FORWARD-LOOKING STATEMENTS


We make forward-looking statements in this Report and in other materials we file
with the Securities and Exchange Commission ("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, as amended, and 21E of the Securities Exchange Act of 1934 (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, 2020 and in our subsequent filings with the Securities
Exchange Commission, and include among others, the following:



  ? competitive products and pricing;

  ? product demand and market acceptance;

  ? entry into new markets;

  ? new product and services development and commercialization;

? key strategic alliances with vendors and channel partners that resell our

products;

? uncertainty in continued relationships with clients due to termination rights;

? our ability to control costs;

? availability, quality and security of products produced and services provided


    by third-party vendors;

  ? the healthcare regulatory environment;




22

? 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 future cash needs;

  ? 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;

? 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 Global Market.



Some of these factors and risks have been, and may further be, exacerbated by the COVID-19 pandemic.


Most of these factors are beyond our ability to predict or control. Any of these
factors, or a combination of these factors, could materially affect our future
financial condition or results of operations and the ultimate accuracy of our
forward-looking statements. There also are other factors that we may not
describe (generally because we currently do not 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.



Results of Operations



Revenues



                                    Three Months Ended
(in thousands):            April 30, 2020        April 30, 2019      Change      % Change

System sales              $              -      $            221     $  (221 )           - %
Professional services                  181                   455        (274 )         (60 )%
Audit services                         544                   395         149            38 %
Maintenance and support              1,258                 1,452        (194 )         (13 )%
Software as a service                  861                   641         220            34 %
Total Revenues            $          2,844      $          3,164     $  (320 )         (10 )%




23






Proprietary software and term licenses - Proprietary software revenue recognized
for the three months ended April 30, 2020 decreased by $221 over the prior
comparable period as there were no perpetual license sales of our Streamline
Health® Abstracting™ solution in the first quarter of fiscal 2020. The Company
is able to influence sales of these products; however, the timing is difficult
to manage as sales generally result from our distribution partners.. certain
delays in contracting for systems sales are a result of the novel COVID-19. The
Company is unable to ascertain the timing or extent of the impact of COVD-19 on
the Company's on-ongoing performance relative to perpetual software sales.



Professional services - For the three-month period ended April 30, 2020,
revenues from professional services decreased by $274 from the prior comparable
period. This decrease in professional services revenue is primarily due to the
timing of completion of a few, large, professional services agreements in the
first quarter of fiscal year 2019. Additionally, the lower professional services
was a result of the novel COVID-19 as it delayed customer decisions on projects
during the quarter. The Company is unable to ascertain the timing or extent of
the impact of COVD-19 on the Company's on-ongoing performance relative to
professional services.



Audit services - Audit services revenue for the three months ended April 30,
2020 increased by $149 over the prior comparable period. The Company realized
higher demand for audit services in the fourth quarter of 2019, and that higher
demand has continued into the first quarter of 2020. The Company's expertise,
demonstrated and supported by eValuator, and the fact that our professional
staff is onshore is believed to be a competitive advantage with regard to the
audit services. We did experience a temporary reduction in volumes for
approximately 45 days from certain customers that were primarily physician
based, as a result of the COVID-19. This occurred late in the first quarter and
early in the second quarter, of fiscal 2020. The Company has customer
opportunities in the market combining the eValuator technology with audit
services to provide customers with a comprehensive solution ("a technology
enabled service").



Maintenance and support - Revenue from maintenance and support for the three
months ended April 30, 2020 was lower than the prior comparable period by 13%.
The Company is expecting lower revenue for the full year 2020, from the first
quarter levels, due to pricing pressure and cancellations by certain customers
of our legacy products, primarily clinical analytics. The customer pricing
differences and rate of customer cancellations has not exceeded the Company's
budget for fiscal 2020.



Software as a Service (SaaS) - Revenue from SaaS for the three months ended
April 30, 2020 increased by $220 from the prior comparable period. The increase
resulted from new customers of our growth product, eValuator. The Company's
legacy product, Financial Management Systems, has been consistent and is not
expected to see a shortfall in fiscal 2020. The eValuator SaaS revenue base
should continue to grow in fiscal 2020 as we experience go-lives on already sold
eValuator customers, and sales of new eValuator customers that will go-live
later in fiscal 2020. We have experienced slower first contact to contracting as
result of COVID-19. While we have seen some positive activity, we are unable to
estimate the impact of COVID-19 on future contracting processes with our
customers.



Cost of Sales



                                            Three Months Ended
(in thousands):                    April 30, 2020        April 30, 2019         Change          % Change
Cost of system sales              $             77      $             64     $         13               20 %
Cost of professional services                  265                   426             (161 )            (38 )%
Cost of audit services                         360                   303               57               19 %
Cost of maintenance and support                186                   127               59               46 %
Cost of software as a service                  382                   107   

          275              257 %
Total cost of sales               $          1,270      $          1,027     $        243               24 %




The increase in overall cost of sales for the three months ended April 30, 2020
from the comparable prior period is primarily due to the increase in
amortization of software development. The Company placed larger amounts of
software development into service in the third and fourth quarter of fiscal
2019. The placement of the software into service is resulting in higher rates of
amortization for fiscal 2020.



24





Cost of system sales includes amortization and impairment of capitalized software expenditures and the cost of third-party software. The increase in expense for the three-month period ended April 30, 2020 from the comparable prior period was primarily due to the increase in amortization of capitalized software costs as discussed above.





The cost of professional services includes compensation and benefits for
personnel and related expenses. The decrease in expense for the three-month
period from the prior comparable period is primarily due to lower rates of
professional services required for SaaS type implementations. The SaaS solutions
are more efficient to implement as compared to the legacy on-premise software
implementations. On-premise implementations, as was the case with legacy
software products implementations, took longer and involved substantially more
cost.



The cost of audit services includes compensation and benefits for audit services
personnel, and related expenses. The increase in expense for the three-month
period ended April 30, 2020 is attributed to the higher volumes of coding
transaction processed, and the related higher revenue. The Company audit
services personnel utilize eValuator and it is believed that the product makes
them more productive and efficient.



The cost of maintenance and support includes compensation and benefits for client support personnel and the cost of third-party maintenance contracts. The increase in expense for the three-month period ended April 30, 2020 was primarily due to increases in compensation for this department.





The cost of SaaS solutions is relatively fixed, subject to inflation for the
goods and services it requires. The increase in expense for the three-month
period ended April 30, 2020 was primarily due to the amortization of capitalized
software development costs and the movement of headcount to support this growth
product.


Selling, General and Administrative Expense





                                         Three Months Ended
(in thousands):                 April 30, 2020        April 30, 2019         Change          % Change
General and administrative
expenses                       $          1,455      $          1,645     $       (190 )            (12 )%
Sales and marketing expenses                836                   776               60                8 %
Total selling, general, and
administrative expense         $          2,291      $          2,421     $

      (130 )             (5 )%




General and administrative expenses consist primarily of compensation and
related benefits, reimbursable travel and entertainment expenses related to our
executive and administrative staff, general corporate expenses, amortization of
intangible assets, and occupancy costs. The decrease in general and
administrative expenses for the three months ended April 30, 2020 from the
comparable prior period is primarily attributed to a reduction in salaries and
benefits and professional fees associated with the company's annual audit and
annual shareholders meeting. The Company previously announced, at the end of
fiscal year ended January 31, 2020, a rationalization to better match expenses
with its lower revenues as a result of the sale of the ECM Assets. The
rationalization impacted personnel beyond that of those directly attributable to
the ECM Assets. The Company records a disproportionate amount of professional
fees in the first quarter of each fiscal year related to the annual audit and
the Company's annual shareholder meeting. This disproportionate amount of
professional fees occurred in both three-month periods ended April 30, 2020 and
2019. However, the fees are lower by more than $100 in the three months ended
April 30, 2020 as compared with same period a year ago.



Sales and marketing expenses consist primarily of compensation and related
benefits and reimbursable travel and entertainment expenses related to our sales
and marketing staff, as well as advertising and marketing expenses, including
trade shows. The increase in sales and marketing expense for the three months
ended April 30, 2020 from the comparable prior period was primarily due to
certain meetings and events that occurred before the impact of the novel
Coronavirus. The Company has temporarily stopped travel until its employee
safety can be assured. There is no anticipated date to re-institute travel for
its sales, and other personnel. The Company has been productive using web-based
meeting media to continue its sales and customer service processes.



25





Research and Development





                                         Three Months Ended
(in thousands):                 April 30, 2020        April 30, 2019         Change          % Change
Research and development
expense                        $            684      $            589     $         95               16 %
Plus: Capitalized research
and development cost                        479                   790             (311 )            (39 )%
Total research and
development cost               $          1,163      $          1,379     $       (216 )            (16 )%




Research and development cost consists primarily of compensation and related
benefits, the use of independent contractors for specific near-term development
projects, and allocated occupancy expense. Total research and development cost
for the three-month period ended April 30, 2020 was lower than that from the
prior comparable period. The Company has continued to be more efficient in
research and development while focusing on its growth products, primarily
eValuator. The Company is spending fewer dollars on maintenance for its legacy
products as these have attained maturity in the marketplace. The Company is
expecting that total research and development expenses will continue at the
first quarter 2020 levels throughout fiscal year 2020. For the three months
ended April 30, 2020 and 2019, as a percentage of revenues, total research and
development costs were 40% and 44%, respectively.



Other Expense



                                  Three Months Ended
(in thousands):          April 30, 2020         April 30, 2019      Change      % Change
Interest expense        $            (14 )     $            (78 )   $    64            82 %
Miscellaneous expense                (18 )                  (16 )        (2 )         (13 )%
Total other expense     $            (32 )     $            (94 )   $    62            66 %




Interest expense consists of interest and commitment fees on the line of credit,
interest on the term loan, and is inclusive of deferred financing cost
amortization expense. Interest expense decreased for the three months ended
April 30, 2020 from the prior comparable period primarily due to the reduction
in outstanding principal on our term loan. The Company re-paid its term loan
with Bridge bank on February 24, 2020, upon closing the sale of the ECM Assets.
The components of miscellaneous expense for the three-month period ended April
30, 2020 and 2019 is primarily the valuation allowance on the Montefiore
liability.



Provision for Income Taxes



We recorded an income tax benefit of $(561) and $(325) for the three months
ended April 30, 2020 and 2019, respectively, which is comprised of estimated
federal, state and local income tax provisions. The income tax benefit is
partially off-set by an income tax from discontinued operations. The Company has
a substantial amount of net operating losses for federal and state income tax
purposes. We do not anticipate any tax from the sale of the ECM Assets, or
income from continuing or discontinued operations for the full year fiscal 2020.
For the three months ended April 30, 2020, the net income tax expense from
continuing and discontinued operations will continue to reverse out through

the
fiscal year.


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
of Directors in its financial and operational decision-making, the Company has
supplemented the condensed consolidated financial statements presented on a GAAP
basis in this quarterly report on Form 10-Q with the following non-GAAP
financial measures: EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted
EBITDA per diluted share.



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.



26





EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, and Adjusted EBITDA per diluted share





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, stock-based compensation expense, transaction
related expenses and other expenses that do not relate to our core operations
such as severances and impairment charges; (iii) Adjusted EBITDA Margin as
Adjusted EBITDA as a percentage of GAAP net revenue; and (iv) Adjusted EBITDA
per diluted share as Adjusted EBITDA divided by adjusted diluted shares
outstanding. EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted EBITDA
per diluted share are used to facilitate a comparison of our operating
performance on a consistent basis from period to period and provide for a more
complete 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. Adjusted EBITDA per diluted share includes incremental shares in
the share count that are considered anti-dilutive in a GAAP net loss position.



The Board of Directors and management also use these measures (i) as one of the
primary methods for planning 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 Loan
and Security 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 of Directors.



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 advantages regarding the use and analysis of
these measures as mentioned above. EBITDA, Adjusted EBITDA, Adjusted EBITDA
Margin, and Adjusted EBITDA per diluted share, as disclosed in this annual
report on Form 10-K 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 Loan and Security 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 annual report on Form 10-K,
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.



27






The following table reconciles EBITDA and Adjusted EBITDA to net loss, and
Adjusted EBITDA per diluted share to loss per diluted share for the fiscal years
ended January 31, 2020 and 2019 (amounts in thousands, except per share data).
All of the items included in the reconciliation from EBITDA and Adjusted EBITDA
to net loss and the related per share calculations 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
In thousands, except per share data                 April 30, 2020        April 30, 2019
Adjusted EBITDA Reconciliation
Loss from continuing operations                    $           (977 )    $ 

         (642 )
Interest expense                                                 14                    78
Income tax expense                                             (561 )                (325 )
Depreciation                                                     14                     8
Amortization of capitalized software development
costs                                                           289        

126


Amortization of intangible assets                               123        

          143
Amortization of other costs                                      75                    66
EBITDA                                                       (1,023 )                (546 )

Share-based compensation expense                                263        

269


Non-cash valuation adjustments to assets and
liabilities                                                      17                    15
Loss on exit of operating lease                                 105        

            -
Adjusted EBITDA                                    $           (638 )    $           (262 )
Adjusted EBITDA margin (1)                                      (23 )%                 (8 )%

Adjusted EBITDA per Diluted Share Reconciliation
Loss from continuing operations per common share
- diluted                                          $          (0.03 )    $          (0.03 )
Adjusted EBITDA per adjusted diluted share (2)     $          (0.02 )      

(0.01 )


Diluted weighted average shares (3)                      29,767,814        

22,825,037


Includable incremental shares - adjusted EBITDA
(4)                                                               -                     -
Adjusted diluted shares                                  29,767,814            22,825,037







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

(2) Adjusted EBITDA per adjusted diluted share for our common stock is computed

using the more dilutive of the two-class method or the if-converted method.

(3) Diluted EPS for our common stock was computed using the if-converted method,

which yields the same result as the two-class method.

(4) The number of incremental shares that would be dilutive under an assumption

that the Company is profitable during the reported period, which is only

applicable for a period in which the Company reports a GAAP net loss. If a

GAAP profit is earned in the reported periods, no additional incremental


    shares are assumed.




28





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 Note 2
to our consolidated financial statements in our Annual Report on Form 10-K for
the fiscal year ended January 31, 2020. 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, 2020.



Liquidity and Capital Resources





The Company's liquidity is dependent upon numerous factors including: (i) the
timing and amount of revenues and collection of contractual amounts from
clients, (ii) amounts invested in research and development and capital
expenditures, and (iii) the level of operating expenses, all of which can vary
significantly from quarter-to-quarter. The Company's primary cash requirements
include regular payment of payroll and other business expenses, principal and
interest payments on debt and capital expenditures. Capital expenditures
generally include computer hardware and computer software to support internal
development efforts or SaaS data center infrastructure. Operations are funded
with cash generated by operations and borrowings under credit facilities.
Additionally, on February 24, 2020, the Company generated over $5.4 million in
proceeds from the sale of the ECM Assets, after repaying its $4.0 million term
loan. The Company believes that cash flows from operations, the cash from the
sale of the ECM Assets and available credit facilities are adequate to fund
current obligations for the next twelve months from issuance of these financial
statements. Cash and cash equivalent balances at April 30, 2020 and January 31,
2020 were $6,560,000 and $1,649,000, respectively. Continued expansion may
require the Company to take on additional debt or raise capital through issuance
of equities, or a combination of both. There can be no assurance the Company
will be able to raise the capital required to fund further expansion.



As discussed in Note 8 - Discontinued Operations of the financial statements,
the Company closed on its agreement to sell the legacy ECM Assets to Hyland
Software, Inc on February 24, 2020. The Company used the proceeds to pay off its
term loan with Bridge Bank and to fund the continuing development and
incremental investment in sales and marketing in support of its eValuator™
cloud-based pre- and post-bill coding analysis platform.



The Company has liquidity through the Loan and Security Agreement described in
more detail in Note 4 - Debt of our condensed consolidated financial statements.
The Company has a $2,000,000 revolving credit facility, which can be advanced
based upon 80% of eligible accounts receivable, as defined in the Loan and
Security Agreement. In order to draw upon the revolving credit facility, the
Company's must comply with certain financial covenants, including the
requirement that the Company maintain certain minimum Bank EBITDA levels,
calculated pursuant to the Loan and Security Agreement, measured on a monthly
basis over a trailing three-month period then ended, and which shall not deviate
by the greater of (i) thirty percent of its projected Bank EBITDA or (ii)
$150,000. Our lender uses a measurement that is similar to the Adjusted EBITDA,
a non-GAAP financial measure described above. The bank uses an Adjusted EBITDA
that is further reduced by the Company's spend on capitalized software
development for the period. The bank agreement initially required the Company to
maintain a minimum Asset Coverage Ratio. However, the Asset Coverage Ratio was
eliminated as a covenant under an amendment dated April 11, 2020. The Company
obtained a waiver at both January 31, 2020 and April 30, 2020 against its
existing covenants. The Company has not provided guidance to external parties
due to the potential impacts of COVID-19 on the Company's revenue. Accordingly,
the Company has not established covenants for its fiscal year 2020. The bank has
waived the covenants until guidance is provided, however, the Company is unable
to draw on its line of credit facility during this time.



The Loan and Security Agreement prohibits the Company from declaring or paying
any dividend or making any other payment or distribution, directly or
indirectly, on account of equity interests issued by the Company if such equity
interests: (a) mature or are mandatorily redeemable pursuant to a sinking fund
obligation or otherwise (except as a result of a change of control or asset sale
so long as any rights of the holders thereof upon the occurrence of a change of
control or asset sale event shall be subject to the prior repayment in full of
the loans and all other obligations that are accrued and payable upon the
termination of the Loan and Security Agreement), (b) are redeemable at the
option of the holder thereof, in whole or in part, (c) provide for the scheduled
payments of dividends in cash, or (d) are or become convertible into or
exchangeable for indebtedness or any other equity interests that would
constitute disqualified equity interests pursuant to clauses (a) through (c)
hereof, in each case, prior to the date that is 180 days after the maturity date
of the Loan and Security Agreement.



29






The Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES
Act, was signed into law on March 17, 2020. Among other things, the Cares Act
provided for a business loan program known as the Paycheck Protection Act
("PPP"). Companies are able to borrow, through the SBA, up to two months of
payroll. The Company received approximately $2,301,000 through the SBA for the
PPP loan program. These funds are utilized by the Company to fund payroll during
the novel corona virus and avoid further staffing reductions during the
slowdown. The loan requires principal payments, beginning after the seventh
monthly anniversary, and must be fully paid in two years. The PPP loan bears an
interest rate of 1.0% per annum.



Significant cash obligations



(in thousands)           April 30, 2020       January 31, 2020
Term loan (1)           $          2,301     $            3,872
Royalty liability (2)                986                    969







(1) Term loan balance is reported net of deferred financing costs of $- and $128

as of April 30, 2020 and January 31, 2020, respectively. Refer to Note 4 -

Debt to the condensed consolidated financial statements for additional

information. The term loan balance as of April 30, 2020 is the Company's PPP

loan. The term loan payable as of January 31, 2020 was bank term debt.

(2) Refer to Note 7- Commitments and Contingencies to the condensed consolidated


    financial statements for additional information.



Operating cash flow activities





                                                               Three Months Ended
(in thousands)                                         April 30, 2020      April 30, 2019

Net loss from continuing operations                   $           (977 )   $          (642 )
Non-cash adjustments to net loss                                   310                  25
Cash impact of changes in assets and liabilities                (1,263 )              (867 )
Net cash used in operating activities                 $         (1,903 )  
$        (1,484 )




The use of cash from operating activities is due to the loss from operations for
the first quarter ended April 30, 2020 as well as certain non-recurring cost
paid in the first quarter of fiscal year 2020. We had some $600 of non-recurring
cost accrued at the end of fiscal 2019, that were funded in the first quarter
ended April 30, 2020. These were inclusive of approximately $300 of severance
liabilities for an employee rationalization that occurred on January 31, 2020.



Investing cash flow activities





                                                   Three Months Ended
(in thousands)                            April 30, 2020        April 30, 2019

Purchases of property and equipment      $              -      $            (38 )
Proceeds from sales of ECM Assets                  11,284                  

-


Capitalized software development costs               (479 )               

(790 ) Net cash used in investing activities $ 10,805 $ (828 )






The improvement in the cash used in investing activities in the three months
ended April 30, 2020 over the prior comparable period is primarily due to the
proceeds from our sale of the ECM Assets, and lower capitalized software
development costs. Refer to Note 8 - Discontinued Operations for more
information on the sale of the ECM Assets. Operationally, the Company has a more
focused effort on the spend for software development projects. See discussion
and analysis in "Research and development costs" above. The proceeds from the
sale of the ECM Assets are net of direct transaction expenses.



30





Financing cash flow activities





                                                  Three Months Ended
(in thousands)                           April 30, 2020        April 30, 2019
Principal repayments on term loan       $         (4,000 )    $           (149 )
Proceeds of term loan payable                      2,301                     -
Other                                                (22 )                 

(3 ) Net cash used in financing activities $ (1,721 ) $ (152 )






The cash used in financing activities in the three months ended April 30, 2020
was primarily the result of the repayment of the Company's term loan on February
24, 2020, upon the closing the sale of the ECM Assets. The Company was required
to repay the term loan at close and funding of the sale of the ECM Assets.
Additionally, the Company filed for, and received, a PPP loan in the amount of
$2,301. Refer to Note 4 - Debt.

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