NOTE 4 — DEBT

Term Loan and Line of Credit

During October 2019 the Company entered into a sixth amendment to its Credit Agreement (the “Sixth Amendment”) with Wells Fargo Bank, N.A., as administrative agent, and other lender parties thereto. Pursuant to the terms of the Sixth Amendment, the Company received consent to proceed with the redemption of the Series A Convertible Preferred Stock. Amounts outstanding under the Credit Agreement continued to bear interest at either LIBOR or the base rate, as elected by the Company, plus an applicable margin, plus, after the effective date of the amendment to the Credit Agreement entered into as of September 11, 2019 (the “Fifth Amendment”), a “paid in kind” rate, or PIK Rate, of 2.75%.

Subject to the Company’s leverage ratio, pursuant to the terms of the amendment to the Credit Agreement entered into as of April 15, 2015, the applicable LIBOR rate margin varied from 4.25% to 6.25%, and the applicable base rate margin varied from 3.25% to 5.25%. The original term loan and line of credit maturity date of May 21, 2020 was extended to August 21, 2020. Additionally, the Credit Agreement, as amended by the Fifth Amendment, requires the payment of certain other fees and expenses, including (a) an amendment fee of up to $200,000 ($50,000 per quarter) and (b) consulting costs of approximately $100,000.

The Sixth Amendment reduced the Company’s capacity on the existing revolving credit from $5,000,000 to $1,500,000, subject to other restrictions as described herein.

The Credit Agreement, as amended, included customary financial covenants, including the requirements that the Company maintain minimum liquidity and achieve certain minimum EBITDA levels (as defined in the Credit Agreement), among other covenants, including a requirement that the Company refrain from paying dividends on the common and any preferred stock. In addition, the Credit Agreement, as amended by the Fifth Amendment, required that the Company (i) engage a consultant for purposes of preparing a budget to be shared with the administrative agent and to be adhered to by the Company and other financial information requested by the administrative agent, (ii) enter into amendments to the Company’s licensing agreements with Montefiore, (iii) pursue a refinancing transaction for purposes of satisfying its obligations under the Credit Agreement, and in connection therewith, achieve certain refinancing milestones and provide the administrative agent with certain deliverables, information and access to its personnel and records, and (iv) on or before October 15, 2019, provide evidence of a common equity contribution of no less than $1,500,000.

Pursuant to the terms of the Credit Agreement, as amended by the Sixth Amendment, the Company was required to maintain minimum liquidity of at least $1,000,000 at all times.

The following table shows our minimum monthly (“Bank EBITDA”) defined as Adjusted EBITDA, less capitalized software development costs for the applicable period, covenant thresholds, as modified by the Fifth Amendment:


Applicable period	Minimum EBITDA
For the twelve-month period ending August 31, 2019	$	(505,000)
For the twelve-month period ending September 30, 2019		(752,000)
For the twelve-month period ending October 31, 2019		(850,000)
For the twelve-month period ending November 30, 2019		(597,000)
For the twelve-month period ending December 31, 2019		(608,000)
For the twelve-month period ending January 31, 2020		(289,000)
For the twelve-month period ending February 29, 2020		(124,000)
For the twelve-month period ending March 31, 2020		(195,000)
For the twelve-month period ending April 30, 2020		(683,000)
For the twelve-month period ending May 31, 2020		(560,000)
For the twelve-month period ending June 30, 2020		(368,000)
For the twelve-month period ending July 31, 2020 and for the twelve-month period ending on the last day of each month thereafter		(374,000)

As of October 31, 2019, the Company had no borrowings under the revolving line of credit, and had accrued $17,000 in interest and unused line fees. Based upon the borrowing base formula set forth in the Credit Agreement, as of October 31, 2019, the Company had access to the full amount of the $1,500,000 revolving line of credit.

As described in Note 9, the Company entered into the Loan and Security Agreement with Bridge Bank and into a definitive asset purchase agreement with Hyland Healthcare, who will acquire certain assets of and assume certain identified liabilities of the Company’s legacy Enterprise Content Management business (the “ECM Business”) upon the satisfaction of certain customary closing conditions, including the receipt of approval of the Company’s stockholders. Under the terms of the Loan and Security Agreement, the Company must prepay the Term Advance (as defined under the Loan and Security Agreement) from all available proceeds of the sale of the ECM Business. As such, the Company is required and will have both the intent and ability to repay its term loan and, accordingly, has reclassified the term loan from non-current to current.

Outstanding principal balances on debt consisted of the following at:


	October 31, 2019		January 31, 2019
Line of Credit	$	—	$	—
Term loan		3,582,000		4,030,000
Total		3,582,000		4,030,000
Deferred financing cost		(110,000)		(82,000)
Total		3,472,000		3,948,000
Less: Current portion		(3,472,000)		(597,000)
Non-current portion of debt	$	—	$	3,351,000