DEBT

Term Loan and Line of Credit

On November 21, 2014, we entered into a Credit Agreement (the “Credit Agreement”) with Wells Fargo Bank, N.A., as administrative agent, and other lender parties thereto. Pursuant to the Credit Agreement, the lenders agreed to provide a $10,000,000 senior term loan and a $5,000,000 revolving line of credit to our primary operating subsidiary. Amounts outstanding under the Credit Agreement bear interest at either LIBOR or the base rate, as elected by the Company, plus an applicable margin. Subject to the Company’s leverage ratio, under the terms of the original Credit Agreement, the applicable LIBOR rate margin varied from 4.25% to 5.25%, and the applicable base rate margin varied from 3.25% to 4.25%. Pursuant to the terms of the amendment to the Credit Agreement entered into as of April 15, 2015, the applicable LIBOR rate margin was amended to vary from 4.25% to 6.25%, and the applicable base rate margin was amended to vary from 3.25% to 5.25%. The term loan and line of credit mature on November 21, 2019 and provide support for working capital, capital expenditures and other general corporate purposes, including permitted acquisitions. The outstanding senior term loan is secured by substantially all of our assets. The senior term loan principal balance is payable in quarterly installments, which started in March 2015 and will continue through the maturity date, with the full remaining unpaid principal balance due at maturity. In November 2014, the Company repaid indebtedness under its prior credit facility using approximately $7,400,000 of the proceeds provided by the term loan. The prior credit facility with Fifth Third Bank was terminated concurrent with the entry of the Credit Agreement. Financing costs of $355,000 associated with the new credit facility are being amortized over its term on a straight-line basis, which is not materially different from the effective interest method.

The Credit Agreement includes customary financial covenants, including the requirements that the Company maintain minimum liquidity and achieve certain minimum EBITDA levels (as defined in the Credit Agreement). In addition, the Credit Agreement prohibits the Company from paying dividends on the common and preferred stock. Pursuant to the terms of the second amendment to the Credit Agreement entered into as of April 29, 2016, the Company is required to maintain minimum liquidity of at least $6,500,000 from April 29, 2016 through and including the maturity date of the credit facility.

Pursuant to the terms of the second amendment to the Credit Agreement, for the four-quarter period ending April 30, 2017, and fiscal quarters thereafter, the minimum EBITDA will be determined within 30 days following delivery of, and based upon, the projections then most recently delivered by the Company. The Company has not yet received the minimum EBITDA covenant thresholds for the four-quarter period ending April 30, 2017, and fiscal quarters thereafter.

The Company was in compliance with the applicable loan covenants at April 30, 2017.

As of April 30, 2017, the Company had no outstanding borrowings under the revolving line of credit, and had accrued $17,000 in unused line fees. Based upon the borrowing base formula set forth in the Credit Agreement, as of April 30, 2017, the Company had access to the full amount of the $5,000,000 revolving line of credit.

Outstanding principal balances on debt consisted of the following at:



	April 30, 2017			January 31, 2017
Senior term loan	$	5,393,000		$	5,539,000
Capital lease	58,000			91,000
Total	5,451,000			5,630,000
Less: Current portion	(713,000		)	(747,000		)
Non-current portion of debt	$	4,738,000		$	4,883,000

In May 2016, as a result of excess cash flows achieved as of January 31, 2016 and as required pursuant to the mandatory prepayment provisions of the Credit Agreement, we made a $1,738,000 payment of principal towards the term loan with Wells Fargo. In December 2016, we used $500,000 of the proceeds from the sale of our Looking Glass® Patient Engagement suite of solutions to make a prepayment on our term loan with Wells Fargo. As a result of these prepayments, the schedule of future principal payments was revised to reduce each future principal payment on a pro rata basis.

In the event that the Company does not close another acquisition within six months of the aforementioned sale of our Looking Glass® Patient Engagement suite of solutions, the Company will make an additional prepayment of $500,000 at the end of that six-month period.

Future principal repayments of debt consisted of the following at April 30, 2017:



	Senior Term Loan (1)		Capital Lease (2)		Total
2017	$	492,000	$	58,000	$	550,000
2018	656,000		—		656,000
2019	4,426,000		—		4,426,000
Total repayments	$	5,574,000	$	58,000	$	5,632,000

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(1)	Term loan balance on the condensed consolidated balance sheet is reported net of deferred financing costs of $181,000.


(2)	Future minimum lease payments include principal plus interest.