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Long-term debt, net | 12 Months Ended
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Dec. 31, 2018
Debt Disclosure [Abstract] |
Long-term debt, net | Long-term debt, net As of December 31, 2018, Long-term debt, net, consists of the following:
| Refinanced Term Loan
(In thousands) | due 2023
Principal amount | $ | 60,320 |
Less: unamortized debt issuance costs | (4,848 | )
Long-term debt, net | 55,472 |
Less: current portion of long-term debt | (3,500 | )
Long-term debt, net (non-current) | $ | 51,972 |
As of December 31, 2017, long-term debt, net, including promissory notes payable to certain shareholders, consisted of the following:
| Term Loan |  | Incremental Term Loan |  | Promissory Loan |  |
(In thousands) | due 2020 |  | due 2020 |  | due 2021 |  | Total
Principal amount | $ | 40,688 |  |  | $ | 14,312 |  |  | $ | 10,000 |  |  | $ | 65,000 |
Less: unamortized debt issuance costs | (2,753 | ) |  | (672 | ) |  | (312 | ) |  | (3,737 | )
Add: PIK interest accrued to principal balance | 542 |  |  | 9 |  |  | 1,149 |  |  | 1,700 |
Long-term debt, net | 38,477 |  |  | 13,649 |  |  | 10,837 |  |  | 62,963 |
Less: current portion of long-term debt | (2,062 | ) |  | (688 | ) |  | — |  |  | (2,750 | )
Long-term debt, net (non-current) | $ | 36,415 |  |  | $ | 12,961 |  |  | $ | 10,837 |  |  | $ | 60,213 |
Term Loans On December 8, 2015, Fluent, LLC entered into an agreement ("Credit Agreement") with certain financial institutions and the administrative agent (collectively, "Whitehorse") for a term loan in the amount of $45.0 million ("Term Loan"). The Credit Agreement provided for certain customary mandatory prepayments upon certain events, as well as certain prepayment premiums during the first four years of the Term Loan, provided that the prepayment premiums were not applicable to scheduled payments of principal, the required excess cash flow payments (as defined in the Credit Agreement) and certain other required prepayments. On January 19, 2017, Fluent, LLC entered into Amendment No. 3 to Credit Agreement ("Amendment No. 3"), which amended the Term Loan. Amendment No. 3, among other things, provided for a new term loan in the principal amount of $15.0 million ("Incremental Term Loan"), subject to the terms and conditions of Amendment No. 3, and modified certain other Credit Agreement provisions, including certain financial covenants and related definitions. The Incremental Term Loan of $14,039, net of debt issuance costs of $961, was received on February 1, 2017. The Term Loan and Incremental Term Loan (collectively, the "Term Loans") were guaranteed by the Company and all of its direct and indirect subsidiaries, and were secured by substantially all of the assets of the Company and its direct and indirect subsidiaries, in each case, on an equal and ratable basis. The Term Loans accrued interest at the rate of: (a) either, at Fluent, LLC's option, LIBOR (subject to a floor of 0.50%) plus 10.5% per annum, or base rate (generally equivalent to the U.S. prime rate) plus 9.5% per annum, payable in cash, plus (b) 1% per annum, payable, at Fluent, LLC's option, either in cash or in-kind. Payments of principal on the Term Loans were $688 per quarter, payable at the end of each calendar quarter, commencing on March 31, 2017. The Term Loans were scheduled to mature on December 8, 2020. On March 26, 2018, the remaining principal amounts of the Term Loans were prepaid through the Refinancing, as defined below, in connection with the Spin-off of Red Violet. Promissory Notes On December 8, 2015, the Company entered into and consummated the promissory notes financing (the "Promissory Notes") with each of Frost Gamma Investment Trust ("Frost Gamma"), an affiliate of Phillip Frost, M.D., the Vice Chairman of the Company's Board of Directors prior to the Spin-off, Michael Brauser, the then Executive Chairman of the Company's Board of Directors, and another investor, pursuant to which the Company issued Promissory Notes of $5.0 million to Frost Gamma, $4.0 million to Michael Brauser and $1.0 million to another investor, respectively, for an aggregate financing amount of $10.0 million. The Promissory Notes carried an interest rate of 10% per annum, which was capitalized monthly and added to the outstanding principal amount of such Promissory Notes. Under the terms of the Promissory Notes, the Company was required to repay the principal and all accrued interest six months after the repayment of all amounts due under the Credit Agreement, except that the Company had the option to repay the Promissory Notes earlier from the proceeds of a public equity financing. During the first quarter of 2017, the Company made cash payments of accrued paid-in-kind ("PIK") interest of $533, $426 and $107 to Frost Gamma, Michael Brauser and another investor, respectively. As of December 31, 2017, the net balance of Promissory Notes was presented as promissory notes payable to certain shareholders, net, on the consolidated balance sheet. On March 26, 2018, the remaining principal amount plus accrued PIK interest of the Promissory Notes was fully repaid through the Refinancing, as discussed below, in connection with the Spin-off of Red Violet. As of March 26, 2018, the unamortized debt costs of $284 pertaining to the Promissory Notes were written off to loss on disposal of discontinued operations. See Note 5, Discontinued Operations. Refinanced Term Loan In connection with the Spin-off of Red Violet, effective March 26, 2018, Fluent, LLC refinanced and fully repaid the Term Loans and Promissory Notes with a new term loan in the amount of $70.0 million ("Refinanced Term Loan"), pursuant to a Limited Consent and Amendment No. 6 to the Credit Agreement (the "Amendment No. 6") (the "Refinancing"). The Refinanced Term Loan is guaranteed by the Company and its direct and indirect subsidiaries, and secured by substantially all of the assets of the Company and its direct and indirect subsidiaries, including Fluent, LLC, in each case, on an equal and ratable basis. The Refinanced Term Loan accrues interest at the rate of either, at Fluent, LLC's option, (a) LIBOR (subject to a floor of 0.50%) plus 7.00% per annum, or (b) base rate plus 6.0% per annum, payable in cash. Interest under the Refinanced Term Loan is payable monthly. The fair value of the Company's debt will generally fluctuate with movements of interest rates, increasing in periods of declining rates of interest and declining in periods of rising rates of interest. Commencing with the second quarter of 2018, scheduled principal amortization of the Refinanced Term Loan is $875 per quarter. The Refinanced Term Loan matures on March 26, 2023. As of December 31, 2018, the Company has additional borrowing capacity under the Refinanced Term Loan. On March 26, 2018, the Refinanced Term Loan was utilized to repay, in full, the outstanding principal amount plus accrued PIK interest of the Term Loans and Promissory Notes of $55,586 and $11,425, respectively. Prepayment premiums and unamortized debt costs associated with the Term Loans of $2,818 and $3,136, respectively, were capitalized in the balance of the Refinanced Term Loan. These prepayment premiums and unamortized debt costs are being amortized over the remaining period of the Refinanced Term Loan. Further, refinancing costs paid to third parties of $193 were recognized in loss on disposal of discontinued operations. See Note 5, Discontinued operations. Commencing with the second quarter of 2018, the Credit Agreement, as amended, requires that the Company maintain and comply with certain financial and other covenants. Additionally, the Credit Agreement, as amended, includes certain prepayment provisions, including mandatory quarterly principal prepayments of the Refinanced Term Loan with a portion of the Company's excess cash flow, as defined in the Credit Agreement. For the fourth quarter ended December 31, 2018, there were no mandatory prepayments required based on the excess cash flow obligation. As of December 31, 2018, the Company was in compliance with all of the financial and other covenants under the Credit Agreement, as amended. Whitehorse Warrants On November 3, 2017, the Company entered into warrant amendments (the "Whitehorse Warrant Amendments") with Whitehorse, regarding warrants to purchase an aggregate of 300,000 shares of common stock (collectively, the “Whitehorse Warrants”), at an exercise price of $5.08 per share. Pursuant to the Whitehorse Warrant Amendments, the Company agreed to reduce the exercise price to $3.00 per share. Whitehorse exercised all the Whitehorse Warrants for 300,000 shares of common stock (the “Whitehorse Shares”) and gross proceeds of an aggregate of $900 were received in November 2017. Pursuant to the terms of the Whitehorse Warrant Amendments, Whitehorse was prohibited from engaging or otherwise agreeing to any sale, pledge, or other transfer of the Whitehorse Shares for a period of 120 days (the “Whitehorse Lock-Up Period”) following the exercise of such warrants in full. Following the Whitehorse Lock-Up Period, (i) Whitehorse may only sell such number of shares underlying the warrants representing up to 5.0% of the Company’s daily trading volume on the immediately prior trading day prior to a sale and (ii) Whitehorse may not transfer any of the Whitehorse Shares for less than $4.50 per share, provided that Whitehorse may not transfer any Whitehorse Shares unless the Company has an effective registration statement permitting the resale of the Whitehorse Shares. Upon either the Record Date or the termination of the Business Combination Agreement, dated September 6, 2017, by and among Cogint, Inc. and BlueFocus International Limited, Whitehorse could require the Company to purchase all of the Whitehorse Shares at a price of $4.50 per share. As of December 31, 2017, a liability of $1,350 in relation to the Whitehorse Shares with put rights was classified into current liabilities. On July 9, 2018 the Company entered into First Amendments (the "First Amendments") to the Amendments to Warrants and Agreements to Exercise ("Amended Whitehorse Warrants") with (i) H.I.G. Whitehorse SMA ABF, L.P. regarding 46,667 warrants to purchase common stock of the Company, par value $0.0005 per share, at an exercise price of $3.00 per share; (ii) H.I.G. Whitehorse SMA Holdings I, LLC regarding 66,666 warrants to purchase common stock of the Company at an exercise price of $3.00 per share; and (iii) Whitehorse Finance, Inc. regarding 186,667 warrants to purchase common stock of the Company at an exercise price of $3.00 per share. Pursuant to the First Amendments, the parties agreed to reduce the price per share at which the warrant holders have the right, but not the obligation, to require the Company to purchase from the warrant holders the Warrant Shares (the "Put Right") to $3.8334 per share, to modify the period during which the Put Right can be exercised to the period commencing January 1, 2019 and ending December 15, 2019, and to modify the minimum price that the warrant holders can transfer any of the Warrant Shares to no less than $3.8334 per share. The reduction in the Put Right price from $4.50 per share to $3.8334 per share was a result of the receipt by the warrant holders of 40,000 shares of Red Violet common stock in the Spin-off and the warrant holders' subsequent sale of those shares for $200 in a private transaction. During the third quarter of 2018, the change in value of the Put Right price resulted in a reduction to the puttable option classified within accrued expenses and other current liabilities and a corresponding increase to additional paid-in-capital of $200 on the consolidated balance sheets. The Company estimated the fair value of such warrants on the date of grant and amendment, respectively, using a Black-Scholes pricing model by applying the following assumptions:
| Year Ended December 31, 2017
Expected term (in years) | 0.08 - 9 |
Risk-free interest rate | 1.02 - 2.35 % |
Expected volatility | 82.50 | %
Expected dividend yield | — | %
For the year ended December 31, 2017, a gain of $350, as a result of the Whitehorse Warrant Amendments, was capitalized as a deduction to the balance of debt costs. As of December 31, 2018 and 2017, the debt costs balances related to the Whitehorse Warrants were $669 and $897, respectively. The fair value of the warrants is amortized to interest expense over the term of the Refinanced Term Loan using the interest method. Maturities As of December 31, 2018, scheduled future maturities of the Refinanced Term Loan, excluding potential voluntary future additional principal prepayments, are as follows:
(In thousands) |
Year |  |
2019 | $ | 3,500 |
2020 | 3,500 |
2021 | 3,500 |
2022 | 3,500 |
2023 | 46,320 |
Total maturities | 60,320 |
Less: unamortized debts issuance costs | 4,848 |
Total | $ | 55,472 |
Fair value As of December 31, 2018, the fair value of long-term debt is considered to approximate its carrying value, as the Refinanced Term Loan has a variable interest rate.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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