For purposes of classifying current maturities of long-term debt in the Company’s balance sheets, none of the discount is attributed to the current portion until the maturity date is less than one year from the balance sheet date. Accordingly, the $2.7 million net carrying amount of the related party note payable to GP Sponsor is classified as a current liability due to the amended maturity date of January 4, 2019. As discussed below, the Company repaid in full and terminated the Credit Facility on July 19, 2018.

Overview.

In June 2016, the Company entered into a multi-draw term loan Financing Agreement (the “Credit Facility”) with a syndicate of lenders (the “Lenders”). The Credit Facility would have matured in June 2020 but was repaid and terminated in July 2018 as discussed below. The Credit Facility provided for an aggregate commitment of up to $125.0 million. An origination fee equal to 5.0% of the $125.0 million commitment was paid in cash to the Lenders from the proceeds of the initial term loan. The Credit Facility provided for an Original Issue Discount (“OID”) of 2.0% of the initial face amount of borrowings. Origination fees and OID were accounted for as DDIC.

Borrowings under the Credit Facility were collateralized by substantially all assets of the Company, including certain cash depository accounts that were subject to control agreements with the Lenders as discussed in Note 3. Upon termination of the Credit Facility as discussed below, the restrictions related to the cash control account were eliminated and the related funds held in the control accounts are classified as cash and cash equivalents as of September 30, 2018. The Company was previously required to comply with various financial and operational covenants on a monthly or quarterly basis, including a leverage ratio, minimum liquidity, churn rate, asset coverage ratio, minimum gross margin, and certain budget compliance restrictions under the Credit Facility. Additionally, the covenants in the Credit Facility prohibited or limited the Company’s ability to incur additional debt, pay cash dividends, sell assets, merge or consolidate with another company, and other customary restrictions associated with debt arrangements.

Interest and Fees.

The outstanding principal balance under the Credit Facility provided for monthly interest payments at 15.0% per annum, consisting of 12.0% per annum that was payable in cash and 3.0% per annum that was payable through the issuance of additional borrowings beginning on the interest payment due date (referred to as paid-in-kind, or “PIK” interest). In addition, a make-whole applicable premium payment of approximately 15.0% per annum through June 2019 was required for certain principal prepayments as defined in the Credit Facility. The Credit Facility provided for collateral monitoring fees at the rate of 2.5% of the outstanding principal balance. The Credit Facility also required unused line fees of 5.0% per annum on the $17.5 million undrawn portion. All unused line fees and collateral monitoring fees were payable monthly in arrears and were recorded as a component of other debt financing expenses in the period incurred. Upon the occurrence and during the continuance of any event of default, the principal (including PIK interest), and all unpaid interest provided for an additional interest rate of 2.0% per annum (the “Default Interest”) from the date such event of default occurred until it was cured or waived. The Lenders waived all Default Interest that would have otherwise been payable during periods when events of default existed.

Accretion and Amortization.

DDIC that relates to the entire Credit Facility was allocated pro rata between the funded and unfunded portions of the Credit Facility based on the relative amounts that were cumulatively borrowed versus the undrawn portion of the $125.0 million commitment. DDIC related to funded debt was accreted to interest expense using the effective interest method based on the aggregate principal obligations to the Lenders and consulting and Trigger Event obligations to one of the lenders that served as the origination agent (the “Origination Agent”). DDIC associated with unfunded debt was amortized using the straight-line method from the date incurred through the maturity date of the Credit Facility, which was included in other debt financing expenses in the accompanying unaudited condensed consolidated statements of operations and comprehensive loss.

As of December 31, 2017, accretion of DDIC related to the funded portion of the Credit Facility was at an annual rate of 26.3%. Excluding the impact of unused line fees, collateral monitoring fees, and amortization of DDIC related to the unfunded portion of the Credit Facility, the overall effective rate was 41.3% as of December 31, 2017.

Principal Prepayments.

Under the Credit Facility, the Company was required to make payments to the Lenders when certain extraordinary cash receipts were received. Extraordinary receipts included certain insurance settlements, and court awards from litigation and appeals of judgments. As discussed in Note 7, on March 30, 2018, the Company received $21.5 million from the appeal of the Oracle litigation, of which approximately $0.5 million is payable to a third party that previously provided insurance coverage related to the litigation. On April 3, 2018, the Company paid $21.0 million consisting of $17.9 million of principal, and $3.1 million for make-whole applicable premium due to the Lenders. The Company also recognized a write-off of DDIC of $7.2 million related to the $17.9 million principal prepayment that was triggered by collection of the appeal proceeds.

Termination of the Credit Facility.

In connection with the closing on July 19, 2018 of the Private Placement discussed in Note 11, the Company used substantially all of the $133.0 million of gross proceeds from the Private Placement (together with cash-on-hand) to repay all outstanding indebtedness and fees under the Credit Facility and the Credit Facility was terminated.

The aggregate cash payment to terminate the Credit Facility was $132.8 million and consisted of the following (in thousands):

Contractual principal and exit fees:
Principal balance	$	102,576
Mandatory trigger event exit fees		13,624
Mandatory consulting fees		2,000

Subtotal		118,200
Make-whole applicable premium		7,307
Amendment fees and related liabilities		6,250
Accrued interest and fees payable		1,073

Total cash termination payments	$	132,830

As a result of the early termination of the Credit Facility, the Company recognized a write-off of DDIC related to the funded debt for $44.6 million and the unfunded debt for $2.8 million. Certain investors in the Credit Facility, including ASP as discussed in Note 8, purchased an aggregate of approximately 42,000 shares of Series A Preferred Stock and 0.9 million shares of Common Stock in the Private Placement discussed in Note 11.

	December 31,			PIK		Liability		Contractual Liability Payments									Accretion			DDIC Write-off						September 30,
	2017			Accrual		Adjustments		Scheduled			Prepayments			Pay-off			Expense			Prepayments			Pay-off			2018

Contractual liabilities:
Principal balance	$	125,872		$	1,886	$	-	$	(7,250	)	$	(17,932	)	$	(102,576	)	$	-		$	-		$	-		$	-
Mandatory trigger event exit fees		9,672			-		3,952		-			-			(13,624	)		-			-			-			-
Mandatory consulting fees		4,000			-		-		(2,000	)		-			(2,000	)		-			-			-			-

Total contractual liability		139,544			1,886		3,952		(9,250	)		(17,932	)		(118,200	)		-			-			-			-

DDIC:
Original issue discount		1,816			-		-		-			-			-			-			(234	)		(1,582	)		-
Origination fee		4,538			-		-		-			-			-			-			(586	)		(3,952	)		-
Amendment fee		11,521			-		-		-			-			-			-			(1,487	)		(10,034	)		-
Fair value of warrants		6,424			-		-		-			-			-			-			(829	)		(5,595	)		-
Consulting fees to lenders		6,519			-		-		-			-			-			-			(841	)		(5,678	)		-
Mandatory trigger event exit fees		55,200			-		3,952		-			-			-			-			(7,314	)		(51,838	)		-
Other issuance costs		3,600			-		-		-			-			-			-			(465	)		(3,135	)		-

Total DDIC		89,618			-		3,952		-			-			-			-			(11,756	)		(81,814	)		-
Cumulative accretion		(30,128	)		-		-		-			-			-			(11,670	)		4,587			37,211			-

Net DDIC		59,490			-		3,952		-			-			-			(11,670	)		(7,169	)		(44,603	)		-

Net carrying value	$	80,054		$	1,886	$	-	$	(9,250	)	$	(17,932	)	$	(118,200	)	$	11,670		$	7,169		$	44,603		$	-

Upon consummation of the Merger Agreement with GPIA, the Company assumed an outstanding loan payable to GPIC Ltd., a Bermuda company (“GP Sponsor”) with a face amount of approximately $3.0 million. This loan is non-interest bearing and was originally due and payable upon the outstanding principal balance under the Credit Facility being less than $95.0 million. At inception of this loan, the maturity date was expected to occur in June 2020 based on the scheduled principal payments under the Credit Facility. Due to the $17.9 million principal prepayment on April 3, 2018 discussed above, the maturity date was prospectively accelerated to March 2019 for purposes of accretion calculations for the six months ended June 30, 2018. Effective in July 2018, the maturity date was amended to January 4, 2019 whereby the accretion calculations for the three months ended September 30, 2018 were prospectively adjusted to reflect the shorter period to maturity.

Interest was initially imputed under this note payable assuming a maturity date in June 2020 and based on the estimated market rate of 15.0% per annum, which resulted in a discount of approximately $1.0 million as of October 10, 2017. Based on the revised maturity date of January 4, 2019, the imputed interest rate changed to 33.1% for the three months ended September 30, 2018.

	Three Months Ended				Nine Months Ended
	September 30:				September 30:
	2018		2017		2018		2017

Credit Facility:
Interest expense at 12.0%	$	631	$	2,389	$	7,513	$	8,327
PIK interest at 3.0%		162		582		1,886		2,038
Accretion expense for funded debt		1,071		6,151		11,670		18,548
Make-whole applicable premium:
Credit Facility prepayments		-		-		3,103		4,607
Payoff of Credit Facility		7,307		-		7,307		-
Accretion expense for GP Sponsor note payable		309		-		676		-
Interest on other borrowings		19		30		76		109

Total interest expense	$	9,499	$	9,152	$	32,231	$	33,629

	Three Months Ended				Nine Months Ended
	September 30:				September 30:
	2018		2017		2018		2017

Write-off of DDIC:
Credit Facility prepayments	$	-	$	193	$	7,169	$	9,861
Payoff of funded Credit Facility		44,603		-		44,603		-
Termination of unfunded Credit Facility		2,764		-		2,764		-
Collateral monitoring fees		121		483		1,556		1,734
Target date fee under Credit Facility		-		1,250		-		1,250
Amortization of DDIC related to unfunded debt		70		305		756		855
Unused line fees		42		219		481		664
Amortization of prepaid agent fees and other		775		113		1,002		340

Total other debt financing expenses	$	48,375	$	2,563	$	58,331	$	14,704

The Credit Facility included features that were determined to be embedded derivatives requiring bifurcation and accounting as separate financial instruments. Prior to termination of the Credit Facility on July 19, 2018, the Company determined that embedded derivatives included the requirements to pay make-whole applicable premium in connection with certain mandatory prepayments of principal, and default interest due to non-credit-related events of default. These embedded derivatives were classified within Level 3 of the fair value hierarchy and had an aggregate fair value of $7.8 million and $1.6 million as of June 30, 2018 and December 31, 2017, respectively. Due to the termination of the Credit Facility on July 19, 2018, the embedded derivatives no longer exist and therefore had no value as of September 30, 2018. The liability for embedded derivatives is included in other accrued liabilities in the accompanying unaudited condensed consolidated balances sheets. The change in the fair value of embedded derivative liabilities resulted in gains of $7.8 million and $1.6 million for the three and nine months ended September 30, 2018, respectively. The change in the fair value of embedded derivative liabilities resulted in a gain of $1.4 million and a loss of $4.4 million for the three and nine months ended September 30, 2017, respectively.

The fair value of these embedded derivatives was estimated using the “with” and “without” method. Accordingly, the Credit Facility was first valued with the embedded derivatives (the “with” scenario) and subsequently valued without the embedded derivatives (the “without” scenario). Fair values of the embedded derivatives were estimated as the difference between these two scenarios. The fair values were determined using the income approach, specifically the yield method. As of December 31, 2017, key Level 3 assumptions and estimates used in the valuation of the embedded derivatives included timing of projected principal payments, remaining term to maturity of approximately 2.5 years, probability of default of approximately 35%, and a discount rate of 20.9%. As of December 31, 2017, the discount rate was comprised of a risk-free rate of 1.9% and a credit spread of 19.0% determined based on option-adjusted spreads from public companies with similar credit quality.