Note 8.

Commitments and Contingencies

Operating leases: The Company leases office space and equipment under the terms of non-cancellable operating leases that expire at various dates through 2021.

On March 25, 2015, the Company terminated a portion of an office lease agreement. The Company agreed to vacate the space no later than August 31, 2015. The remaining space is still under a lease agreement that expires on December 31, 2021, and has been subleased under the terms of a sublease agreement. Because the Company vacated the space where its principal office was located, the Company disposed of the related leasehold improvements. There was a tenant improvement liability associated with the disposed assets. The Company recorded a loss on property and equipment of $1.1 million from the disposal of the assets and related liability. The Company also expects to incur a loss of approximately $0.7 million in lease termination costs related to the sublease agreements that are in effect on the remaining space. The related unfavorable lease liability was adjusted to its fair value as part of the Business Combination. This liability totaled approximately $0.8 million and $0.9 million as of December 31, 2016 and 2015, respectively.

On April 8, 2015, the Company entered into a new lease agreement to lease space under an agreement which expires on September 30, 2020. The new lease agreement includes rent abatement and an escalation clause which has increased the existing deferred rent liability related to the new lease. Similarly, the Company recognizes landlord incentive payments received as a reduction of rent expense over the lease term. The unrecognized portion of landlord incentive payments is reflected as deferred rent in the accompanying consolidated balance sheets. In connection with the Business Combination, any existing deferred rent liabilities were removed as a result.

The future minimum lease payments have not been reduced by minimum required rental income under sublease agreements totaling approximately $7.6 million as of December 31, 2016. The following is a schedule of the approximate future minimum lease payments required under non-cancelable operating leases that have initial or remaining terms in excess of one year at December 31, 2016 (in thousands):

Year Ending December 31,

2017	$	3,343
2018		2,591
2019		2,579
2020		2,350
2021		1,754
	$	12,617

In conjunction with the principal office lease agreement, the Company was required to issue a letter-of-credit to the landlord as security for the new facility in the amount of $0.8 million. The letter-of-credit can be reduced to $0.4 million in conjunction with the termination agreement. This letter-of-credit was cancelled due to the termination of the prior credit facility described further in Note 7. As a result, the Company was required to increase its security deposit. The security deposit shall be the security for the performance of the Company’s obligations, covenants and agreements under the deed of the lease.

Rent expense, net of sublease income, aggregated to $1.9 million, $0.2 million, $2.3 million, and $3.3 million for the year ended December 31, 2016, the period from November 24, 2015 through December 31, 2015 and January 1, 2015 through November 23, 2015, and the year ended December 31, 2014, respectively.

Underwriters’ Agreement: In 2013, pursuant to their public offering, the Company entered into an agreement with their underwriters which entitled them to an underwriting discount of 3.0%. This fee was paid in cash at the closing of the public offering, including any amounts raised pursuant to the over-allotment option. In addition, the underwriters were entitled to a deferred fee of 2.75% of the public offering, including any amounts raised pursuant to the over-allotment option, payable in cash upon the closing of a business combination. This amount, totaling approximately $1.9 million, was paid upon closing of the Business Combination with STG Group. The Company also paid $0.6 million in additional fees and other expenses to the underwriters upon close of the Business Combination. These costs are included as part of the buyer related transaction costs which are recorded during the period from November 24, 2015 through December 31, 2015.

Legal matters: From time to time the Company may be involved in litigation in the normal course of its business. Management does not expect that the resolution of these matters would have a material adverse effect on the Company’s business, operations, financial condition or cash flows.