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.

During the third quarter of fiscal 2012, CareTech Solutions, Inc. paid the remaining balance on its loan from the Company. As of December 31, 2011, our loans receivable balance consists of a note due from 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 principal balance on the loan receivable to $5.6 million as of December 31, 2011.

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

	As of December 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	$	6,953	$	1,132	$	17	$	40,072	$	48,174
Loans								5,868		5,868
Total		6,953		1,132		17		45,940		54,042

Watch rating
Software products		-		-		109		190		299

Total financing receivables	$	6,953	$	1,132	$	126	$	46,130	$	54,341

	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 December 31, 2011 and March 31, 2011, the allowance for credit losses on our financing receivables was $299,000 and $389,000, respectively.