Debt

3 Months Ended

Apr. 30, 2020

As of April 30, 2020 and January 31, 2020, the Company had the following outstanding loan balances:


	April 30, 2020		January 31, 2020
Term loan	$	20,000	$	20,000
Less deferred financing costs	(866)		(937)
Plus accrued interest and payments	336		381
Long term debt	$	19,470	$	19,444

On February 28, 2019 (the Effective Date), the Company entered into an Amended and Restated Loan and Security Agreement that provides for a $20,000 term loan and a revolving credit facility with up to $25,000 of availability. The Company is also permitted to borrow an additional $10,000 term loan (the Term Loan B Advance) and, subject to the bank’s approval, another $15,000 (the Term Loan C Advance) prior to February 28, 2020. The term loans under the loan agreement bear interest, which is payable monthly, at a floating rate equal to the bank’s prime rate plus 1.50% until such time that EBITDA reaches a defined level, after which time the interest rate is reduced to the prime plus 0.75%. Principal payments due under the term loans are due in 36 equal monthly installments beginning in March 2021. In addition to principal and interest payments due under the term loans, the Company is required to make a final payment to the lenders due upon the earlier of prepayment or maturity of the term loan, which is equal to 2.75% of the original principal amount. The Company accrues the estimated final payment fee using the effective interest method resulting in a charge to interest expense of $257 for the three months ended April 30, 2020. In connection with the New Loan Agreement, the Company issued warrants to the lenders to purchase an aggregate of 150,274 shares of common stock at an exercise price of $8.02 per share. The 75,137 common stock warrants that remain outstanding as of April 30, 2020 expire in February 2029. The fair value of the warrants of $833 was recorded as a debt discount and is being amortized to interest expense over the term of the new term loan and revolving credit facility. If the Company prepays the term loans prior to their respective scheduled maturities, it will also be required to make prepayment fees to the lenders equal to 3% if prepaid on or before the second anniversary of the Effective Date, 2% if prepaid after the second and on or before the third anniversary of funding or 1% if prepaid after the third anniversary of funding of the principal amounts borrowed. Interest expense related to the term loan under the loan agreement was $311, including amortization of deferred financing fees of $39 for the three months ended April 30, 2020. For the three months ended April 30, 2020, the effective interest rate on the term loan was 6.2%. Borrowings under the prior term loan and loans payable were repaid in full with the proceeds from this Amended and Restated Loan and Security Agreement.

During the three months ended April 30, 2019, the Company accounted for the settlement of the previously outstanding loans payable and the term loan as a debt extinguishment and recorded an expense of $1,073, which was included in other income (expense), and is comprised of the write-off of $773 of deferred financing costs related to these facilities and a $300 prepayment fee related to the loans payable. The modification of the revolving line of credit was accounted for as an insubstantial modification. The Company incurred fees of $112 related to the extinguishment and modification.

Borrowings under the revolving credit facility are subject to a borrowing base equal to 80% of eligible accounts receivable plus a percentage of recurring revenue, as defined, not to exceed $25,000 in the aggregate. The Company has $25,000 of availability as of April 30, 2020. Borrowings under the revolving credit facility bear interest, which is payable monthly, at a floating rate equal to the greater of the bank's prime rate less 0.50%, or 5.0% until such time that EBITDA reaches a defined level, after which time the interest rate is reduced to the greater of prime less 0.75%, or 4.75%. In addition to principal and interest due under the revolving credit facility, the Company is required to pay an annual fee of $100 per year during the first three years of the facility and then $75 per year in years four and five. The first facility fee payment of $100 was paid in the three months ended April 30, 2020. Interest expense related to the revolving credit facility under the loan agreement was $36, including amortization of deferred financing fees of $32, for the three months ended April 30, 2020. The Company is required to pay a fee of 0.15% per year for any unused availability and a termination fee of 1.50% if the revolving credit agreement is terminated prior to its scheduled maturity. The revolving credit facility is due five years from the Effective Date, which is February 28, 2024.

The Company’s obligations under the loan agreement are secured by a first priority security interest in substantially all of its assets, other than intellectual property. The loan agreement includes a financial covenant that requires the Company to achieve specified revenue levels, as defined, through January 31, 2020, after which time revenue levels for covenants purposes will be determined by the bank based on the Company’s forecast, subject to certain minimums. The Company is also required to maintain certain liquidity levels, as defined. The Company was in compliance with all covenants related to the loan agreement as of April 30, 2020.

The loan agreement contains events of default, including, without limitation, events of default upon: (i) failure to make payment pursuant to the terms of the agreement; (ii) violation of covenants; (iii) material adverse changes to the Company’s business; (iv) attachment or levy on the Company’s assets or judicial restraint on its business; (v) insolvency; (vi) significant judgments, orders or decrees for payments by the Company not covered by insurance; (vii) incorrectness of representations and warranties; (viii) incurrence of subordinated debt; (ix) revocation of governmental approvals necessary for the Company to conduct its business; and (x) failure by the Company to maintain a valid and perfected lien on the collateral securing the borrowing.

As of April 30, 2020, the Company’s long-term debt is payable as follows:


	April 30, 2020
2021 (Remaining nine months)	$	—
Year ending January 31,
2022	6,111
2023	6,667
2024	6,667
2025 - thereafter	555
Total long-term debt payments	$	20,000

On May 5, 2020, the Company entered into a Second Amended and Restated Loan and Security Agreement. The Second Restated Loan Agreement provides for a revolving line of credit of up to $50,000 that replaces the Company's existing line of credit of up to $25,000 (with options to increase to up to $65,000). The Company used approximately $20,000 of the proceeds to pay off the existing term loan as of April 30, 2020. Refer to Note 16 for further detail.