STRM Streamline Health Solutions Inc

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 months ended April 30, 2025, are not necessarily indicative of the results that may be expected for the fiscal year ending January 31, 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 that it is probable that the 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. 

As of  April 30, 2025, the Company had approximately $14 million of total outstanding debt associated with its term loan, line of credit and private placement notes payables, 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.

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 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.

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 months ended April 30, 2025 and 2024, the Company made cash payments of $0 and $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 consolidated balance sheet as “acquisition earnout liability” and totaled $377,000 as of April 30, 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 months ended April 30, 2025 and 2024, the Company recorded $2,000 and $7,000, respectively, related to such office space rentals.

NOTE 5 — DEBT

Outstanding principal balances consisted of the following at April 30, 2025:

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.

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:

The 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 cross defaults and a change of control default. The line of credit also is subject to customary prepayment requirements. Substantially all the assets of the Company are collateralized by the Loan Agreement. For the period ended  April 30, 2025, the Company was in compliance with the financial covenants under the Loan Agreement. The Company has determined that it is probable that a covenant  may not be achieved in the next 12 months, and as such, the Company has reclassified the Term Loan and Revolving Line of Credit balances as current as of  January 31, 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.

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. 

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. During the second quarter of fiscal 2024, the Company reclassified the $837,000 remeasured value of the Warrants as additional paid in capital on the consolidated Balance Sheet. 

NOTE 6 — INCOME TAXES

Income tax expense was $0 for the three months ended April 30, 2025 and 2024, 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 $331,000 in reserves for uncertain tax positions as of  April 30, 2025 and January 31, 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, 2021. All material state and local income tax matters have been concluded for years through January 31, 2020. The Company is no longer subject to IRS examination for periods prior to the tax year ended January 31, 2021; however, carryforward losses that were generated prior to the tax year ended January 31, 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 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, Inc. (“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.

NOTE 8 — COMMITMENTS AND CONTINGENCIES

Consulting Agreement with 180 Consulting, LLC

On March 19, 2020, the Company entered into that 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 April 30, 2025, there were two active SOWs under the eValuator MSA. One of the active SOWs 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. As of April 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 30,774 and 27,910 shares for the three months ended April 30, 2025 and 2024, respectively, and has earned an aggregate of 249,355 shares of the Company’s common stock through April 30, 2025. For services rendered by 180 Consulting during the three months ended April 30, 2025 and 2024, the Company incurred fees of $554,000 and $539,000, respectively. For the three months ended April 30, 2025 and 2024, the Company recorded capitalized non-employee stock compensation of $26,000 and $30,000, respectively. The Company paid fees of $600,000 and $376,000 for services rendered by 180 Consulting during the three months ended April 30, 2025 and 2024, respectively. 

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 $257,000 and $141,000 for the SOWs that include the sublicense agreement for the three months ended April 30, 2025 and 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 consolidated results of operations, financial position or cash flows.

NOTE 9 - RELATED PARTY TRANSACTIONS

Debt Private Placement

The following related parties participated in the Debt Private Placement (Refer to Note 5 – Debt for additional information): 

(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.

NOTE 10- SUBSEQUENT EVENTS

Agreement and Plan of Merger with Mist Holding Co.

On May 29, 2025, the Company entered into the Merger Agreement with Parent and 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.

At the effective time of the Merger, each share of common stock of the Company issued and outstanding as of immediately prior to the effective time of the Merger (other than (i) any shares held by the Company as treasury stock and not held on behalf of third parties, any shares owned by Parent or Merger Sub and any shares owned by any direct or indirect wholly owned subsidiary of Parent or Merger Sub, and (ii) any shares held by holders who have not voted in favor of the adoption of the Merger Agreement (or consented thereto in writing and who are entitled to demand, and who have perfected a demand, for appraisal rights of such shares in accordance with Section 262 of the General Corporation Law of the State of Delaware, as may be amended from time to time), will automatically be cancelled and converted into the right to receive 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 (the “Requisite Company Stockholder Approval”) at a meeting of the Company’s stockholders (the “Company Stockholders Meeting”); (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 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 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.

Voting Agreements

On May 29, 2025, concurrently with the execution and delivery of the Merger Agreement, certain officers and directors of the Company and their respective affiliates entered into Voting and Support Agreements with Parent (each, a “Voting Agreement”). Pursuant to the Voting Agreements, each of such officers and directors of the Company and their respective affiliates have agreed, among other things, to vote all shares owned by them (i) in favor of the approval and adoption of the Merger Agreement and the 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 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 furtherance of such an acquisition proposal, and any other actions that are intended to, or would reasonably be expected to, result in the conditions to the closing of the Merger not being satisfied or a breach by the Company of the Merger Agreement, change in the capitalization of the Company or the voting rights of the Company’s securities, or otherwise impede, interfere with, delay, discourage, adversely affect or inhibit the timely consummation of the Merger; provided, however, that nothing in the Voting Agreements shall affect any actions taken by such stockholder or any of such stockholder’s affiliates (or any officer, director or employee thereof) solely in his or her capacity as a director or officer of the Company or from complying with his or her fiduciary obligations solely to the extent acting in such Person’s capacity as a director or officer of the Company.

The Voting Agreements terminate upon the earliest of the effective time of the Merger, the valid termination of the Merger Agreement in accordance with its terms, the mutual written agreement of Parent and the applicable stockholder to terminate the Voting Agreement, and the date on which, subject to the terms of the Voting Agreements, the applicable stockholder delivers written notice to Parent of such stockholder’s election, in its sole discretion, to terminate the Voting Agreement following any amendment or modification to the Merger Agreement that reduces the amount of the Merger Consideration, changes the form of any of the Merger Consideration or otherwise modifies the terms of the Merger Agreement in a manner that is materially adverse to the Company’s stockholders as a 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.