Credit Facility

and

Convertible

Notes

The Company maintains financing facilities and convertible note purchase agreements. For a description of the Company’s debt financing, see the notes to consolidated financial statements contained in the Company’s Annual Report on Form

-K for the year ended

March

31,

2016

and the summaries set forth below.

April

20,

2016,

the Company and its wholly owned subsidiary, Determine Sourcing, Inc., entered into Amendment Number Seven to the Amended and Restated Business Financing Agreement with Western Alliance Bank, an Arizona corporation, as successor in interest to Bridge Bank, National Association. The Amendment extended the maturity date of the underlying credit facility to

April

20,

2018.

In order to satisfy certain conditions for Western Alliance Bank to enter into the Amendment, on

April

22,

2016,

Lloyd I. Miller, III, the Company’s largest stockholder, and his affiliates MILFAM II, L.P. and Alliance Semiconductor Corporation (“ALSC”, now known as Alimco Financial Corporation), a Delaware corporation, each entered into an Amended and Restated Limited Guaranty with Western Alliance. The Amended Guaranties extended the term of the limited guaranties entered into by Mr. Miller and MILFAM with Western Alliance on

March

11,

2015,

and the limited guaranty entered into by ALSC with Western Alliance on

February

2016,

April

20,

2018

(Mr. Miller, MILFAM and ALSC, collectively the “Guarantors”).

April

22,

2016,

the Company and the Guarantors entered into a Second Amendment to

2015

Guaranty Fee Agreement and Amendment to

2016

Guaranty Fee Agreement, which (i) further amended the Guaranty Fee Agreement, dated

March

11,

2015,

entered into by the Company, Mr. Miller and MILFAM and (ii) amended the Guaranty Fee Agreement, dated

February

2016,

entered into by the Company and ALSC. Pursuant to this amendment, the term of the

2015

Fee Agreement and the

2016

Fee Agreement were extended to

April

20,

2018.

As a condition for extending the term of the Amended Guaranties as described above, the Company agreed to pay an additional cash fee of

$76,000

to Mr. Miller and MILFAM, payable by the Company within

five

business days following the termination or expiration of the Amended Guaranties, and also agreed to pay certain fees and expenses of the Guarantors related to the Amended Guaranties.

December

27,

2016,

the Company entered into a Junior Secured Convertible Note Purchase Agreement with MILFAM II L.P. and Alimco Financial Corporation, formerly ALSC, pursuant to which the Company issued and sold junior secured convertible promissory notes (the

“2016

Notes”) in the aggregate principal amount of

million. The

2016

Notes are due on

December

27,

2021

and accrue interest at an annual rate of

10%

on the aggregate unconverted and outstanding principal amount, payable quarterly, beginning on

December

31,

2016.

The Company has the option to pay any amounts of interest due under the

2016

Notes by compounding and adding such interest amount to the unpaid principal amount of the

2016

Notes, based on an interest rate calculated at

12%

per year, provided that the Company is not then in default under any of its debt financing agreements. Upon any default, the

2016

Notes will bear interest at the rate of

13%

per year or, if less, the maximum rate allowable under the laws of the State of New York. The

2016

Notes are secured by a

second

-position security interest on the Company’s assets, pursuant to the terms of the Amended and Restated Security Agreement entered into by the Company and the Investors and existing noteholders on

December

27,

2016

(the “Security Agreement”).

Subject to applicable NASDAQ listing rule limitations (including, if applicable, approval by the Company’s stockholders), the outstanding principal and interest under the

2016

Notes

may

be converted into shares of common stock of the Company at the sole option of the Investors at any time prior to the Maturity Date, at a conversion price of

$3.00

per share (as

may

be adjusted for any subdivision by any stock split, stock dividend, recapitalization, reorganization, scheme, arrangement or similar event occurring prior to such record date); provided, however, that if prior to the Maturity Date the Company offers and sells share of its common stock in a private placement primarily intended to raise capital at a price per share of

$2.50

or less, then the conversion price for the Notes will be reduced to such common stock offering price plus

$0.50

per share. However, the total number of shares of Common Stock that

may

be issued to the Investors upon conversion of the

2016

Notes

may

not exceed

19.99%

of the Company’s outstanding shares of common stock as of

December

27,

2016.

Additionally, under the terms of an Amendment to Junior Secured Convertible Promissory Notes, entered into as of

December

27,

2016

(the “Prior Note Amendment”), between the Company and Mr. Miller as Lenders’ Agent, the Junior Secured Convertible Promissory Notes issued by the Company on

March

11,

2015

in the aggregate principal amount of

million and on

December

16,

2015

in the aggregate principal amount of

$2.5

million (collectively, the “Prior Notes”), were amended to terminate the Company’s option to pay quarterly accrued interest by conversion into shares of common stock of the Company and to provide, instead, the same compounding interest options as described for the

2016

Notes above.

Further, the Prior Notes issued by the Company on

December

16,

2015

(the

“December

2015

Notes”) were amended to reduce the conversion price to

$3.00

per share; provided, however, that if prior to the maturity date as of the

December

2015

Notes, the Company offers and sells shares of its common stock in a private placement primarily intended to raise capital at a price per share of

$2.50

or less, then the conversion price for the

December

2015

Notes will be reduced to such common stock offering price plus

$0.50

per share. As a result of the Prior Notes Amendment on the

December

2015

Notes, the Company recorded a gain on debt extinguishment of approximately

$166,000,

which consisted of the remeasurement of the debt at fair value offset by the deferred financing costs previously associated with the

December

2015

Notes. As the extinguishment was with a related party, the transaction was deemed to be a capital transaction and the gain is recorded in the Company’s stockholders’ equity as of

December

31,

2016.

Also on

December

27,

2016,

the Company and the Guarantors amended the

2015

and

2016

Guaranty Fee Agreements to reduce the amount of the monthly fees accrued to the ratable monthly amount of an aggregate annual fee equal to

10%

of the amounts guaranteed under the guaranties entered into by the Guarantors with Bank on

March

11,

2015

and

February

2016.

Additionally, the Company issued

277,248

shares of Company common stock to the Guarantors, at an issue price equal to approximately

$1.89

per share, as payment for

$524,000

of the monthly fees previously accrued under the agreements. These shares are not registered under the Securities Act.

As of

December

31,

2016

and

March

31,

2016,

the Company owed

$10.9

million and

$9.0

million, respectively, under the Credit Facility, and

$1.1

million and

$3.0

million was available for future borrowings, respectively. The Company’s Credit Facility with Western Alliance contains certain financial covenants that require, among other things, the maintenance of an asset coverage ratio of not less than

:00

1:00

at the end of each month. As of

December

31,

2016,

the Company met all the requirements and was in compliance.