11. Long-term debt, net

Long-term debt, net, as of December 31, 2015, consist of the following:


(In thousands)	12% term loan, due 2020		10% bridge loans, due 2021		Total
Principal amount	$	45,000		10,000	$	55,000
Less: unamortized debt issuance costs		3,729		449		4,178
Add: PIK interest accrued to the principal balance		29		67		96

Long-term debt, net		41,300		9,618		50,918
Less: Current portion of long-term debt		2,250		—		2,250

Long-term debt, net (non-current)	$	39,050	$	9,618	$	48,668

There was no long-term debt for the year ended December 31, 2014.

Term Loans

On December 8, 2015, Fluent became the borrower under the term loan agreement (“Credit Agreement”), among the Company, Fluent Merger Sub, Fluent, Inc., and Fluent Merger Co (now known as Fluent), the persons party thereto from time to time as guarantors, the financial institutions party thereto from time to time as lenders, and Whitehorse Finance, Inc. (the “Agent”), evidencing a term loan in the amount of $45.0 million (“Term Loan”). Fluent’s obligations in respect of the Term Loan are guaranteed by the Company and substantially all of the other direct and indirect subsidiaries of the Company. The obligations of Fluent and the obligations of the guarantors are secured by substantially all of such entities’ assets. The Credit Agreement has a term of five years.

The Term Loan accrues interest at LIBOR (with a floor of 0.5%) plus 10.5% per annum, payable in cash, plus an additional 1.0% per annum payable, at Fluent LLC’s election, in-kind or in cash. Interest under the Term Loan is payable monthly, including monthly compounding of paid-in-kind interest.

Payments of principal in the amount of $563 each are due on the last day of each quarter during the term of the Credit Agreement, commencing March 31, 2016. Additionally, 50% of excess cash flow of Fluent and its subsidiaries for the immediately preceding fiscal year is required to be paid towards the Term Loan obligations, commencing with the fiscal year ending December 31, 2016. The Credit Agreement provides for certain other customary mandatory prepayments upon certain events. The Credit Agreement provides for certain prepayment premiums during the first 4 years of the Term Loan, provided that the prepayment premiums are not applicable to scheduled payments of principal, the required excess cash flow payments and certain other required prepayments.

In connection with the Term Loan, on December 8, 2015, the Company issued to the Agent and its affiliates warrants (the “Whitehorse Warrants”) to purchase, in aggregate, 200,000 shares of Common Shares. The Whitehorse Warrants are exercisable at any time (i) following the date of approval for listing of the Common Share issuable upon exercise of the Whitehorse Warrants on the NYSE MKT and (ii) prior to the 10 year anniversary of the date of issuance of the Whitehorse Warrants at $8.00 per share. If the Company has a public equity offering, certain adjustments are available.

The fair value of Whitehorse Warrants of $1,586 was recognized as debt issuance costs. At December 31, 2015, the balance was $1,564. We estimate the fair value of the Whitehorse Warrants on the date of grant using a Black-Scholes pricing model, applying the following assumptions, and amortize the fair value to interest expense over the term of the Term Loan using the interest method:


Expected term (in years)	10
Risk-free interest rate	2.24	%
Expected volatility	114.33	%
Expected dividend yield	0.00	%

The Credit Agreement contains customary representations and warranties, covenants (including certain financial covenants), and events of default, upon the occurrence of which the Agent may accelerate the obligations under the Credit Agreement. The financial covenants include the requirement that the Company and its subsidiaries attain certain quarterly minimum EBITDA thresholds, Fluent and its subsidiaries attain certain quarterly minimum EBITDA thresholds, Fluent and its subsidiaries meet certain leverage ratios on a quarterly basis, Fluent and its subsidiaries meet certain fixed charge coverage ratios on a quarterly basis, and Fluent and its subsidiaries maintain at all times cash and cash equivalent balances of at least $2.0 million (or such lesser amount agreed to by the Agent), in the aggregate. As of December 31, 2015, the Company was in compliance with the financial covenant requirements.

Bridge Loans

On December 8, 2015, the Company entered into and consummated the bridge financing (the “Bridge Loans”) with each of Frost Gamma Investment Trust (“Frost Gamma”), Michael Brauser, the Executive Chairman of the Board of Directors, and another investor (the “Bridge Investors”), pursuant to which the Company received a $5.0 million bridge loan from Frost Gamma, $4.0 million from Michael Brauser, and $1.0 million from other investor, for an aggregate bridge financing in the amount of $10.0 million. The Bridge Investors received (i) a promissory note in the principal amount equal to the amount of their respective Bridge Loans, with a rate of interest of 10% per annum, which interest shall be capitalized monthly by adding to the outstanding principal amount of such Bridge Loans, and (ii) a grant of 100 shares of Series B Preferred for each $1.0 million increment of their respective Bridge Loans, with a total of 1,000 shares of Series B Preferred granted (“Bridge Loan Shares”), pursuant to fee letter agreements (the “Fee Letters”),. Each share of Series B Preferred shall automatically convert into 50 shares of Common Share on the Conversion Date, as defined below in Note 13. Under the terms of the Bridge Loans, the Company is required to repay the principal amounts thereof, with all accrued interest thereon, on the date that is six months after the repayment of all amounts due under the Credit Agreement, except that the Company may repay the Bridge Loans earlier from the proceeds of a round of public equity financing.

The fair value of Bridge Loan Shares of $413 was calculated by multiplying the closing common stock market price of the Company on December 8, 2015 of $8.45, with the total shares granted, as converted, which was recognized as debt cost, and the unamortized debt cost as of December 31, 2015 was $409.

In connection with the Bridge Loans, on December 8, 2015, the Company, Fluent, substantially all of the direct and indirect subsidiaries of the Company, each lender under the Bridge Loans, and the Agent, entered into a Subordination Agreement (the “Subordination Agreement”), pursuant to which the debt under the Bridge Loans was made expressly subordinate to the debt under the Credit Agreement. In addition, the Subordination Agreement restricts the terms of the Bridge Loans, including certain modifications of such terms, and the ability of any lender under the Bridge Notes to take certain actions with respect to the obligations arising under the Bridge Loans. The terms of the Subordination Agreement shall remain in effect until such time that all obligations under the Credit Agreement are paid in full.

Maturities

Excluding potential additional principal payments due on the Term Loans based on excess cash flows for the immediately preceding fiscal year, as mentioned above, scheduled future maturities of total debts as of December 31, 2015, were as follows:


(In thousands)
Year
2016	$	2,250
2017		2,250
2018		2,250
2019		2,250
2020		36,000
2021 and thereafter		10,000

Total maturities		55,000
Add: Accrued PIK interest, added to the principal		96
Less: Unamortized debts issuance costs		(4,178	)

Total	$	50,918

Fair value

As mentioned above, the Company’s long-term debt outstanding as of December 31, 2015 represented 1) the Term Loan pursuant to a Credit Agreement on December 8, 2015, with interest at LIBOR (with a floor of 0.5%) plus 10.5% per annum, and 2) Bridge Loans pursuant to bridge loan agreements effective December 8, 2015, with a rate of interest of 10% per annum. By considering the short period of the long-term debt being outstanding from December 8, 2015, the effective date, up to December 31, 2015, and the market interest rates, we regard the fair values of the long-term debt approximate their carrying amount as of December 31, 2015.