CareCloud, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Subsequent Events

Subsequent Events	12 Months Ended
Dec. 31, 2016
Subsequent Events [Abstract]
Subsequent Events	18. Subsequent eventS During February 2017, the Company filed a proxy statement and subsequently notified its shareholders of a special meeting to be held on April 14, 2017. The shareholders have been requested to authorize the Board of Directors to approve a reverse stock split ranging from 1:3 to 1:8 of the Company’s common stock. The proxy also asks for shareholder approval to amend the 2014 Plan to increase the number of common shares available for grant and add the Company’s Series A Preferred Stock to the 2014 Plan. In January 2017 the Compensation Committee of the Board of Directors amended management incentives which they granted during 2016 so they will be paid in shares of Series A Preferred Stock instead of in cash. The value of these incentives is included in accrued compensation in the December 31, 2016 consolidated balance sheet and in stock-based compensation expense in the 2016 consolidated statement of cash flows. During March 2017, the Company amended its agreement with Opus Bank whereby the asset coverage ratio covenant was removed and replaced with a requirement to maintain a month-end cash balance of at least $1 million. There is a provision for a minimum balance during the month, as well as the ability to go below the minimum as long as the balance recovers in 5 days. The new covenants also contain minimum revenue and adjusted EBITDA requirements, as defined in the agreement. If we raise additional capital through a sale of equity, a portion of the net proceeds will be used to pay down the term loans. Additionally, on June 30, September 30 and December 31, 2017, the interest rate on the Opus debt increases in steps by a total of 3.5% from prime plus 1.75% to prime plus 5.25%. On March 29, 2017 the Company received a letter from Prudential that demanded immediate payment of the $3 million portion of the MediGain acquisition consideration that was due on that date, together with accrued interest, and expressing Prudential’s intention to collect on said amounts. The Company anticipates raising additional capital to satisfy this obligation.

Subsequent Events

12 Months Ended

Dec. 31, 2016

18. Subsequent eventS

During February 2017, the Company filed a proxy statement and subsequently notified its shareholders of a special meeting to be held on April 14, 2017. The shareholders have been requested to authorize the Board of Directors to approve a reverse stock split ranging from 1:3 to 1:8 of the Company’s common stock. The proxy also asks for shareholder approval to amend the 2014 Plan to increase the number of common shares available for grant and add the Company’s Series A Preferred Stock to the 2014 Plan. In January 2017 the Compensation Committee of the Board of Directors amended management incentives which they granted during 2016 so they will be paid in shares of Series A Preferred Stock instead of in cash. The value of these incentives is included in accrued compensation in the December 31, 2016 consolidated balance sheet and in stock-based compensation expense in the 2016 consolidated statement of cash flows.

During March 2017, the Company amended its agreement with Opus Bank whereby the asset coverage ratio covenant was removed and replaced with a requirement to maintain a month-end cash balance of at least $1 million. There is a provision for a minimum balance during the month, as well as the ability to go below the minimum as long as the balance recovers in 5 days. The new covenants also contain minimum revenue and adjusted EBITDA requirements, as defined in the agreement. If we raise additional capital through a sale of equity, a portion of the net proceeds will be used to pay down the term loans. Additionally, on June 30, September 30 and December 31, 2017, the interest rate on the Opus debt increases in steps by a total of 3.5% from prime plus 1.75% to prime plus 5.25%.

On March 29, 2017 the Company received a letter from Prudential that demanded immediate payment of the $3 million portion of the MediGain acquisition consideration that was due on that date, together with accrued interest, and expressing Prudential’s intention to collect on said amounts. The Company anticipates raising additional capital to satisfy this obligation.