(8) PRIVATE PLACEMENT MEMORANDUM

Commencing in November of 2016, the Company conducted a private placement on a “best efforts, minimum-maximum” basis of 12% unsecured subordinated promissory notes, for a minimum of $1,000,000 and a maximum of $1,500,000 pursuant to Sections 4(a)(2) and 4(a)(5) of the Securities Act of 1933, as amended (the “1933 Act”) and Rule 506(b) of the 1933 Act (the “Offering”). The Offering was conducted through a FINRA registered broker, Newbridge Securities Corporation (“Newbridge”). On February 28, 2017, the Company conducted a closing under the Offering and issued promissory notes totaling $1,035,000, with a maturity date of June 28, 2018, with the remaining unpaid principal balance due. The Offering requires the Company to make monthly repayment commencing on June 1, 2017, until the Senior Lender has been paid in full, the private placement memorandum limits the funds available for repayment to the note holders to an amount equal to 5% of the Company’s collections received by the Senior Lender during that month.. Newbridge was compensated in connection with sales made in the Offering consisting of (i) a cash amount equaling 10% commissions, a 3% non-accountable expense allowance, and related expenses totaling $154,000 (ii) 776,250 shares of our Common Stock were issued to the placement agent as additional commission and fees totaling $255, and (iii) the Company has an obligation to issue 776,250 shares of the common stock, six months after issuance of the notes to the noteholders which nave initially been recorded as a liability totaling $255. In connection with the Offering, we also paid our Lender $342,000 as repayment of principal and interest on the outstanding obligations. During the three months ended March 31, 2017, the Company recognized $37 debt issuance cost and debt discount amortization expense included in interest expense.

The table below summarizes the cash and non-cash components of the private placement memorandum dated February 28, 2017:

Proceeds from unsecured subordinated promissory notes	$	1,035
Less debt issuance costs and discount
Payment of commission and placement agent fees and related expenses		155

Non-cash activity
Common stock issued to placement agent		255
Obligation to issue common stock to private placement noteholders		255
Amortization of issuance costs and debt discount		(38)
Unsecured subordinated promissory notes, net of issuance and debt discount		408

Current portion of unsecured subordinated promissory notes based upon estimated required repayments form expected cash flows		(288)
Long-term portion of unsecured subordinated promissory notes	$	120