XML 37 R24.htm IDEA: XBRL DOCUMENT

Subsequent Event

12 Months Ended

Dec. 31, 2015

17. Subsequent Event

In March 2016, the Company entered into an amendment (the “Amendment”) to the loan and security agreement. The loan and security agreement as amended by the Amendment is referred to as the “Amended Loan Agreement.”

Under the Amended Loan Agreement, through March 31, 2017, the Company may request advances in an aggregate outstanding amount at any time up to the lesser of (a) the revolving line or (b) the sum of $2,000,000 (which the Company refers to as the “sublimit”) plus the amount equal to the Company’s borrowing base, in each case, less the aggregate outstanding principal amount of prior advances. On March 31, 2017, the sublimit becomes zero. If the aggregate amount of advances as of March 31, 2017 exceeds the lesser of the revolving line or the amount equal to the Company’s borrowing base, then it must pay the lender the amount of such excess.

Other changes to the original terms of the loan and security agreement made under the Amendment are:

	●	Under the original terms of the loan and security agreement, the Company’s borrowing base was, as of the date of determination, an amount equal to the product of: (a) the average monthly recurring revenue for the immediately preceding three months; times (b) one plus the average churn rate for the immediately preceding three months (not to exceed zero); times (c) 300%. The manner in which the borrowing base is determined is unchanged under the Amendment, except that the monthly recurring revenue is limited to all recurring subscription revenue attributable to software that the Company sold or licensed and all recurring revenue relating to services it delivered and 50% of all revenue attributable to the “Stump” product line.

	●	All advances under the revolving line are due on December 31, 2017 as opposed to April 14, 2018 as was the case under the original terms.

	●	On or before March 31, 2017, advances will bear interest, at the Company’s option, at the rate of either (A) a variable rate per annum equal to the prime rate as set forth in The Wall Street Journal plus 2.75%, up from 1.25% under the original terms, or (B) at a fixed rate per annum equal to the LIBOR Rate for the interest period for the advance plus 5.50%, up from 4.00% under the original terms. After March 31, 2017, the interest rates will revert to their original terms.

	●	The financial covenants with respect to the Company’s minimum adjusted earnings before interest, taxes, depreciation and amortization, or adjusted EBITDA, changed from a six-month measurement period to a three-month measurement period, beginning with the three month period ending March 31, 2016, and, accordingly, the minimum adjusted EBITDA targets the Company is required to achieve over each of the three month measurement periods were changed.

	●	The Amendment provides for two additional financial covenants: (a) that the Company maintain a balance on deposit with the lender equal to (i) on March 31, 2017, 100% of the aggregate outstanding principal amount of the advances at such time, and (ii) at all times after March 31, 2017, an amount determined by the lender based on the Company’s 2017 financial projections; and (b) that the sum of the following be not less than $2,000,000: (i) the aggregate amount of unrestricted cash that the Company holds in accounts maintained with the lender and (ii) the amount available to the Company under the Amended Loan Agreement.

	●	The aggregate amount that the Company owes under its current credit facility with its equipment lender at any time is no longer limited to $2,500,000.

	●	With the lender’s consent, the Company may incur additional indebtedness with other equipment lenders of up to $2,000,000 in the aggregate for equipment financing.

Under the Amendment, the lender also waived an event of default that occurred because the Company did not achieve the specified churn rate required under the loan and security agreement for the month ended January 31, 2016.