NOTE 14. SENIOR DEBT

On October 28, 2015, the Company entered into an $8,000 senior credit facility (“Facility”). The Facility had a two-year term, and interest payments in the amount of 12%, paid quarterly in arrears. Additionally, there is a PIK provision providing a 4% per annum increase in the principal balance monthly. The Facility is secured by all assets of the Company. As a condition of the Facility, the Company issued 163,441 shares of its Series D Preferred Stock and 391,903 shares of its Series F Preferred Stock to the lender. A market valuation was performed on this transaction by a qualified third-party valuation firm, an original issue discount of $437 was recorded and is being amortized on a straight-line method, approximating the interest rate method, over twenty-four months to Interest Expense on the Consolidated Statement of Operations. During the years ended December 31, 2018 and 2017, $0 and $182, respectively, was included in amortization of debt discount, and none remained unamortized.

On April 5, 2016, the Company entered into an amendment agreement (“Amendment No.1”) to the Facility, amending select provisions of the original credit agreement, including equity raises and changes to certain financial and operational covenants. On September 30, 2016, the Company entered into a second amendment agreement (“Amendment No. 2”) to consolidate a series of short-term bridge loans which were granted to the Company from time to time during the second and third quarters of 2016 into a $5,000 loan, with a maturity date of April 30, 2017 bearing interest at 12% and a PIK provision of 4%. Amendment No. 2 also amended certain covenants.

In conjunction with Amendment No. 2, the Company issued warrants to purchase 93,750 shares of the Company’s common stock at any time for five years at an initial exercise price of $20 per share. The $322 value of the warrants was recorded as debt discount and is being amortized on a straight-line basis over the remaining life of the Facility.

During November 2016, the Company borrowed a total of $1,000 under the terms of the Facility and issued warrants to purchase 100,000 shares of the Company’s common stock at any time for five years at an initial exercise price of $10 per share. The $430 value of the warrants was recorded as debt discount and is being amortized on a straight-line basis over the remaining life of the Facility.

During December 2016, the Company borrowed a total of $1,500 under the terms of the Facility and issued warrants to purchase 150,000 shares of the Company’s common stock at any time for five years at an initial exercise price of $10 per share. The $519 value of the warrants was recorded as debt discount and is being amortized on a straight-line basis over the remaining life of the Facility.

During March 2017, the Company borrowed an additional $1,500 under the terms of the Facility, originally due April 30, 2017, but subsequently extended to March 31, 2019.

On April 20, 2017, as part of the Benchmark acquisition, the Facility was amended (“Amendment No. 3”) to provide for an additional $11,480, extend the maturity date of the Facility to March 31, 2019 and add certain covenants regarding debt coverage, EBITDA and revenue. Approximately $10,100 was applied to the cash purchase price and extended the maturity date of the Facility to March 31, 2019. The Company issued 256,801 shares of Common Stock to the senior lender with a fair value of $5,649 as a term of Amendment No. 3. The value of the shares was recorded as a debt discount.

During April 2017, the Company incurred a $480 extension fee to extend the Facility to March 31, 2019. This amount was added to the principal amount of the Facility and incurs interest under the terms of the Facility.

The Company’s senior lender became a greater than 5% beneficial owner of the Company’s common stock on May 15, 2017.

During October and November 2017, the Company borrowed a total of $1,600 under the terms of the Facility, due March 31, 2019.

During December 2017, the Company incurred a $42 penalty related to loan non-compliance, which was added to the principal amount of the Facility and incurs interest under the terms of the Facility, due March 31, 2019.

During the year ended December 31, 2017, the Company reclassified 444,275 shares of Common Stock held by its senior lender with a fair value of $438 from temporary equity to permanent equity which is included in the Stockholders’ Equity section of the Consolidated Balance Sheet as of December 31, 2017. The temporary equity was reclassified due to the put provision included in the original Facility being removed upon the execution of Amendment No. 3 resulting from the Benchmark acquisition on April 20, 2017.

During January 2018, the Company received cash of $23 for a note under the terms of the facility and converted $867 in PIK interest and $110 in debt discount into principal, all due March 31, 2019.

During April 2018, the Company borrowed a total of $1,025 under the terms of the Facility, due March 31, 2019. The Company recognized an original issuance discount of $103 and deferred finance costs of $10 on the note.

During September 2018, the Company borrowed a total of $2,188 under the terms of the Facility, due March 31, 2019. The borrowing consisted of $1,949 in accrued interest conversion, an original issuance discount of $219 and fees of $20.

During October 2018, the Company borrowed $1,300 under the terms of the Facility, due March 31, 2019. The borrowing consisted of $1,170 in cash and an original issuance discount of $130.

During the years ended December 31, 2018 and 2017, the Company recognized $4,540 and $2,678 in original issuance discounts and deferred finance costs on related senior debt issuances, respectively. During the years ended December 31, 2018 and 2017, the Company recognized $8,492 and $548 in amortization expense on the straight-line method over the term of the Facility, respectively, which approximates the effective interest method. The unamortized original issuance discount and deferred finance costs balance was $2,118 and $3,452 as of December 31, 2018 and 2017, respectively.

The Senior Notes payments all come due in 2019, the outstanding balance is reflected as current on the consolidated financial statements at December 31, 2018. See Note 26.