on the last day of each month thereafter through April 30, 2025		0

The Fifth Modification also requires the Company to pay certain fees to Western Alliance Bank in connection with the extension of credit and subsequent repayment of obligations due to Western Alliance Bank under the Second Amended and Restated Loan and Security Agreement. The foregoing fees, if any, will be due and payable on the earlier of (i) August 26, 2026, and (ii) the date on which the Company repays in full all obligations due to Western Alliance Bank under the Second Amended and Restated Loan and Security Agreement.

Line of Credit Draw

On November 20, 2024, the Company received a $1,000,000 draw from its revolving line of credit under the Second Amended and Restated Loan Agreement as detailed in Note 5 – Debt.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

We make forward-looking statements in this Quarterly Report on Form 10-Q (this “Report”) and in other materials we file with the SEC or otherwise make public. This Report, therefore, contains statements about future events and expectations which are forward-looking statements within the meaning of Sections 27A of the Securities Act of 1933, as amended (the “Securities Act”), and 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In addition, our senior management makes forward-looking statements to analysts, investors, the media and others. Statements with respect to expected revenue, income, receivables, backlog, client attrition, acquisitions and other growth opportunities, sources of funding operations and acquisitions, the integration of our solutions, the performance of our channel partner relationships, the sufficiency of available liquidity, research and development, and other statements of our plans, beliefs or expectations are forward-looking statements. These and other statements using words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “project,” “target,” “can,” “could,” “may,” “should,” “will,” “would” and similar expressions also are forward-looking statements. Each forward-looking statement speaks only as of the date of the particular statement. The forward-looking statements we make are not guarantees of future performance, and we have based these statements on our assumptions and analyses in light of our experience and perception of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances. Forward-looking statements by their nature involve substantial risks and uncertainties that could significantly affect expected results, and actual future results could differ materially from those described in such statements. Management cautions against putting undue reliance on forward-looking statements or projecting any future results based on such statements or present or historical earnings levels.

Among the factors that could cause actual future results to differ materially from our expectations are the risks and uncertainties described under “Risk Factors” and elsewhere in our Annual Report on Form 10-K for the fiscal year ended January 31, ~~2024~~2025 and in our subsequent filings with the SEC, and include among others, the following:

● our proposed acquisition by Mist Holding Co. including our expectations regarding the anticipated occurrence, manner, timing and completion thereof and its effects on our relationships with employees, customers, vendors, and other business partners; ● competitive products and pricing; ● product demand and market acceptance; ● entry into new markets; ● new product and services development and commercialization; ● key strategic alliances with vendors and channel partners that resell our products; ● uncertainty in continued relationships with customers due to termination rights; ● our ability to control costs; ● availability, quality and security of products produced, and services provided by third-party vendors; ● the healthcare regulatory environment; ~~● potential changes in legislation, regulation and government funding affecting the healthcare industry; ● healthcare information systems budgets;~~

● availability of healthcare information systems trained personnel for implementation of new systems, as well as maintenance of legacy systems; ● the success of our relationships with channel partners; 28

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	●	potential changes in legislation, regulation and government funding affecting the healthcare industry;

	●	healthcare information systems budgets;

	●	availability of healthcare information systems trained personnel for implementation of new systems, as well as maintenance of legacy systems;

	●	the success of our relationships with channel partners;

●

fluctuations in operating results;

● our ability to continue as a going concern; ● our future cash needs and, if and when required, our ability to obtain additional debt and/or equity financing on terms acceptable to us; ● the consummation of resources in researching acquisitions, business opportunities or financings and capital market transactions; ● the failure to adequately integrate past and future acquisitions into our business; ● critical accounting policies and judgments; ● changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or other standard-setting organizations; ● changes in economic, business and market conditions impacting the healthcare industry and the markets in which we operate; ● impairment of our goodwill and other intangible assets; ● the extent to which health epidemics and other outbreaks of communicable diseases could disrupt our operations and/or materially and adversely affect our business and financial conditions; ● our ability to maintain compliance with the terms of our credit facilities; and ● our ability to maintain compliance with the continued listing standards of ~~the~~ Nasdaq ~~Capital Market (“Nasdaq”)~~.

Most of these risk factors are beyond our ability to predict or control. Any of these factors, or a combination of these factors, could materially affect our future financial condition or results of operations and the ultimate accuracy of our forward-looking statements. There also are other factors that we may not describe (generally because we currently do not perceive them to be material) that could cause actual results to differ materially from our expectations. We expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

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Overview

OnStreamline ~~October~~Health 16Solutions, ~~2023,~~Inc. ~~the~~is ~~Company~~a ~~announced~~provider itof ~~was~~solutions ~~executing~~and aservices ~~Strategic~~in ~~Restructuring~~the ~~designed~~middle toof ~~reduce~~the ~~expenses~~revenue ~~while~~cycle ~~maintaining~~for ~~the~~healthcare ~~Company’s~~providers ~~ability~~throughout tothe ~~expand~~United ~~its~~States ~~SaaS~~and ~~business~~Canada. ~~The~~Streamline ~~Strategic~~Health’s ~~Restructuring~~technology ~~initiatives~~helps ~~included~~hospitals aimprove ~~reduction~~their infinancial ~~force,~~performance ~~resulting~~by inoptimizing ~~the~~data ~~termination~~and ofcoding 26for ~~employees,~~every orpatient ~~approximately~~encounter ~~24%~~prior ofto ~~the~~bill ~~Company’s workforce~~submission. ToBy ~~execute~~performing ~~the~~these ~~Strategic~~activities ~~Restructuring,~~before ~~the Company recorded $749~~billing,~~000~~ ofproviders ~~expenses~~can indrive ~~the~~net ~~three~~revenue ~~months~~through ~~ending~~reduced ~~October~~revenue 31leakage, ~~2023~~overbilling, ~~which consisted of approximately $731,000 in severance~~ and ~~other~~days ~~employee termination-related expenses and approximately $18,000~~ in ~~incurred~~accounts ~~legal fees~~receivable. AsThis ofenables ~~October~~providers ~~31,~~to ~~2024,~~achieve ~~the~~more ~~Company~~predictable ~~has~~revenue ~~recorded~~streams ~~all~~using ~~expenses~~technology ~~related~~rather tothan ~~the Strategic~~manual ~~Restructuring~~intervention.

31 The Company provides software solutions, professional consulting, and auditing services, which capture, aggregate, and translate structured and unstructured data to deliver intelligently organized, easily-accessible predictive insights to its clients. Hospitals and certain hospital-owned-and operated physician groups use the knowledge generated by Streamline Health to help them improve their financial performance.

The Company’s software solutions are delivered to clients either by access to the Company’s hosted web applications in the cloud through a secure connection, commonly referred to as a software as a service delivery method, or by a fixed-term or perpetual license, where such software is installed locally in the client’s data center.

The Company operates exclusively in one segment as a provider of health information technology solutions and associated services that improve healthcare processes and information flows within a healthcare facility. The Company sells its solutions and services in North America to hospitals and health systems through its direct sales force and its reseller partnerships.

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Recent Developments

~~Reverse~~Pending ~~Stock~~Transaction ~~Split~~with Mist Holding Co.

On ~~September~~May 2529, ~~2024~~2025, the Company ~~filed~~entered ainto ~~Certificate~~an ofAgreement ~~Amendment~~and toPlan of Merger (the ~~Company’s~~“Merger ~~Certificate~~Agreement”) ofwith ~~Incorporation~~Mist toHolding ~~effect~~Co., a ~~1-for-15~~Delaware ~~reverse~~corporation ~~stock~~and ~~split~~the ~~pursuant~~parent tocompany ~~which~~of ~~each~~Hayes 15Management ~~shares~~Consulting ofLLC ~~the~~d/b/a ~~Company’s~~MDaudit ~~issued~~(“Parent”), and ~~outstanding~~MD ~~common~~BE ~~stock~~Merger ~~immediately~~Sub, ~~prior to the effective time~~Inc., ~~which~~a ~~was~~Delaware ~~12:01~~corporation amand ~~Eastern~~wholly ~~Daylight~~owned ~~Time~~subsidiary onof ~~October~~Parent 4,(“Merger ~~2024~~Sub”), ~~were~~pursuant ~~combined~~to ~~into~~which ~~one~~upon ~~share of~~ the ~~Company’s~~terms ~~common~~and ~~stock,~~subject ~~without~~to ~~effecting~~the aconditions ~~change~~set toforth ~~the~~therein, ~~par~~Merger ~~value~~Sub ~~per~~will ~~share~~merge ofwith ~~Common~~and ~~Stock (~~into the ~~“Reverse~~Company, ~~Stock~~with ~~Split”).~~the ~~The~~ Company’s ~~common~~continuing ~~stock~~as ~~began~~the ~~trading~~surviving oncorporation aand ~~split-adjusted~~becoming ~~basis~~a ~~when~~wholly ~~the~~owned ~~market~~subsidiary ~~opened~~of onParent ~~October~~(the ~~4, 2024~~“Merger”).

~~The~~At ~~Reverse~~the ~~Stock~~effective ~~Split~~time ~~did~~of ~~not change~~ the ~~Company's~~Merger, ~~authorized~~each ~~number~~share of ~~shares of~~ common stock. Noof ~~fractional~~the ~~shares~~Company ~~were~~ issued inand ~~connection~~outstanding ~~with~~as ~~the~~of ~~Reverse~~immediately ~~Stock~~prior ~~Split,~~to ~~and~~the ~~stockholders~~effective ~~who~~time ~~would~~of ~~otherwise~~the ~~have~~Merger ~~been~~(other ~~entitled~~than to(i) ~~receive~~any ashares ~~fractional~~held ~~share~~by ~~instead~~the ~~received~~Company aas ~~cash~~treasury ~~payment~~stock ~~equal~~and tonot ~~the~~held ~~fraction~~on behalf of athird ~~share~~parties, ofany ~~common~~shares ~~stock~~owned inby ~~lieu~~Parent ofor ~~such~~Merger ~~fractional~~Sub ~~share.~~and ~~Proportionate~~any ~~adjustments~~shares ~~were~~owned ~~made~~by toany ~~the~~direct ~~number~~or ofindirect ~~shares~~wholly ~~authorized~~owned ~~under~~subsidiary ~~the~~of ~~Company’s~~Parent ~~equity~~or ~~incentive~~Merger ~~plans~~Sub, ~~the~~and ~~number~~(ii) ofany shares ~~subject~~held toby ~~any~~holders ~~award~~who orhave ~~purchase~~not ~~right~~voted ~~under~~in ~~the~~favor ~~Company’s~~of ~~equity~~the ~~incentive~~adoption ~~plans,~~of ~~and~~ the ~~exercise~~Merger ~~price~~Agreement (or ~~purchase~~consented ~~price~~thereto ~~with~~in ~~respect~~writing and towho ~~any~~are ~~stock~~entitled ~~option~~to ~~award~~demand, orand ~~purchase~~who ~~right~~have ~~under~~perfected ~~the~~a ~~Company’s~~demand, ~~equity~~for ~~incentive~~appraisal ~~plans.~~rights ~~All~~of such shares in accordance with Section 262 of the ~~Company’s~~General ~~common~~Corporation ~~stock,~~Law ~~stock-based~~of ~~instruments~~the ~~and~~State ~~per-share~~of ~~data~~Delaware, ~~included~~as inmay ~~this~~be ~~Quarterly~~amended ~~Report~~from ontime ~~Form~~to ~~10-Q~~time), ~~have~~will ~~been~~automatically ~~retrospectively~~be ~~adjusted~~cancelled asand ~~though~~converted into the ~~Reverse~~right ~~Stock~~to ~~Split~~receive ~~had been~~$5.34 ~~effected~~per ~~prior~~share toin ~~all~~cash, ~~periods~~without ~~presented~~interest (the “Merger Consideration”).

The Merger is subject to certain customary conditions, including, among others: (i) the receipt of the vote in favor of the adoption of the Merger Agreement by the holders of two-thirds of the outstanding shares of common stock of the Company entitled to vote thereon at a meeting of the Company’s stockholders; (ii) no court or governmental authority having enacted any law or order that restrains, enjoins, renders illegal or otherwise prevents the consummation of the Merger; (iii) each parties’ representations and warranties are accurate, subject to customary materiality standards; and (iv) each party shall have performed in all material respects its obligations under the Merger Agreement. Additionally, Parent’s obligation to close the Merger is subject to the condition that there has not occurred a material adverse effect (as defined in the Merger Agreement) with respect to the Company since the date of the Merger Agreement.

The Merger Agreement provides for certain termination rights, including, among others, the right of the parties to terminate the Merger Agreement (i) by mutual written consent; (ii) if the Merger has not been consummated as of December 31, 2025 (the “Outside Date”); (iii) if the Company does not receive votes in favor of the adoption of the Merger Agreement by the holders of two-thirds of the outstanding shares of common stock of the Company entitled to vote thereon (the “Requisite Company Stockholder Approval”) at a meeting of the Company’s stockholders (the “Company Stockholders Meeting”); (iv) if there is any final and non-appealable law or order that permanently restrains, enjoins, renders illegal or otherwise permanently prevents the consummation of the Merger; and (v) if the other party breaches its representations, warranties, covenants or agreements and such breach would result in the failure of a closing condition in favor of the other party, in each case, subject to a cure period set forth in the Merger Agreement. In addition, the Company may terminate the Merger Agreement in order for the board of directors of the Company (the “Board”) to cause or permit the Company to enter into an Alternative Acquisition Agreement (as defined in the Merger Agreement) with respect to a Superior Proposal (as defined in the Merger Agreement), and Parent may terminate the Merger Agreement if the Board changes its recommendation in favor of the Merger Agreement.

The Merger Agreement further provides that, upon termination of the Merger Agreement under certain specified circumstances, the Company will be required to pay Parent a termination fee of $950,000, including if the Company terminates the Merger Agreement to enter into an Alternative Acquisition Agreement with respect to a Superior Proposal, Parent terminates the Merger Agreement because the Board changes its recommendation in favor of the Merger Agreement, or either party terminates the Merger Agreement because the Merger has not been consummated as of the Outside Date or the Requisite Company Stockholder Approval is not obtained, in each case, at a time that Parent also had a right to terminate the Merger Agreement for the Board changing its recommendation in favor of the Merger Agreement. This termination fee will also be payable by the Company if the Merger Agreement is terminated under certain circumstances and, prior to such termination, an alternative acquisition proposal has been made public (or otherwise become publicly known) or announced to the Company or the Board and has not been withdrawn publicly without qualification at least five business days prior to the Company Stockholders Meeting or prior to the date of termination, and within twelve (12) months after such termination, the Company consummates a transaction contemplated by an alternative acquisition proposal or enters into an Alternative Acquisition Agreement. Refer to Note 10, Subsequent Events for additional information about the Merger.

Loan Modification

On ~~November~~March 1327, ~~2024~~2025, the Company executed the ~~Fifth~~Sixth Modification toand ~~Second~~Waiver ~~Amended~~(the ~~and~~“Sixth ~~Restated~~Modification”) ~~Loan~~to ~~and~~the ~~Security~~Loan Agreement. Refer to ~~Item~~Note 15 – ~~Subsequent Events~~ Debt for additional information ~~regarding the Fifth Modification~~.

3231

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Results of Operations

Revenues

	Three Months Ended
($ in thousands):	~~October~~April 3130, ~~2024~~2025		~~October~~April 3130, ~~2023~~2024		Change			% Change
Software as a service	$	23,~~933~~359	$	32,~~924~~723	$	~~(991~~636	)		~~(25~~23	)%
Maintenance and support	$	~~878~~737		~~1,070~~890		(~~192~~153	)		(1817	)%
Professional fees and licenses	$	~~608~~714		~~1,139~~717		(~~531~~3	)		(470	)%
Total Revenues	$	4,~~419~~810	$	64,~~133~~330	$	~~(1,714~~480	)		~~(28~~11	)%

	Nine Months Ended
($ in thousands):	October 31, 2024		October 31, 2023		Change			% Change
Software as a service	$	8,734	$	10,630	$	(1,896	)		(18	)%
Maintenance and support		2,651		3,327		(676	)		(20	)%
Professional fees and licenses		1,841		3,278		(1,437	)		(44	)%
Total Revenues	$	13,226	$	17,235	$	(4,009	)		(23	)%

Software as a Service (SaaS) — Revenue from SaaS for the three months ended April 30, 2025 increased $636,000 compared to the prior year period. The growth of SaaS revenue was primarily the result of successful implementations of the Company’s eValuator and RevID products, partially offset by the net amount of $452,000 in customer non-renewalst. The Company expects quarterly SaaS revenue to remain relatively flat during fiscal 2025 as it continues to execute and deliver on signed agreements.

~~Software~~Maintenance asand asupport ~~Service (SaaS)~~ — ~~Revenue~~For ~~from SaaS for~~ the three ~~and nine~~ months ended ~~October~~April 3130, ~~2024 decreased by $991~~2025,~~000~~ revenue from maintenance and support decreased $1153,~~896,~~000, ~~respectively,~~ compared to the prior year ~~periods~~period. AThe ~~previously~~Company ~~announced~~continues ~~client non-renewal contributed~~ to aprioritize ~~decrease~~SaaS ~~of $1~~products,~~156,000~~ and ~~$3,053,000 for~~anticipates ~~the~~maintenance ~~three~~ and ~~nine~~support ~~months~~revenue ~~ended~~will ~~October~~continue ~~31, 2024, respectively. New clients on the Company’s eValuator and RevID products provided an offset~~ to ~~the~~decline ~~negative~~for ~~impact of~~ the ~~client~~remainder ~~non-renewal. The Company expects relatively flat quarterly revenue through the fourth quarter~~ of fiscal ~~2024 as~~2025 ~~the~~due ~~Company delivers on executed agreements~~ to ~~replenish the~~expected ~~lost~~contract ~~revenue related to the~~ non-~~renewal~~renewals ofand ~~the~~limited ~~client~~new ~~contract~~sales.

The Company had approximately $2.1 million of annualized contract value of SaaS contracts to be implemented as of October 31, 2024. The industry continues to be impacted by hospital personnel shortages and a backlog of hospital IT projects. The Company is seeing improvements in the contract-to-implementation timelines compared to the prior year. Despite this positive trend, the Company remains uncertain how long the broader industry challenges will continue to affect our implementation schedules. 32

~~Maintenance~~ Table and support — For the three and nine months ended October 31, 2024, revenue from maintenance and support decreased by $192,000 and $676,000, respectively, compared to the prior year periods. As the Company continues to prioritize SaaS products, we anticipate maintenance and support revenue will continue to decline for the remainder of ~~fiscal 2024 compared to fiscal 2023 due to expected contract non-renewals and limited new sales.~~ Contents

Professional fees and licenses — Revenues from professional fees and licenses include proprietary software, term license, professional services and audit and coding services revenue. Total professional fees and license revenues for the three months ended April 30, 2025, decreased $3,000 compared to the prior year period. The Company has primarily shifted the business from perpetual software licenses to a SaaS model. Software license sales come solely from our channel partners; therefore, the periodic amounts are less predictable and consistent than recurring revenues.

For the three months ended April 30, 2025, revenue from professional services decreased $16,000 compared to the prior year period. Professional services for a subset of the Company's solutions are recognized as the services are performed. The Company expects professional services revenue to fluctuate based on the timing and combination of products currently being implemented. For the three months ended April 30, 2025, the Company saw a decrease in license revenue of $135,000 compared to the prior year period. The Company is primarily focused on growth of its SaaS products, and, accordingly, is not expecting growth in license revenue for the remainder of fiscal 2025.

For the three months ended April 30, 2025, revenue from audit services increased $148,000 compared to the prior year period. The increase was driven primarily from existing and new clients utilizing the Company's with audit services. Certain existing clients shifted their demand for audit services which resulted in a net increase of audit service revenue of $131,000 for the three months ended April 30, 2025. New clients resulted in a $17,000 increase for the three months ended April 30, 2025, compared to the prior year period. The Company believes demand for its onshore, technically proficient coders and auditors in the marketplace is strong and that it has a competitive edge in providing audit and coding services as an offering independently or in conjunction with the eValuator solution as a technology-enabled service. As a result of shifting demand among clients, the Company anticipates the audit and coding services to remain relatively flat throughout the remainder of fiscal 2025.

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~~Professional~~Cost ~~fees~~of and licenses — Revenues from professional fees and licenses include proprietary software, term license, professional services and audit and coding services revenue. Total professional fees and license revenues for the three and nine months ended October 31, 2024, decreased by $531,000 and $1,437,000, respectively, compared to the prior year periods. The Company has primarily shifted the business from perpetual software licenses to a SaaS model. Software license sales come solely from our channel partners; therefore, the periodic amounts are less predictable and consistent than recurring revenues.Sales

For the three and nine months ended October 31, 2024, revenue from professional services decreased by $347,000 and $935,000, respectively, compared to the prior year periods. Professional services for a subset of the Company's solutions, are recognized as the services are performed. The Company expects professional services revenue to fluctuate based on the timing and combination of products currently being implemented. For the nine month period ending October 31, 2024, the Company saw an increase in license revenue of $61,000 compared to the same period in the prior year. The Company is primarily focused on growth of its SaaS products, and, accordingly, is not expecting growth in license revenue for the remainder of fiscal 2024.

	Three Months Ended
(in thousands):	April 30, 2025		April 30, 2024		Change			% Change
Cost of software as a service	$	1,380	$	1,348	$	32			2	%
Cost of maintenance and support		32		42		(10	)		(24	)%
Cost of professional fees and licenses		808		887		(79	)		(9	)%
Total cost of sales	$	2,220	$	2,277	$	(57	)		(3	)%

~~For~~Cost ~~the~~of ~~three~~software ~~and~~as ~~nine~~a ~~months~~service ~~ended~~(SaaS) ~~October~~– The ~~31,~~cost ~~2024,~~of ~~revenue~~SaaS ~~from~~consists ~~audit~~of ~~services~~expenses ~~decreased~~associated bywith ~~$184,000~~(i) ~~and~~amortization ~~$563,000,~~of ~~respectively~~capitalized software, ~~compared~~(ii) toroyalties ~~the~~payable ~~prior~~to ~~year~~third-parties ~~periods.~~for ~~The~~use ~~decrease~~of ~~was~~their ~~driven~~coding ~~primarily~~related bycontent, ~~three~~and ~~clients~~(iii) nopersonnel ~~longer~~and ~~requiring~~network ~~the~~infrastructure ~~Company's~~required ~~assistance~~to ~~with~~deploy ~~audit services. Increased~~and ~~demand~~support applications for ~~audit~~each ~~services~~client. For ~~from~~the ~~existing~~three ~~and~~months ~~new~~ended ~~eValuator clients~~April ~~resulted~~30, in2025, anthe ~~increase~~cost of ~~audit~~SaaS ~~services revenue~~solutions ofincreased $~~246~~32,000 ~~for~~compared to the ~~nine-month~~prior year period. ~~ending~~The ~~October~~increase was ~~31,~~primarily ~~2024,~~driven ~~compared~~by tohigher ~~the~~royalty ~~prior~~expenses, ~~year~~salaries ~~period. The~~and ~~Company~~outside ~~believes~~contracting ~~demand~~fees ~~for~~totaling ~~its~~to ~~onshore~~$95,000, ~~technically~~offset ~~proficient~~by ~~coders~~lower infrastructure costs and ~~auditors~~reduced inamortization ~~the~~of ~~marketplace~~capitalized issoftware ~~strong~~expenses ~~and~~totaling ~~that~~$73,000. Certain itexpenses ~~has~~included ain ~~competitive~~our ~~edge~~cost inof ~~providing~~SaaS ~~audit~~are ~~and~~tied ~~coding~~to ~~services~~volumes. These asexpenses aninclude ~~offering~~coding ~~with~~tools ~~the~~supporting eValuator ~~solution~~and as a ~~technology~~third-~~enabled~~party ~~service.~~system Tothat ~~support~~translates ~~the~~data ~~shifting~~from ~~demand~~the ~~among~~hospital ~~clients,~~system to the Company’s ~~anticipates~~systems. ~~the~~The ~~audit~~Company ~~and~~expects ~~coding~~these ~~services~~costs toof ~~remain~~SaaS ~~relatively~~solutions ~~flat~~to ~~throughout~~increase ~~the~~as ~~remainder~~revenue ~~of fiscal 2024~~increases.

For the three months ended April 30, 2025, the cost of SaaS solutions includes non-cash charges of $507,000 related to the amortization of capitalized software expenses. The Company expects margins related to SaaS solutions to increase in the future from clients currently in the process of implementation. Certain costs included in cost of SaaS, such as labor and third-party content providers, negatively impact gross margin before a client is fully implemented and revenue is recognized.

Cost of maintenance and support – The cost of maintenance and support includes compensation and benefits for client support personnel required to provide product support for clients on our CDI and Abstracting software licenses. For the three months ended April 30, 2025, the cost of maintenance and support decreased $10,000 compared to the prior year period.

Cost of professional fees and licenses – The cost of professional fees and licenses includes the cost of software licenses, the cost of professional services and the cost of audit and coding services. The aggregate cost of professional fees and licenses decreased $79,000 for the three months ended April 30, 2025 compared to the prior year period.

The cost of professional fees includes compensation and benefits for personnel and related expenses. For the three months ended April 30, 2025, professional services costs decreased approximately $46,000 compared to the prior year period. This decrease was driven by a reduction in staff resulting in lower personnel and third-party contractor costs. The costs of professional fees are expected to remain relatively flat throughout the remainder of fiscal year 2025.

The cost of audit services includes compensation and benefits for internal audit services personnel, and related expenses. During the three months ended April 30, 2025, the cost of audit services increased $35,000 compared to the prior year period. The increased expense was the result of higher personnel and related expenses driven by shifting demand for the Company's audit services.

The cost of software licenses for the three months ended April 30, 2025, decreased $68,000 compared to the prior year period due to lower amortization of development costs related to the Company’s coding/CDI product. The Company fully amortized the Coding and CDI software license cost at the end of fiscal year 2024.

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Cost of Sales

	Three Months Ended
(in thousands):	October 31, 2024		October 31, 2023		Change			% Change
Cost of software as a service	$	1,512	$	1,677	$	(165	)		(10	)%
Cost of maintenance and support		42		129		(87	)		(67	)%
Cost of professional fees and licenses		831		1,072		(241	)		(22	)%
Total cost of sales	$	2,385	$	2,878	$	(493	)		(17	)%

	Nine Months Ended
(in thousands):	October 31, 2024		October 31, 2023		Change			% Change
Cost of software as a service	$	4,356	$	5,159	$	(803	)		(16	)%
Cost of maintenance and support		127		250		(123	)		(49	)%
Cost of professional fees and licenses		2,558		3,202		(644	)		(20	)%
Total cost of sales	$	7,041	$	8,611	$	(1,570	)		(18	)%

Cost of software as a service (SaaS) – The cost of SaaS consists of expenses associated with (i) amortization of capitalized software, (ii) royalties payable to third-parties for use of their coding related content, and (iii) personnel and network infrastructure required to deploy and support applications for each client. For the three and nine months ended October 31, 2024, the cost of SaaS solutions decreased $165,000 and $803,000, compared to the prior year periods. The decrease is driven by lower infrastructure costs and lower contract and personnel costs. The amortization of capitalized software remained relatively unchanged. Certain expenses included in our cost of SaaS are tied to volumes. These expenses include coding tools supporting eValuator and a third-party system that translates data from the hospital system to the Company’s systems. The Company expects these costs of SaaS solutions to increase as revenue increases.

For the three and nine months ended October 31, 2024, the cost of SaaS solutions includes non-cash charges of $625,000 and $1,726,000, respectively, related to the amortization of capitalized software. The Company expects margins related to SaaS solutions to increase in the future from clients currently in the process of implementation. Certain costs included in cost of SaaS, such as labor and third-party content providers, negatively impact gross margin before a client is fully implemented and revenue is recognized.

Cost of maintenance and support – The cost of maintenance and support includes compensation and benefits for client support personnel required to provide product support for clients on our CDI and Abstracting software licenses. For the three and nine months ended October 31, 2024, the cost of maintenance and support decreased by $87,000 and $123,000, respectively, compared to the prior year periods.

Cost of professional fees and licenses – The cost of professional fees and licenses includes the cost of software licenses, the cost of professional services and the cost of audit and coding services. The aggregate cost of professional fees and licenses decreased by $241,000 and $644,000, respectively, for the three and nine months ended October 31, 2024, compared to the prior year periods.

The cost of professional fees includes compensation and benefits for personnel and related expenses. For the three and nine months ended October 31, 2024, professional services costs decreased by approximately $52,000 and $115,000, respectively, compared to the prior year periods. This decrease was driven by a reduction in staff resulting in lower personnel and third-party contractor costs. The costs of professional fees are expected to remain relatively flat throughout the remainder of fiscal year 2024.

The cost of audit services includes compensation and benefits for internal audit services personnel, and related expenses. The costs for the three and nine months ended October 31, 2024, decreased by approximately $203,000 and $568,000, respectively, compared to the prior year periods. The reduction of personnel and related expenses is a response to matching the shifting demand for the Company's audit services.

The cost of software licenses for the three and nine months ended October 31, 2024, increased by $14,000 and $39,000, respectively, compared to the prior year periods due to the amortization of development costs related to the Company’s coding/CDI product. The Company expects the remaining capitalized Coding and CDI software license costs to be fully amortized by the end of fiscal 2024.

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Selling, General and Administrative Expense

	Three Months Ended
($ in thousands):	~~October~~April 3130, ~~2024~~2025		~~October~~April 3130, ~~2023~~2024		Change			% Change
General and administrative expenses	$	2,~~087~~065	$	2,~~798~~246	$	(~~711~~181	)		(258	)%
Sales and marketing expenses		~~793~~723		~~1,324~~946		(~~531~~223	)		(4024	)%
Total selling, general, and administrative expense	$	2,~~880~~788	$	43,~~122~~192	$	(~~1,242~~404	)		(3013	)%

	Nine Months Ended
($ in thousands):	October 31, 2024		October 31, 2023		Change			% Change
General and administrative expenses	$	6,092	$	8,220	$	(2,128	)		(26	)%
Sales and marketing expenses		2,968		3,859		(891	)		(23	)%
Total selling, general, and administrative expense	$	9,060	$	12,079	$	(3,019	)		(25	)%

General and administrative expenses comprise various costs including compensation and associated benefits, reimbursable travel and entertainment expenses related to our executive and administrative staff, general corporate expenditures, amortization of intangible assets, and occupancy costs. For the three months ended April 30, 2025, general and administrative expenses decreased $181,000 compared to the prior year period. The decrease was primarily driven by lower employee and director compensation and benefits of $143,000, compared to the prior year period.

~~General~~Sales and ~~administrative~~marketing expenses ~~comprise~~primarily ~~various~~encompass ~~costs including~~ compensation, ~~and~~ associated benefits, ~~reimbursable~~ travel and entertainment ~~expenses~~costs ~~related~~for to our ~~executive~~sales and ~~administrative~~marketing ~~staff~~personnel. Additionally, ~~general~~sales ~~corporate~~and ~~expenditures,~~marketing ~~amortization~~expenses ofinclude ~~intangible~~costs ~~assets~~from third parties related to advertising, marketing and ~~occupancy~~trade ~~costs~~show attendance. For the three ~~and nine~~ months ended ~~October~~April 3130, ~~2024~~2025, sales ~~the general~~ and ~~administrative~~marketing expenses decreased by $~~711~~223,000 ~~and $2,128,000, respectively,~~ compared to the prior year ~~periods~~period. ~~The decrease~~ ~~was~~This decrease ~~driven~~is primarily bythe ~~lower compensation~~result ~~and related benefits, severance and contractor expense~~ of ~~approximately $687,000~~reduced ~~and~~headcount ~~$1,713,000~~related ~~for~~expenses ~~the three and nine months ended October 31, 2024, respectively. The Company saw an increase~~ in ~~director fees and audit financial fees for~~ the ~~nine~~amount ~~months~~of ~~ended October 31~~$271, ~~2024~~000, ~~compared~~offset toby ~~the~~increased ~~prior~~professional ~~year period~~services.

Sales and marketing expenses primarily encompass compensation, associated benefits, travel and entertainment costs for our sales and marketing personnel. Additionally, sales and marketing expenses include costs from third parties related to advertising, marketing and trade show attendance. For the three and nine months ended October 31, 2024, sales and marketing expenses decreased by $531,000 and $891,000, respectively, compared to the prior year periods. This decrease is primarily related to the Strategic Restructuring and is net of any severance expense incurred in the period.

Research and Development

Three Months Ended

($ in thousands):

~~October~~April 3130, ~~2024~~2025

~~October~~April 3130, ~~2023~~2024

Change

% Change

Research and development expenses

~~1,134~~903

1,~~304~~111

(~~170~~208

)

(1319

Capitalized research and development cost

~~236~~228

~~535~~247

(~~299~~19

)

(568

	Nine Months Ended
($ in thousands):	October 31, 2024		October 31, 2023		Change			% Change
Research and development expense	$	3,569	$	4,310	$	(741	)		(17	)%
Capitalized research and development cost		638		1,556		(918	)		(59	)%

Research and development expenses consist primarily of compensation and related benefits and the use of independent contractors for specific near-term development projects. Research and development expenses for the three months ended April 30, 2025 decreased $208,000 compared to the prior year period as a result of reduced headcount related expenses totaling $203,000. The Company continues to focus research and development activities and strategically invest to improve eValuator and RevID, its flagship SaaS solutions.

~~Research~~Capitalized ~~and~~research ~~development expenses consist primarily of compensation~~ and ~~related benefits and the use of independent contractors for specific near-term~~ development ~~projects.~~costs ~~Research and development expenses~~ for the three ~~and nine~~ months ended ~~October~~April 3130, ~~2024~~2025, decreased by $~~170~~19,000 ~~and $741,000, respectively,~~ compared to the prior year ~~periods~~period. ~~The nine months ended October 31, 2024, includes cost savings related to outside staff augmentation and~~ ~~headcount related expenses. The Company continues to focus research and development activities and make certain strategic investments on eValuator and RevID, its flagship SaaS solutions.~~

~~Capitalized research and development costs for the three and nine months ended October 31, 2024, decreased by $299,000 and $918,000, respectively, compared to the prior year period.~~ 35

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Impairment of Goodwill

	Three Months Ended
($ in thousands):	October 31, 2024		October 31, 2023		Change			% Change
Impairment of Goodwill	$	—	$	9,813	$	(9,813	)		(100	)%

	Nine Months Ended
($ in thousands):	October 31, 2024		October 31, 2023		Change			% Change
Impairment of Goodwill	$	—	$	9,813	$	(9,813	)		(100	)%

Based on the 2023 Triggering Events and in conjunction with its preparation of its financial statements for the three and nine months ended October 31, 2023, the Company tested the reporting unit’s goodwill for possible impairment as of October 31, 2023. Refer to the Goodwill section of Note 10 — Goodwill and Intangible Assets of the unaudited condensed consolidated financial statements included in Part I, Item I, “Financial Statements” for more information on the goodwill impairment testing.

The Company concluded that goodwill was impaired based on the weighted combination of the DCF and MCM value estimates which resulted in a calculated fair value lower than its carrying value. The Company recorded an impairment of goodwill in the amount of $9,813,000 for the three and nine-month periods ended October 31, 2023, with no goodwill impairments reported in the three and nine-month periods ended October 31, 2024.

Impairment of long-lived assets

	Three Months Ended
($ in thousands):	October 31, 2024		October 31, 2023		Change			% Change
Impairment of long-lived assets	$	—	$	963	$	(963	)		(100	)%

	Nine Months Ended
($ in thousands):	October 31, 2024		October 31, 2023		Change			% Change
Impairment of long-lived assets	$	—	$	963	$	(963	)		(100	)%

Based on the 2023 Triggering Events and in conjunction with its preparation of its financial statements for the three and nine months ended October 31, 2023, the Company tested long-lived assets, including intangible assets, for recoverability that, if failed, would indicate impairment. The Company, in reviewing long-lived assets to define asset group(s), identified an abandoned asset. A separate long-lived asset for “client relationships” related to Avelead was no longer going to be used following the Company’s determination that these services were not part of its core offerings going forward. The Company adjusted the abandoned asset’s carrying value to its salvage value which would be zero given no future cash flows.

Refer to the Intangible Assets section of Note 10 — Goodwill and Intangible Assets of the unaudited condensed consolidated financial statements included in Part I, Item I, “Financial Statements” for more information on the long-lived asset impairment testing.

For the three and nine-month periods ended October 31, 2023, the Company recorded $963,000 representing the impairment of the Abandoned Asset with no other long-lived impairments reported in the three and nine-month periods ended October 31, 2024.

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Other Income (Expense)

	Three Months Ended
($ in thousands):	~~October~~April 3130, ~~2024~~2025			~~October~~April 3130, ~~2023~~2024			Change			% Change
Interest expense	$	(~~496~~543	)	$	(~~266~~465	)	$	(~~230~~78	)		8617	%
Valuation adjustments		—			~~1,182~~(24	)		~~(1,182~~24	)		(100	)%
Miscellaneous income (expense)		—(1	)		—			—(1	)		100	%
Total other (expense) income	$	(~~496~~544	)	$	~~916~~(489	)	$	(~~1,412~~55	)		~~(154~~11	)%

	Nine Months Ended
($ in thousands):	October 31, 2024			October 31, 2023			Change			% Change
Interest expense	$	(1,457	)	$	(781	)	$	(676	)		87	%
Valuation adjustments		(115	)		1,905			(2,020	)		(106	)%
Miscellaneous income (expense)		(2	)		31			(33	)		(106	)%
Total other (expense) income	$	(1,574	)	$	1,155		$	(2,729	)		(236	)%

Interest expense consists of interest associated with the term loan, notes payable, and their respective deferred financing costs, less interest related to capitalization of software. For the three months ended April 30, 2025, interest expense increased by $78,000. The increase was primarily attributable to non-cash interest accrued for the notes payable (Refer to Note 5 – Debt).

~~Interest~~Valuation ~~expense~~adjustments ~~consists~~are related ofto ~~interest~~the liabilities associated with the ~~term~~Avelead ~~loan~~acquisition (Refer to Note 3 – Business Combination of the unaudited condensed consolidated financial statements included in Part I, ~~notes~~Item ~~payable~~I, ~~and~~“Financial ~~their~~Statements”), ~~respective~~and ~~deferred~~the ~~financing~~common ~~costs,~~stock ~~less~~underlying ~~interest~~the ~~related~~Warrants (Refer to ~~capitalization~~Note of5 ~~software~~– Debt). For the three ~~and nine~~ months ended ~~October~~April 3130, 2025 and 2024, ~~interest~~the ~~expense~~Company ~~increased~~recorded byvaluation ~~$230,000~~adjustments of $0 and $~~676~~24,000, respectively. The ~~increase~~valuation ~~was~~adjustments ~~primarily~~are caused ~~attributable~~by tothe ~~interest~~decrease ~~accrued~~in on the ~~$4,400,000~~value of ~~notes~~the ~~payable~~stock ~~(Refer~~ to be transferred and that decrease ~~Note~~effects 5the –Black ~~Debt)~~Scholes model used for valuing the Warrants.

Valuation adjustments (Refer to Note 2 – Summary of Significant Accounting Policies) are related to the liabilities associated with the Avelead acquisition and the common stock underlying the Warrants. For the nine months ended October 31, 2024, the Company recorded a valuation gain of $44,000, for the Warrants. The valuation adjustments for the nine months ended October 31, 2024, are attributable to the decrease in the value of the stock to be transferred to the holders and the corresponding effect on the Black Scholes pricing model for purposes of valuing the Warrants. There ~~were~~was no ~~Warrant~~material ~~valuation~~miscellaneous ~~adjustments~~income infor the three ~~and nine~~ months ended ~~October~~April 3130, ~~2023~~2025 and, 2024~~, respectively~~. For the nine months ended October 31, 2024, the Company recorded a valuation loss of $159,000 related to the Avelead earnout liability, with no adjustment recorded in the three months ended October 31, 2024. For the three and nine months ended October 31, 2023, the Company recorded valuation gains of $1,182,000 and 1,905,000, respectively, related to the Avelead earnout liability.

There was no miscellaneous income for the three and nine months ended October 31, 2024. Miscellaneous income for the nine months ended October 31, 2023, is primarily from the sublease of the Alpharetta location (Refer to Note 4 – Operating Leases of the unaudited condensed consolidated financial statements included in Part I, Item I, “Financial Statements”).

Provision for Income Taxes

We recorded an income tax expense of $0 ~~and income tax benefit of $59,000~~ for the ~~nine~~three months ended ~~October~~April 3130, ~~2024~~2025 and ~~2023~~2024, ~~respectively,~~ which is comprised of estimated federal, state and local income tax provisions. The Company has a substantial amount of net operating losses for federal and state income tax purposes. The effective income tax rate on continuing operations of approximately 0% differs from our combined federal and state statutory rate of 24% primarily due to the full valuation allowance the Company currently maintains on its net deferred tax asset.

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Use of Non-GAAP Financial Measures

In order to provide investors with greater insight and allow for a more comprehensive understanding of the information used by management and the Board in its financial and operational decision-making, the Company has supplemented the condensed consolidated financial statements presented on a GAAP basis in this Report with the following non-GAAP financial measures: EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin.

These non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of Company results as reported under GAAP. The Company compensates for such limitations by relying primarily on our GAAP results and using non-GAAP financial measures only as supplemental data. We also provide a reconciliation of non-GAAP to GAAP measures used. Investors are encouraged to carefully review this reconciliation. In addition, because these non-GAAP measures are not measures of financial performance under GAAP and are susceptible to varying calculations, these measures, as defined by us, may differ from and may not be comparable to similarly titled measures used by other companies.

EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin

We define: (i) EBITDA as net earnings (loss) before net interest expense, income tax expense (benefit), depreciation and amortization; (ii) Adjusted EBITDA as net earnings (loss) before net interest expense, income tax expense (benefit), depreciation, amortization, share-based compensation expense, valuation adjustments, restructuring charges, transaction related expenses and other expenses that do not relate to our core operations such as severances and impairment charges; and (iii) Adjusted EBITDA Margin as Adjusted EBITDA as a percentage of GAAP net revenue. EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin are used to facilitate a comparison of our operating performance on a consistent basis from period to period and provide for a supplemental understanding of factors and trends affecting our business than GAAP measures alone. These measures assist management and the Board, and may be useful to investors in comparing our operating performance consistently over time as they remove the impact of our capital structure (primarily interest charges), asset base (primarily depreciation and amortization), items outside the control of the management team (taxes) and expenses that do not relate to our core operations including: transaction-related expenses (such as professional and advisory services), corporate restructuring expenses (such as severances) and other operating costs that are expected to be non-recurring. Adjusted EBITDA removes the impact of share-based compensation expense, which is another non-cash item.

The Board and management also use these measures (i) as one of the primary methods for planning and forecasting overall expectations and for evaluating, on at least a quarterly and annual basis, actual results against such expectations; and (ii) as a performance evaluation metric in determining achievement of certain executive and associate incentive compensation programs.

Our lender uses a measurement that is similar to the Adjusted EBITDA measurement described herein to assess our operating performance. The lender under our Second Amended and Restated Loan Agreement requires delivery of compliance reports certifying compliance with financial covenants, certain of which are based on a measurement that is similar to the Adjusted EBITDA measurement reviewed by our management and Board.

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EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin are not measures of liquidity under GAAP or otherwise and are not alternatives to cash flow from continuing operating activities, despite the supplemental information provided by these measures regarding the use and analysis of these measures as mentioned above. EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin, as disclosed in this Report have limitations as analytical tools, and you should not consider these measures in isolation or as a substitute for analysis of our results as reported under GAAP; nor are these measures intended to be measures of liquidity or free cash flow for our discretionary use. Some of the limitations of EBITDA and its variations are:

	●	EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;

	●	EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

	●	EBITDA does not reflect the interest expense, or the cash requirements to service interest or principal payments under our Second Amended and Restated Loan Agreement;

	●	EBITDA does not reflect income tax payments that we may be required to make; and

	●	Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized often will have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements.

Adjusted EBITDA has all the inherent limitations of EBITDA. To properly and prudently evaluate our business, the Company encourages readers to review the GAAP financial statements included elsewhere in this Report, and not rely on any single financial measure to evaluate our business. We also strongly urge readers to review the reconciliation of these non-GAAP financial measures to the most comparable GAAP measure in this section, along with the condensed consolidated financial statements included above.

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Table of Contents

The following table reconciles EBITDA and Adjusted EBITDA to net loss for the three ~~and nine~~ months ended ~~October~~April 3130, ~~2024~~2025 and ~~2023~~2024 (amounts in thousands). All of the items included in the reconciliation from EBITDA and Adjusted EBITDA to net loss are either recurring non-cash items, or items that management does not consider in assessing our on-going operating performance. In the case of the non-cash items, management believes that investors may find it useful to assess the Company’s comparative operating performance because the measures without such items are less susceptible to variances in actual performance resulting from depreciation, amortization and other expenses that do not relate to our core operations and are more reflective of other factors that affect operating performance. In the case of items that do not relate to our core operations, management believes that investors may find it useful to assess our operating performance if the measures are presented without these items because their financial impact does not reflect ongoing operating performance.

	Three Months Ended						~~Nine Months Ended~~
In thousands, except per share data	~~October~~April 3130, ~~2024~~2025			~~October~~April 3130, ~~2023~~2024			~~October 31, 2024~~			~~October 31, 2023~~
Adjusted EBITDA Reconciliation
Net Loss	$	(21,~~476~~645	)	$	(112,~~911~~739	)	$	~~(8,018~~	)	$	~~(17,327~~	)
Interest expense		~~496~~543			~~266~~465			~~1,457~~			~~781~~
Income tax expense (benefit)		—			(120	)		—			(59	)
Depreciation and amortization		875			1,017
Depreciation and amortization		1,187			1,105			3,260			3,186
EBITDA	$	(227	)	$	(1,257	)
EBITDA	$	(793	)	$	(10,660	)	$	(3,301	)	$	(13,419	)
Share-based compensation expense		430			499
Share-based compensation expense		451			517			1,483			1,626
Non-cash valuation adjustments		—			24
Impairment of goodwill		—			9,813			—			9,813
Acquisition-related costs, severance, and transaction-related bonuses		23			31
Impairment of long-lived assets		—			963			—			963
Adjusted EBITDA	$	226		$	(703	)
Non-cash valuation adjustments		—			(1,182	)		115			(1,905	)
Adjusted EBITDA margin (1)		5	%		(16	)%
Acquisition-related costs, severance, and transaction-related bonuses		16			213			372			389
Restructuring charges		—			749			—			749
Other non-recurring charges		—			—			—			(33	)
Adjusted EBITDA	$	(326	)	$	413		$	(1,331	)	$	(1,817	)
Adjusted EBITDA margin (1)		(7	)%		7	%		(10	)%		(11	)%

(1)	Adjusted EBITDA as a percentage of GAAP net revenue.

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Application of Critical Accounting Policies

The preparation of financial statements in conformity with GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenue and expenses during the reporting period. Management considers an accounting policy to be critical if the accounting policy requires management to make particularly difficult, subjective, or complex judgments about matters that are inherently uncertain. A summary of our critical accounting policies is included in Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended January 31, ~~2024~~2025. There have been no material changes to the critical accounting policies disclosed in our Annual Report on Form 10-K for the fiscal year ended January 31, ~~2024~~2025.

~~Goodwill and Intangible Assets~~ 40

The Company completed its annual goodwill assessment for fiscal year 2024 and 2023 as of October 31, 2024, and October 31, 2023, respectively. The Company used a weighted sum of income and market approaches to determine the fair value of the Company’s goodwill. Under the income approach, the fair value was based on the present value of the estimated debt-free, discounted cash flows that the reporting unit is expected to generate. Cash flow projections were based on management’s estimates of revenue growth rates and operating margins, taking into consideration industry and market conditions. The discount rate was based on the weighted average cost of capital appropriate for the Company.

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. 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 test was conducted under guidance of ASC 360 for certain long-lived assets, including capitalized contract costs, developed technology, client relationships and trade names, and in accordance with ASC 350 with respect to the reporting unit’s goodwill. The results of the impairment test showed the fair value of the reporting unit was approximately 20% higher than the equity carrying value, resulting in no goodwill impairment.

In the third quarter of fiscal 2023, the Company received notice from a significant SaaS client of its intent not to renew its contract following the expiration of the then-current term on December 31, 2023. The Company also announced the acceleration of the Strategic Restructuring to reduce costs while maintaining the Company’s ability to expand its SaaS business. Following these announcements, the Company's share price declined significantly. Based on the 2023 Triggering Events, the Company identified indicators of possible impairment and initiated testing using a valuation date of October 31, 2023. The impairment test was conducted under guidance of ASC 360 for certain long-lived assets, including capitalized contract costs, developed technology, client relationships and trade names, and in accordance with ASC 350. The results of the impairment test showed the fair value of the reporting unit was lower than the carrying value, resulting in a $9.8 million goodwill impairment charge. As of January 31, 2024, no further impairment was required for goodwill. The remaining goodwill balance of the Company after recording the goodwill impairment charge is $13.3 million.

During the third quarter of fiscal 2023, the Company also assessed whether the carrying amounts of the Company’s long-lived assets may not be recoverable and, therefore, impaired. The Company's assessment resulted in an impairment charge of $1.0 million, primarily attributable to client relationships related to a subset of consulting related services the Company expects will not be a core part of its business going forward. The impairment charge was calculated using the asset’s salvage value as it was considered no longer held for use.

The fair value of the Company's reporting unit and intangible assets is subjective in nature and involves the use of significant estimates and assumptions, particularly related to future operating results and cash flows. These estimates and assumptions include, but are not limited to, revenue growth rates and operating margins used to calculate projected future cash flows, risk-adjusted discount rates, and future economic and market conditions. If the Company does not achieve its forecasts or the Company’s share price declines further, it is possible the goodwill of the Company could be deemed to be impaired in a future period.

The risks and potential impacts on the fair value of the Company's goodwill and long-lived assets are included in the risk factor disclosures referenced under “Item 1A. Risk Factors”.

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Liquidity, Capital Resources and Going Concern

~~The~~On ~~Company’s~~May ~~liquidity~~29, is2025, ~~dependent~~the ~~upon~~Company ~~numerous~~entered ~~factors~~into ~~including: (i)~~ the ~~timing~~Merger ~~and~~Agreement ~~amount~~with ofParent ~~revenue~~ and ~~collection~~Merger ofSub, ~~contractual~~pursuant ~~amounts~~to ~~from customers~~which, ~~(ii)~~upon ~~amounts~~the ~~invested~~terms ~~in research~~ and ~~development~~subject ~~and~~to ~~capital expenditures, and (iii)~~ the ~~level~~conditions ofset ~~operating~~forth ~~expenses~~therein, ~~all~~Merger ofSub ~~which~~will ~~can~~merge ~~vary~~with ~~significantly from quarter to quarter. The Company’s primary cash requirements include regular payment of payroll~~ and ~~other~~into ~~business~~the ~~expenses~~Company, ~~principal and interest payments on debt and capital expenditures, which generally include computer hardware. Operations are funded~~ with ~~cash generated by operations and borrowings under credit facilities. Information concerning~~ the Company’s ~~assessment~~continuing as athe ~~going~~surviving ~~concern~~corporation isand ~~included~~becoming ina ~~Note~~wholly 1owned –subsidiary ~~Basis~~ of ~~Presentation in our unaudited condensed consolidated financial statements included in Part I, Item I, “Financial Statements~~Parent.~~” Cash and cash equivalent balances at October 31, 2024 and January 31, 2024, were approximately $754,000 and $3,190,000, respectively.~~

~~The~~While ~~Company~~the ~~has~~Merger ~~liquidity~~Agreement ~~through~~is ~~its Second~~in ~~Amended~~effect, ~~and~~we ~~Restated~~are ~~Loan~~subject ~~Agreement~~to ~~(as~~restrictions ~~amended~~on ~~and~~our ~~modified~~business activities, ~~the~~generally ~~"Second~~requiring ~~Amended~~us ~~and~~to ~~Restated~~conduct ~~Loan~~our ~~Agreement")~~business ~~described~~ in ~~more~~the ~~detail~~ordinary incourse ~~Note~~of 5business, –consistent ~~Debt~~with inpast ~~our~~practice. ~~unaudited~~Further, outside ~~condensed~~of ~~consolidated~~certain ~~financial~~limited ~~statements~~exceptions, ~~included~~we inmay ~~Part~~not I,take ~~Item~~certain I,actions ~~“Financial~~without ~~Statements."~~Parent’s ~~Under~~consent prior to the ~~Second~~closing ~~Amended~~of ~~and~~the ~~Restated~~Merger, ~~Loan~~including, ~~Agreement~~among other things, ~~the~~(i) ~~Company~~acquiring ~~has~~other abusinesses ~~term~~and ~~loan~~assets ~~facility~~in ~~with~~excess anof ~~initial,~~a ~~maximum~~specified limit, ~~principal~~(ii) ~~amount~~disposing of ~~$10~~our assets,~~000,000.~~ ~~Amounts~~(iii) ~~outstanding~~making ~~under~~investments, ~~the~~(iv) ~~Second~~entering ~~Amended~~into ~~and~~certain ~~Restated~~contracts, ~~Loan~~(v) ~~Agreement~~paying ~~bear~~dividends, ~~interest~~(vi) atincurring acapital ~~per~~expenditures ~~annum~~in ~~rate~~excess ~~equal~~of toa ~~the~~specified ~~Prime~~limit, ~~Rate~~ (asvii) ~~published~~incurring indebt, ~~The~~(viii) ~~Wall~~taking ~~Street~~certain ~~Journal)~~actions ~~plus~~relating ~~1.5%~~to intellectual property, ~~with~~(ix) aamending ~~Prime~~our ~~“floor”~~organizational ~~rate~~documents, of(x) ~~3.25%.~~issuing ~~The~~additional ~~Company~~securities ~~executed~~or a(xi) ~~Second~~repurchasing ~~Modification~~shares toof ~~Second~~Company’s ~~Amended~~common ~~and~~stock. ~~Restated~~We ~~Loan~~do ~~Agreement~~not ~~(the~~believe ~~“Second~~these ~~Modification”)~~restrictions onwill ~~November~~prevent ~~29,~~us ~~2022,~~from ~~which~~meeting ~~amended~~our ~~the~~ongoing ~~covenants~~costs ~~under~~of ~~the~~operations, ~~Second~~working ~~Amended~~capital ~~and~~needs ~~Restated~~or ~~Loan~~capital ~~Agreement~~expenditure ~~expanded~~requirements. Under the ~~Company’s~~terms ~~total~~of ~~borrowing~~the toMerger ~~include~~Agreement, awe ~~$2,000,000~~may ~~non-formula~~be ~~revolving~~required ~~line~~to ofpay ~~credit.~~Parent ~~The~~a ~~revolving~~termination ~~line~~fee of ~~credit~~$950,000 ~~will~~if bethe ~~co-terminus~~Merger ~~with~~Agreement ~~the~~is ~~term~~terminated ~~loan~~under ~~and~~certain ~~matures~~circumstances onspecified ~~August~~in ~~26,~~the ~~2026~~Merger Agreement. ~~The~~Moreover, ~~Company~~we ~~executed~~have ~~the~~incurred, ~~Third Modification~~ and ~~Fourth~~will ~~Modification~~continue onto ~~February 7~~incur, ~~2024~~significant costs and ~~April~~expenses 5,in ~~2024,~~connection ~~respectively~~with ~~(collectively,~~ the ~~“Third~~pending ~~and~~transaction. ~~Fourth~~We ~~Modifications”).~~must ~~The~~pay ~~Third~~a ~~Modification~~material ~~and~~portion ~~Fourth~~of ~~Modification reestablished~~these ~~certain~~costs ~~customary~~and ~~financial~~expenses ~~covenants~~whether ~~for~~or not the ~~Second~~transaction ~~Amended~~is ~~and~~completed. ~~Restated~~Payment ~~Loan~~of ~~Agreement.~~any ~~Refer~~such tofees, ~~Note~~costs 5or –expenses ~~Debt~~may ~~for~~require ~~information~~us ~~regarding~~to ~~the~~use ~~Second~~available ~~Amended~~cash ~~and~~that ~~Restated~~would ~~Loan~~have ~~Agreement,~~otherwise ~~Second~~been ~~Modification,~~available ~~Third~~for ~~Modification~~general ~~and~~corporate ~~Fourth~~purposes ~~Modification~~or other uses.

The ~~Second~~Company’s ~~Amended~~liquidity ~~and~~is ~~Restated~~dependent ~~Loan~~upon ~~Agreement~~numerous ~~includes~~factors ~~customary financial covenants,~~ including: ~~the~~(i) ~~requirements that~~ the ~~Company~~timing ~~achieve~~and ~~certain~~amount ~~EBITDA~~of ~~levels~~revenue and ~~ratios,~~collection ~~ARR~~of ~~net~~contractual ~~leverage ratios,~~amounts ~~and~~from ~~fixed~~customers, ~~charge~~(ii) ~~coverage~~amounts ~~ratios. The~~invested ~~Second~~in ~~Amended~~research and ~~Restated~~development ~~Loan~~and ~~Agreement~~capital ~~also includes customary negative covenants~~expenditures, ~~subject~~and to(iii) ~~exceptions,~~the ~~which~~level ~~limit~~of ~~transfers,~~operating ~~capital expenditures~~expenses, ~~indebtedness,~~all ~~certain liens, investments, acquisitions, dispositions~~ of ~~assets,~~which ~~restricted~~can ~~payments,~~vary ~~and~~significantly ~~the~~from ~~business~~quarter ~~activities~~to ofquarter. ~~the~~The Company,’s asprimary ~~well~~cash asrequirements ~~customary~~include ~~representations~~regular ~~and~~payment ~~warranties,~~of ~~affirmative~~payroll ~~covenants~~ and ~~events~~other ofbusiness ~~default~~expenses, ~~including~~principal aand ~~cross~~interest ~~default~~payments ~~provision~~on ~~with~~debt ~~the Second Amended~~ and ~~Restated~~capital ~~Loan~~expenditures, ~~Agreement and~~which agenerally ~~change~~include ofcomputer ~~control default provision~~hardware. ~~For~~Operations ~~the~~are ~~period~~funded ~~ended October 31, 2024, the Company was not in compliance~~ with ~~the~~cash ~~covenants~~generated ~~under~~by ~~the~~operations ~~Second Amended~~ and ~~Restated~~borrowings ~~Loan~~under ~~and~~credit ~~Security Agreement~~facilities. ~~Subsequent~~Information toconcerning the ~~period ended October 31, 2024, the~~ Company’s ~~entered~~assessment ~~into~~as ~~the Fifth Modification whereby certain covenants were modified. As~~ a ~~result,~~going ~~the~~concern ~~Company~~is ~~was~~included in ~~compliance~~Note ~~with~~1 ~~all~~– ~~modified~~Basis ~~debt~~of ~~covenants.~~Presentation ~~However,~~in ~~the~~our ~~Company's~~unaudited ~~current~~condensed ~~forecast projects~~consolidated ~~the Company may not be able to maintain compliance with certain of its~~ financial ~~covenants~~statements ~~under~~included ~~the~~in ~~Second~~Part ~~Amended~~I, ~~and~~Item ~~Restated~~I, ~~Loan~~“Financial ~~Agreement in the future~~Statements.” WeCash ~~have been dependent on sales of our equity securities~~ and ~~debt financing to meet our ongoing~~ cash ~~requirements.~~equivalent ~~There~~balances ~~can~~at beApril no30, ~~assurances~~2025 ~~that~~and weJanuary ~~would be able to obtain debt or equity financing when needed~~31, ~~on terms acceptable to the Company~~2025, orwere atapproximately ~~all~~$1,449,000 and ~~our~~$2,183,000, ~~failure to raise additional capital in amounts and on terms sufficient to fund our operations could limit our ability to continue operations~~respectively. ~~Refer to Note 1 – Basis of Presentation for detail regarding the Company’s assessment as a going concern.~~

The Company has liquidity through its Second Amended and Restated Loan Agreement (as amended and modified, the "Second Amended and Restated Loan Agreement") described in more detail in Note 5 – Debt in our unaudited condensed consolidated financial statements included in Part I, Item I, “Financial Statements." Under the Second Amended and Restated Loan Agreement, the Company has a term loan facility with an initial, maximum, principal amount of $10,000,000. Amounts outstanding under the Second Amended and Restated Loan Agreement bear interest at a per annum rate equal to the Prime Rate (as published in The Wall Street Journal) plus 1.5%, with a Prime “floor” rate of 3.25%. The Company executed a Second Modification to Second Amended and Restated Loan Agreement (the “Second Modification”) on November 29, 2022, which amended the covenants under the Second Amended and Restated Loan Agreement expanded the Company’s total borrowing to include a $2,000,000 non-formula revolving line of credit. The revolving line of credit will be co-terminus with the term loan and matures on August 26, 2026. The Company executed the Third Modification and Fourth Modification on February 7, 2024 and April 5, 2024, respectively (collectively, the “Third and Fourth Modifications”). The Third Modification and Fourth Modification reestablished certain customary financial covenants for the Second Amended and Restated Loan Agreement. On November 13, 2024, the Company executed the Fifth Modification (the “Fifth Modification”) to ~~Second~~the ~~Amended~~Loan ~~and~~Agreement ~~Restated~~which amended certain financial covenants under the Loan Agreement. On March 27, 2025, the Company and ~~Security~~certain of its subsidiaries entered into a Sixth Modification and Waiver (the “Sixth Modification”) to the Loan Agreement with Western Alliance Bank. The Sixth Modification waived the Company’s non-compliance with the Maximum Debt to ARR Ratio under the Loan Agreement and amended certain financial covenants. Refer to Note 115 – ~~Subsequent~~Debt ~~Events~~ for ~~additional~~ information regarding the Second Amended and Restated Loan Agreement, Second Modification, Third Modification and Fourth Modification, Fifth Modification, and Sixth Modification.

43 The Second Amended and Restated Loan Agreement includes customary financial covenants, including the requirements that the Company achieve certain EBITDA levels and ratios, ARR net leverage ratios, and fixed charge coverage ratios. 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. For the period ended April 30, 2025, the Company was in compliance with the covenants under the Second Amended and Restated Loan and Security Agreement. 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. We have been dependent on sales of our equity securities and debt financing to meet our ongoing cash requirements. There can be no assurances that we would be able to obtain debt or equity financing when needed, on terms acceptable to the Company, or at all, and our failure to raise additional capital in amounts and on terms sufficient to fund our operations could limit our ability to continue operations. Refer to Note 1 – Basis of Presentation for detail regarding the Company’s assessment as a going concern.

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Significant cash obligations

(in thousands)	~~October~~April 3130, ~~2024~~2025		January 31, ~~2024~~2025
Term loan (1)	$	87,~~133~~277	$	97,~~066~~709
Notes payable (2)		4,~~129~~703		—4,415
Acquisition earnout liability (3)		377		~~1,794~~377
Line of credit (4)		—2,000		1,~~500~~000

(1)	Term loan balance is reported net of unamortized deferred financing costs of $4430,000 and $6936,000 as of ~~October~~April 3130, ~~2024~~2025 and January 31, ~~2024~~2025, respectively, and accrued financing ~~cost~~costs payable of $~~178~~307,000 and $~~135~~245,000 as of ~~October~~April 3130, ~~2024~~2025 and January 31, ~~2024~~2025, respectively. Refer to Note 5 – Debt for additional information. The term loan ~~payable~~balance as of ~~October~~April 3130, ~~2024~~2025 and January 31, ~~2024~~2025 was bank term debt under the Second Amended and Restated Loan Agreement.
(2)	Refer to Note 5 – Debt for additional information. ~~The~~As of April 30, 2025, the cash obligation is net of discounts on notes payable of $~~642~~489,000 and deferred financing costs of $~~136~~91,000. As of January 31, 2025, the cash obligation is net of discounts on notes payable of $573,000 and deferred financing costs of $107,000.
(3)	~~The~~As ~~fair value~~ of ~~the~~April ~~acquisition~~30, ~~earnout~~2025 ~~liability~~and ~~is based upon a probability-weighted discounted cash flow as of~~ January 31, ~~2024. As of October 31~~2025, ~~2024,~~ the acquisition earnout liability reflects the remaining cash balance. Refer to Note 3 – Business Combination for additional information.
(4)	Refer to Note 5 – Debt for additional information. ~~The outstanding balance on the line of credit was paid in full as of October 31, 2024.~~

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Operating cash flow activities

	Nine Months Ended
	Three Months Ended
(in thousands)	~~October~~April 3130, ~~2024~~2025			~~October~~April 3130, ~~2023~~2024
Net loss	$	(81,~~018~~645	)	$	(172,~~327~~739	)
Non-cash adjustments to net loss		51,~~641~~661			131,~~657~~795
Cash impact of changes in assets and liabilities		(~~261~~985	)		~~1,509~~(255	)
Net cash (used in) provided by operating activities	$	(~~2,638~~969	)	$	(21,~~161~~199	)

The net cash used in operating activities ~~increased~~slightly decreased during the ~~nine~~three months ended ~~October~~April 3130, ~~2024~~2025, compared to the prior year ~~comparable~~ period. ~~The~~ ~~timing~~The ofdecrease ~~invoices~~was ~~and~~primarily ~~collections~~due ~~offset~~to by the ~~recognition~~timing of ~~deferred~~invoices, ~~revenues in~~which ~~the~~resulted ~~nine~~in ~~months~~higher ~~ended~~accounts ~~October 31~~receivable, ~~2024 contributed to~~as ~~the~~well ~~increase~~as ina ~~cash~~reduction ~~used~~ in operating ~~activities~~expenses driven by cost-saving measures.

Investing cash flow activities

	Nine Months Ended
	Three Months Ended
(in thousands)	~~October~~April 3130, ~~2024~~2025			~~October~~April 3130, ~~2023~~2024
Purchases of property and equipment	$	—		$	~~(47~~—	)
Capitalized software development costs		(~~667~~232	)		(~~1,562~~232	)
Net cash (used in) provided by investing activities	$	(~~667~~232	)	$	(~~1,609~~232	)

The cash used in investing activities for the ~~nine~~three months ended ~~October~~April 3130, ~~2024~~2025 and ~~October~~April 3130, ~~2023~~2024, includes capitalized software development costs. The Company expects continued capitalizable projects associated with the Company’s flagship products, and we expect it to remain constant at this rate.

Financing cash flow activities

	Nine Months Ended
	Three Months Ended
(in thousands)	~~October~~April 3130, ~~2024~~2025			~~October~~April 3130, ~~2023~~2024
Proceeds from notes payable	$	~~4,400~~—		$	—4,400
Proceeds from issuance of common stock		~~100~~—			—100
Proceeds from line of credit		—1,000			~~500~~—
Payments for deferred financing costs		~~(168~~—	)		—(16	)
Repurchase of common shares to satisfy employee tax withholding		(7733	)		(~~271~~67	)
Repayment of bank term loan		(~~1,000~~500	)		(~~500~~250	)
Payments of acquisition earnout liabilities		~~(886~~—	)		—(447	)
Repayment of line of credit		~~(1,500~~—	)		—(1,500	)
Net cash (used in) provided by financing activities	$	~~869~~467		$	~~(271~~2,220	)

The cash used in financing activities for the ~~nine~~three months ended ~~October~~April 3130, ~~2024~~2025 and ~~October~~April 3130, ~~2023~~2024, includes principal payments on the term loan related to the Second Amended and Restated Loan Agreement, repayment on the line of credit, payments of acquisition earnout liabilities, and the repurchase of common shares to satisfy employee tax withholding. The cash provided by financing activities for the ~~nine~~three months ended ~~October~~April 3130, 2025 and April 30, 2024, includes proceeds received in connection with the issuance of the Notes in the Debt Private Placement, which closed in February 2024, and proceeds from a draw on the line of the credit.

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Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a “smaller reporting company,” as defined by Item 10 of Regulation S-K, we are not required to provide this information.

Item 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our President and Chief Executive Officer (who serves as our principal executive officer) and our Chief Financial Officer (who serves as our principal financial officer) have evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(c)) as of ~~October~~April 3130, ~~2024~~2025. Based on that evaluation, our President and Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as of ~~October~~April 3130, ~~2024~~2025, due to the material weaknesses described below.

● As of October 31, 2024, the Company has concluded that its internal controls over financial reporting were, ~~not~~and ~~effective~~continue to be ineffective as of April 30, 2025, due to separate material weaknesses arising each from a lack of sufficient segregation of duties in preparing and reviewing certain entries and the precise review of ~~supplemental~~ schedules not being performed. The initiation of transactions, the custody of assets, the recording of transactions, and the maintenance of ~~supplemental~~ schedules should be performed and reviewed by separate individuals with a level of precision sufficient to detect a material misstatement.

● As of April 30, 2024, the Company concluded our internal control over financial reporting related to our accounting and classification for the warrants issued in connection with the debt private placement in February 2024 was, and continues to be, ineffective as of ~~October~~April 3130, ~~2024~~2025. Our internal control over financial reporting did not detect the proper accounting classification of the warrants issued in connection with the debt private placement. The change in the classification impacted initial allocation of proceeds for the transaction, the presentation and recognition of the warrants between equity and liability and the recognition of expenses originally allocated to the warrants

Management’s Remediation Measures

While the Company has improved its organizational capabilities, the Company’s remediation efforts are ongoing. Management is committed to maintaining a strong internal control environment. In response to the identified material weaknesses in the overall control environment, management is currently implementing additional measures which include:

●

Use of additional consulting firms to assist with significant and complex accounting transactions, provide staffing resources to establish segregation of duties and create a more structured financial statement reporting environment. Through this combination of actions, the Company will establish more effective controls and available resources to ensure both adequate segregation of duties and perform precise reviews of the supplemental schedules. The Company is evaluating the need for additional resources and intends to expand the available personnel and third party professionals for complex accounting applications and to ensure appropriate segregation of duties as soon as practicable. In addition, management continues to utilize mitigating controls with regards to cash disbursements and vendor authorization processes to ensure segregation of duties in those areas.

●

Our remediation plan includes ensuring appropriate segregation of duties regarding the initiation of transactions, custody of assets, the recording of transactions and the review of supplemental schedules, and, expanding and improving our review process throughout, particularly in the context of complex financial instruments and related accounting standards, as well as internal communications in connection therewith.

The Company will consider the material weaknesses remediated after the applicable controls operate for a sufficient period of time and are tested. We can provide no assurance that our remediation efforts described herein will be successful and that we will not have material weaknesses in the future. However, we believe that the financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented.

Changes in Internal Control over Financial Reporting

~~Except~~There ~~for the material weaknesses described above, there~~ were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended ~~October~~April 3130, ~~2024~~2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

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 could have a material adverse effect on our consolidated results of operations, financial position, or cash flows.

Item 1A. RISK FACTORS

An investment in our common stock or other securities involves a number of risks. You should carefully consider each of the risks described in our Annual Report on Form 10-K for the fiscal year ended January 31, ~~2024~~2025 which ~~Annual Report~~ includes a detailed discussion of the Company’s risk factors. If any of the risks develop into actual events, our business, financial condition, or results of operations could be negatively affected, the market price of our common stock or other securities could decline, and you may lose all or part of your investment.

Except as described below, there have been no material changes to the risk factors disclosed in Item 1A of our Annual Report on Form 10-K for the fiscal year ended January 31, ~~2024~~2025.

WeRisks ~~may~~Related ~~not be able~~ to ~~generate~~the ~~sufficient~~Pending ~~cash~~Transaction ~~flows~~with orMist ~~raise~~Holding ~~additional debt and equity capital to fund our ongoing operations~~Co. We will need to raise additional funding, which may not be available on acceptable terms, if at all. If we are unable to raise additional capital in amounts and on terms sufficient to fund our ongoing operations, our lack of additional capital and results of operations could limit our ability to continue operations.

Our ability to continue as a going concern is dependent upon generating sufficient cash flow from operations and obtaining additional debt and equity financing. If our ability to generate cash flow from operations is curtailed or delayed, our financial condition and results of operations could be materially impacted. We ~~have~~may ~~been~~not ~~dependent~~complete onthe ~~sales~~pending oftransaction ~~our~~with ~~equity~~Mist ~~securities~~Holding ~~and debt financing to meet our ongoing cash requirements~~Co. ~~There~~within ~~can~~the betime noframe ~~assurances that~~ we ~~would be able to obtain debt or equity financing when needed~~anticipate, ~~on terms acceptable to the Company,~~ or at all, ~~and~~which ~~our~~could ~~failure~~have toa ~~raise~~material ~~additional~~adverse ~~capital~~effect ~~in amounts and~~ on ~~terms sufficient to fund~~ our ~~operations~~business, ~~could~~financial ~~limit~~condition, ~~our~~results ~~ability~~of tooperations, ~~continue~~and/or ~~operations~~stock price.

IfOn weMay do29, ~~not~~2025, ~~meet~~the Company entered into an Agreement and Plan of Merger (the ~~continued~~“Merger ~~listing~~Agreement”) ~~standards~~with Mist Holding Co., a Delaware corporation and the parent company of ~~The~~Hayes ~~Nasdaq~~Management ~~Capital~~Consulting ~~Market~~LLC d/b/a MDaudit (“Parent”), ~~our~~and ~~common~~MD ~~stock~~BE ~~could~~Merger beSub, ~~delisted~~Inc., ~~from~~a ~~trading~~Delaware corporation and wholly owned subsidiary of Parent (“Merger Sub”), pursuant to which, ~~could~~upon ~~limit~~the ~~investors’~~terms ~~ability~~and subject to ~~make~~the ~~transactions~~conditions inset ~~our~~forth ~~common~~therein, ~~stock~~Merger Sub will merge with and ~~subject~~into usthe toCompany, ~~additional~~with ~~trading~~the ~~restrictions~~Company continuing as the surviving corporation and becoming a wholly owned subsidiary of Parent (the “Merger”).

~~Our~~Consummation ~~common~~of ~~stock~~the Merger is ~~currently~~subject ~~listed~~to oncertain ~~The~~customary ~~Nasdaq~~conditions, ~~Capital~~including, ~~Market~~among ~~which~~others: ~~imposes~~(i) ~~continued~~the ~~listing~~receipt ~~requirements~~of ~~with~~the ~~respect~~vote toin ~~listed~~favor ~~shares.~~of Onthe ~~October~~adoption ~~24,~~of ~~2023,~~the weMerger ~~received~~Agreement aby ~~letter~~the ~~from~~holders of two-thirds of the ~~Listing~~outstanding ~~Qualifications~~Shares ~~Department~~entitled to vote thereon at the Company Stockholders Meeting (the “~~Staff~~Requisite Company Stockholder Approval”) of; ~~Nasdaq,~~(ii) ~~indicating~~no ~~that~~court ~~our~~or ~~common~~governmental ~~stock~~authority ~~was~~having ~~subject~~enacted toany ~~potential~~law ~~delisting~~or ~~from~~order ~~The~~that ~~Nasdaq~~restrains, ~~Capital~~enjoins, ~~Market~~renders ~~because,~~illegal ~~for~~or aotherwise ~~period~~prevents the consummation of ~~thirty~~the Merger; (30iii) ~~consecutive~~each ~~business~~parties’ ~~days,~~representations ~~the~~and ~~bid~~warranties ~~price~~are ofaccurate, ~~our~~subject ~~common~~to ~~stock~~customary ~~had~~materiality ~~closed~~standards; ~~below~~and ~~the~~(iv) ~~minimum~~each ~~$1.00~~party ~~per~~shall ~~share~~have ~~requirement~~performed ~~for~~in ~~continued~~all ~~listing~~material onrespects ~~The~~its ~~Nasdaq~~obligations ~~Capital~~under ~~Market~~the ~~pursuant~~Merger toAgreement. ~~Nasdaq~~Additionally, ~~Listing~~Parent’s ~~Rule~~obligation ~~5550(a)(2)~~to ~~(the~~close ~~“Bid~~is ~~Price~~subject ~~Requirement”). Pursuant~~ to ~~Nasdaq~~the ~~Listing~~condition ~~Rule~~that ~~5810(c)(3)(A),~~there ~~the~~has ~~Company~~not ~~was~~occurred ~~initially~~a ~~provided~~Material ~~180~~Adverse ~~calendar~~Effect ~~days,~~(as ordefined ~~until~~in ~~April~~the ~~22,~~Merger ~~2024,~~Agreement) with respect to ~~regain~~the ~~compliance~~Company ~~with~~since the ~~Minimum~~date ~~Bid~~of ~~Price~~the ~~Requirement~~Merger Agreement.

OnThe ~~April~~Merger 23Agreement provides for certain termination rights, ~~2024~~including, among others, the ~~Company~~right ~~received~~of athe ~~letter~~parties ~~from~~to terminate the ~~Staff~~Merger ~~informing~~Agreement (i) by mutual written consent; (ii) if the ~~Company~~Merger ~~that~~has not been consummated as of December 31, ~~while~~2025 (the “Outside Date”); (iii) if the Requisite Company ~~has~~Stockholder Approval is not ~~regained~~obtained; ~~compliance~~(iv) ~~with~~if there is any final and non-appealable law or order that permanently restrains, enjoins, renders illegal or otherwise permanently prevents the ~~Bid~~consummation ~~Price~~of ~~Requirement~~the Merger; and (v) if the other party breaches its representations, warranties, covenants or agreements and such breach would result in the ~~Staff~~failure ~~has~~of ~~determined~~a ~~that~~closing condition in favor of the ~~Company~~other isparty, ~~eligible~~in ~~for~~each ancase, ~~additional~~subject ~~180~~to ~~calendar~~a ~~day~~cure period, orset ~~until~~forth ~~October~~in 21the Merger Agreement. In addition, ~~2024~~the Company may terminate the Merger Agreement in order for the board of directors of the Company (the “~~Second~~Board”) ~~Compliance~~to ~~Period”~~cause or permit the Company to enter into an Alternative Acquisition Agreement (as defined in the Merger Agreement), with respect to ~~regain~~a ~~compliance~~Superior Proposal (as defined in the Merger Agreement), and Parent may terminate the Merger Agreement if the Board changes its recommendation in favor of the Merger Agreement.

InThe ~~order~~Merger toAgreement ~~regain~~further ~~compliance~~provides ~~with~~that, upon termination of the ~~Bid~~Merger ~~Price~~Agreement ~~Requirement~~under certain specified circumstances, the Company ~~implemented~~will abe ~~1-for-15~~required ~~reverse~~to ~~stock~~pay ~~split~~Parent ~~pursuant~~a totermination ~~which~~fee ~~each~~of 15$950,000, ~~shares~~including ofif the Company’s ~~issued~~terminates ~~and~~the ~~outstanding~~Merger ~~common~~Agreement ~~stock~~to ~~immediately~~enter ~~prior~~into an Alternative Acquisition Agreement with respect to ~~the~~a ~~effective~~Superior ~~time~~Proposal, ~~which~~Parent ~~was~~terminates ~~12:01~~the amMerger ~~Eastern~~Agreement ~~Daylight~~because ~~Time~~the onBoard ~~October~~changes 4,its ~~2024~~recommendation in favor of the Merger Agreement, ~~were~~or ~~combined~~either ~~into~~party ~~one~~terminates ~~share~~the ofMerger Agreement because the ~~Company’s~~Merger ~~common~~has ~~stock~~not (been consummated as of the ~~“Reverse~~Outside ~~Stock~~Date ~~Split”).~~or ~~The~~the Requisite Company’s ~~common~~Stockholder ~~stock~~Approval ~~began~~is ~~trading~~not onobtained, in each case, at a ~~split-adjusted~~time ~~basis~~that ~~when~~Parent also had a right to terminate the ~~market~~Merger ~~opened~~Agreement onfor ~~October~~the 4,Board ~~2024~~changing its recommendation in favor of the Merger Agreement. OnThis ~~October~~termination 18fee will also be payable by the Company if the Merger Agreement is terminated under certain circumstances and, ~~2024~~prior to such termination, an alternative acquisition proposal has been made public (or otherwise become publicly known) or announced to the Company ~~received~~or athe ~~letter~~Board ~~from~~and ~~the~~has ~~Staff~~not ~~information~~been withdrawn publicly without qualification at least five business days prior to the Company ~~that~~Stockholders Meeting or prior to the ~~Company~~date ~~had~~of ~~regained~~termination, ~~compliance~~and ~~with~~within twelve (12) months after such termination, the ~~Bid~~Company ~~Price~~consummates ~~Requirements~~a transaction contemplated by an alternative acquisition proposal or enters into an Alternative Acquisition Agreement.

~~There~~If ~~can~~the pending Merger is not completed within the expected time frame or at all, we may be nosubject ~~assurance~~to a number of material risks, including to the extent that the current market price of our common stock is positively affected by a market assumption that the Merger will be ~~maintained~~completed. ~~for~~We ~~any~~could ~~period~~be required to pay Parent a termination fee of $950,000 if the Merger Agreement is terminated under specific circumstances described in the Merger Agreement. The failure to complete the Merger also may result in negative publicity and negatively affect our relationship with our stockholders, employees, customers, vendors, and other business partners. We may also be required to devote significant time and resources to litigation related to any failure to complete the Merger or related to any enforcement proceeding commenced against us to perform our obligations under the Merger Agreement.

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~~In the event that our common stock is delisted from~~ The ~~Nasdaq~~announcement ~~Capital Market~~ and ispendency ~~not eligible for quotation or listing on another market or exchange, trading~~ of ~~our common stock could be conducted only in~~ the ~~over-the-counter~~transaction ~~market~~with orParent ~~on an electronic bulletin board established for unlisted securities such as the Pink Sheets or the OTC Bulletin Board. In such event, it~~ could ~~become~~adversely ~~more~~affect ~~difficult~~our ~~to dispose of~~business, orfinancial ~~obtain accurate price quotations for~~condition, ~~our common stock,~~ and/or ~~there~~operating ~~would likely also be a reduction in our coverage by securities analysts and the news media, which could cause the price of our common stock to decline further~~results. ~~Also, it may be difficult for us to raise additional capital if we are not listed on a major exchange.~~

~~Such~~Our aefforts ~~delisting~~to ~~would~~complete ~~also~~the ~~likely~~Merger ~~have~~could acause ~~negative~~substantial ~~effect~~disruptions onin, ~~the~~and ~~price~~create ofuncertainty surrounding, our ~~common~~business, ~~stock~~which may materially adversely affect our business, financial condition and ~~would~~results ~~impair~~of ~~your~~operation. ~~ability~~Uncertainty as to ~~sell~~whether orthe ~~purchase~~Merger will be completed may affect our ~~common~~ability ~~stock~~to ~~when~~recruit ~~you~~prospective ~~wish~~employees or to doretain soand motivate existing employees and, while the Merger is pending, such existing or prospective employees could experience uncertainty about their future with the Company. InA substantial amount of our management’s and employees’ attention is being directed toward the ~~event~~completion of athe ~~delisting,~~Merger weand ~~may~~thus ~~take~~is ~~actions~~being diverted from our day-to-day ~~restore~~operations. Uncertainty as to our ~~compliance~~future ~~with~~could ~~The~~adversely ~~Nasdaq~~affect ~~Capital~~our ~~Market~~business ~~listing~~and ~~requirements~~our relationship with customers, ~~but~~vendors, weand ~~can~~other ~~provide~~business nopartners. ~~assurance~~For ~~that~~example, ~~any~~customers, ~~such~~vendors, ~~action~~and ~~taken~~other counterparties may react unfavorably, including by usdelaying ~~would~~or ~~allow~~deferring ~~our~~decisions ~~common~~concerning ~~stock~~their tobusiness ~~become~~relationships ~~listed~~or ~~again~~transactions with us, ~~stabilize~~or ~~the~~seeking ~~market~~to ~~price~~change or ~~improve~~terminate ~~the~~their ~~liquidity~~existing business relationships with us. Changes to or termination of existing business relationships could adversely affect our ~~common~~results ~~stock~~of operations and financial condition, ~~prevent~~as well as the market price of our common stock. ~~from~~The ~~dropping~~adverse ~~below~~effects of the ~~Bid~~pendency ~~Price~~of ~~Requirement~~the orMerger ~~prevent~~could ~~future~~be ~~non-compliance~~exacerbated ~~with~~by ~~The~~any ~~Nasdaq~~delays ~~Capital~~in ~~Market~~completion ~~listing~~of ~~requirements~~the Merger or termination of the Merger Agreement.

48 While the Merger Agreement is in effect, we are subject to restrictions on our business activities.

While the Merger Agreement is in effect, we are subject to restrictions on our business activities, generally requiring us to conduct our business in the ordinary course of business, consistent with past practice, and subjecting us to a variety of specified limitations absent Parent’s prior consent. Outside certain limited exceptions, these limitations include, among other things, restrictions on our ability to (i) acquire other businesses and assets in excess of a specified limit, (ii) dispose of our assets, (iii) make investments, (iv) enter into certain contracts, (v) pay dividends, (vi) incur capital expenditures in excess of a specified limit, (vii) incur debt, (viii) take certain actions relating to intellectual property, (ix) amend our organizational documents, (x) issue additional securities or (xi) repurchase shares of Company's common stock. These restrictions could prevent us from pursuing strategic business opportunities, taking actions with respect to our business that we may consider advantageous and responding effectively and/or timely to competitive pressures and industry developments, and we may have to forgo certain opportunities we might otherwise pursue, and may as a result materially and adversely affect our business, results of operations and financial condition.

In certain instances, the Merger Agreement requires us to pay a termination fee to Parent, which could require us to use available cash that would have otherwise been available for general corporate purposes.

Under the terms of the Merger Agreement, we may be required to pay Parent a termination fee of $950,000 if the Merger Agreement is terminated under specific circumstances described in the Merger Agreement. If the Merger Agreement is terminated under such circumstances, the termination fee we may be required to pay under the Merger Agreement may require us to use available cash that would have otherwise been available for general corporate purposes and other uses. For these and other reasons, termination of the Merger Agreement could materially and adversely affect our business operations and financial condition, which in turn would materially and adversely affect the price of our common stock.

We have incurred, and will continue to incur, direct and indirect costs as a result of the pending Merger.

We have incurred, and will continue to incur, significant costs and expenses, including fees for professional services and other transaction costs, in connection with the pending Merger. We must pay a substantial portion of these costs and expenses whether or not the Merger is completed. There are a number of factors beyond our control that could affect the total amount or the timing of these costs and expenses, any of which could materially and adversely affect our business, prospects, financial condition, and results of operations.

Lawsuits may be filed against us and the members of our board of directors arising out of the proposed Merger, which may delay or prevent the proposed Merger.

Lawsuits are often brought against public companies that have entered into merger agreements. Complaints may in the future be filed against us, our board of directors, Parent, Parent’s boards of directors and/or others in connection with the transactions contemplated by the Merger Agreement. The outcome of litigation is uncertain, including the amount of costs associated with defending these claims or any other liabilities that may be incurred in connection with the litigation of these claims, and we may not be successful in defending against any such future claims. Regardless of the outcome, lawsuits that may be filed against us, our board of directors, Parent, or Parent’s boards of directors could delay or prevent the consummation of the Merger, result in significant costs, and divert the attention of our management and employees from our day-to-day business which could affect our operations and otherwise adversely affect us financially. Additionally, if a plaintiff is successful in obtaining an injunction prohibiting completion of the Merger, that injunction may delay or prevent the Merger from being completed, or from being completed within the anticipated timeframe, which may adversely affect our business, financial condition or results of operations.

If the Merger occurs, our stockholders will not be able to participate in any further upside to our business.

If the Merger is consummated, our stockholders will receive the right to receive an amount in cash equal to $5.34 per share of common stock of the Company, without interest, and will not receive any equity interests of Parent. As a result, if our business following the Merger performs well, our current stockholders will not receive any additional consideration and will therefore not receive any benefit from any such future performance of our business.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Share Repurchases

The following table sets forth information with respect to our repurchases of common stock during the three months ended ~~October~~April 3130, ~~2024~~2025:

					Total		Maximum
					Number of		Number of
					Shares		Shares
					Purchased		that May
	Total				as Part of		Yet Be
	Number of				Publicly		Purchased
	Shares		Average		Announced		under the
	Purchased		Price Paid		Plans or		Plans or
	(1)		per Share		Programs		Programs
August 1 - August 31		672	$	6.30		—		—
February 1 - February 28		766	$	3.67		—		—
September 1 - September 30		130		3.30		—		—
March 1 - March 30		238		3.24		—		—
October 1 - October 31		—		—		—		—
April 1 - April 30		9,923		2.73		—		—
Total		~~802~~10,927	$	52.81		—		—

(1) Amount represents shares surrendered by employees to satisfy tax withholding obligations resulting from restricted stock that vested during the three months ended ~~October~~April 3130, ~~2024~~2025.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

During the three months ended ~~October~~April 3130, ~~2024~~2025, none of our directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934, as amended) adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K of the Securities Act of 1933).

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Item 6. EXHIBITS

See Index to Exhibits.

INDEX TO EXHIBITS

Exhibit No.		Description of Exhibit
2.1		Agreement and Plan of Merger, dated as of May 29, 2025, by and among Streamline Health Solutions, Inc., Mist Holding Co., and MD BE Merger Sub, Inc. (Incorporated by reference from Exhibit 2.1 of the Current Report on Form 8-K, filed May 29, 2025).
3.1		Certificate of Incorporation of Streamline Health Solutions, Inc. f/k/a LanVision Systems, Inc., as amended through August 19, 2014 (Incorporated by reference from Exhibit 3.1 of the Quarterly Report on Form 10-Q, filed September 15, 2014).
3.2		Certificate of Amendment of Certificate of Incorporation of Streamline Health Solutions, Inc. (Incorporated by reference from Exhibit 3.1 of the Current Report on Form 8-K, filed May 24, 2021).
3.3		Certificate of Amendment of Certificate of Incorporation of Streamline Health Solutions, Inc. (Incorporated by reference from Exhibit 3.1 of the Current Report on Form 8-K, filed June 8, 2022).
3.4		Certificate of Amendment of Certificate of Incorporation of Streamline Health Solutions, Inc. (Incorporated by reference from Exhibit 3.1 of the Current Report on Form 8-K, filed September 26, 2024).
3.5		Bylaws of Streamline Health Solutions, Inc., as amended and restated through March 28, 2014 (Incorporated by reference from Exhibit 3.1 of the Current Report on Form 8-K, filed April 3, 2014).
10.1		~~Fifth~~Sixth Modification to Second Amended and Restated Loan and Security Agreement, dated ~~November~~March 1327, ~~2024~~2025, by and between Streamline Health Solutions, Inc. and certain of its subsidiaries party thereto, and Western Alliance Bank (Incorporated by reference from Exhibit 10.1 of the Current Report on Form 8-K, filed ~~November~~March 1528, ~~2024~~2025).
10.2		Form of Voting and Support Agreement, dated as of May 29, 2025, by and among Mist Holding Co. and each of the persons set forth on the signature pages thereto (Incorporated by reference from Exhibit 10.1 of the Current Report on Form 8-K, filed May 29, 2025).
10.3		Amended and Restated Master Services and Non-Disclosure Agreement, dated as of May 29, 2025, by and between Streamline Health Solutions, Inc. and 180 Consulting, Inc. (Incorporated by reference from Exhibit 10.2 of the Current Report on Form 8-K, filed May 29, 2025).
31.1*		Certification by President and Chief Executive Officer pursuant to Rule 13a-14(a) of the Exchange Act.
31.2*		Certification by Chief Financial Officer pursuant to Rule 13a-14(a) of the Exchange Act.
32.1*		Certification by President and Chief Executive Officer pursuant to 18 U.S.C. Section 1350.
32.2*		Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350.
101.INS*		INLINE XBRL INSTANCE DOCUMENT
101.SCH*		INLINE XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT
101.CAL*		INLINE XBRL TAXONOMY EXTENSION CALCULATION LINKBASE
101.DEF*		INLINE XBRL TAXONOMY EXTENSION DEFINITION LINKBASE
101.LAB*		INLINE XBRL TAXONOMY EXTENSION LABELS LINKBASE
101.PRE*		INLINE XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE
104*		COVER PAGE INTERACTIVE DATA FILE (FORMATTED AS INLINE XBRL AND CONTAINED IN EXHIBIT 101)

*	Filed herewith.

Our SEC file number reference for documents filed with the SEC pursuant to the Securities Exchange Act of 1934, as amended, is 000-28132.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	STREAMLINE HEALTH SOLUTIONS, INC.
DATE: December 20, 2024	By:	/s/ Benjamin L. Stilwill
DATE: June 16, 2025	By:	/s/ Benjamin L. Stilwill
		Benjamin L. Stilwill President and Chief Executive Officer
DATE: December 20, 2024	By:	/s/ Bryant J. Reeves III
DATE: June 16, 2025	By:	/s/ Bryant J. Reeves III
		Bryant J. Reeves III
		Chief Financial Officer

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