Note 3 – Financing Receivables

The Company allows deferred payment terms that exceed one year for customers purchasing licenses (perpetual or time-based) for our software products and the related maintenance services (“multi-year deferred payment arrangements”). A financing receivable exists when the license transfers to the customer or the related maintenance service has been provided (i.e., revenue recognition has occurred) prior to the due date of the related receivable. Our software products financing receivables primarily consist of the perpetual license portion of outstanding multi-year deferred payment arrangements.

Our loans receivable consist of notes due from CareTech, Inc. and ForeSee Results, Inc. (“ForeSee”). During the first quarter of fiscal 2012, the ForeSee loan receivable was modified to extend the payment terms. The modified payment terms require quarterly payments of principal and interest be made through March 31, 2015 at an annual interest rate of 7.0%. The agreement also required ForeSee to make a $2.4 million payment on the related note during the first quarter of fiscal 2012, reducing the loan receivable balance to $5.6 million as of September 30, 2011.

The following is an analysis of our software products and loaned financing receivables aged based on invoice date as of September 30, 2011 and March 31, 2011 (in thousands):

	As of September 30, 2011
					Greater than
	0-29 days		30-90 days		90 days				Total
	past		past		past				financing
	invoice date		invoice date		invoice date		Unbilled		receivables
Pass rating
Software products	$	2,724	$	941	$	26	$	38,198	$	41,889
Loans								6,378		6,378
Total		2,724		941		26		44,576		48,267

Watch rating
Software products		-		-		137		190		327

Total financing receivables	$	2,724	$	941	$	163	$	44,766	$	48,594

	As of March 31, 2011
					Greater than
	0-29 days		30-90 days		90 days				Total
	past		past		past				financing
	invoice date		invoice date		invoice date		Unbilled		receivables
Pass rating
Software products	$	6,439	$	434	$	179	$	37,971	$	45,023
Loans								9,753		9,753
Total		6,439		434		179		47,724		54,776

Watch rating
Software products		-		69		40		280		389

Total financing receivables	$	6,439	$	503	$	219	$	48,004	$	55,165

As of September 30, 2011 and March 31, 2011, the allowance for credit losses on our financing receivables was $327,000 and $389,000, respectively.