Quarterly report pursuant to Section 13 or 15(d)

Notes Payable

Notes Payable

3 Months Ended

Mar. 31, 2018

Notes payable consisted of the following:



	March 31, 2018			December 31, 2017
Notes payable to clearing firm under forgivable loans	$	2,143		$	2,143
Note payable under subsidiary's term loan with bank	5,925			6,563
Note payable under subsidiary's revolver with bank	185			216
Notes payable by subsidiary to certain former shareholders of Highland	6,738			6,738
Notes payable to KMS' former shareholders, net of $67 and $98 of unamortized discount in 2018 and 2017, respectively	1,478			1,958
Notes payable to SSN's former shareholders, net of $244 and $326 of unamortized discount in 2018 and 2017, respectively	4,887			6,074
Senior Notes	81,059			76,569
Less: Unamortized debt issuance costs	(3,418		)	(3,412		)
Total	$	98,997		$	96,849

The Company estimates that the fair value of notes payable was $100,732 at March 31, 2018 and $99,129 at December 31, 2017 based on then current interest rates at which similar amounts of debt could then be borrowed (Level 2 inputs). As of March 31, 2018, the Company was in compliance with all covenants in its debt agreements.

In May 2018, five of the Company’s broker-dealers entered into a six-year extension of their clearing agreements with National Financial Services LLC (“NFS”). In connection with the extensions, the Company entered into a termination of the forgivable loan agreement with NFS whereby the remaining balance of the principal and interest (approximately $2,222) on the loan was forgiven.

At March 31, 2018, the Company had $40,000 available under its $40,000 revolving credit agreement with an affiliate of its principal shareholder. The revolving credit agreement matures on August 25, 2021.

On April 21, 2017, Securities America Financial Corporation ("SAFC") entered into an amended and restated loan agreement with a financial institution. The loan agreement modified the interest rate for new loans under SAFC's revolving credit facility to prime plus 2.25%. As of March 31, 2018, SAFC had $1,000 of availability under the revolving credit facility. This loan agreement also provides for an additional term loan in the aggregate principal amount of $8,000 subject to certain conditions. This second term loan bears interest at 5.75%, with a maturity date of May 1, 2020. The loans are collateralized by the assets of SAFC and Securities America Advisors, Inc.

On November 21, 2017, the Company sold $72,500 principal amount of its 6.5% senior notes due November 2027 ("Senior Notes"). Interest on the Senior Notes accrues from November 21, 2017 and is paid quarterly in arrears on March 31, June 30, September 30 and December 31 of each year. The Company may redeem the Senior Notes in whole or in part on or after November 30, 2020, at its option, at a redemption price equal to 100% of their principal amount, plus accrued and unpaid interest. On December 12, 2017, the underwriters exercised their option to purchase an additional $4,069 principal amount of the Senior Notes, which resulted in total gross proceeds of $76,569, before deducting the underwriting discount paid to unaffiliated underwriters and offering expenses aggregating $3,313, including $1,187 of brokerage commissions earned by employees of Ladenburg, which served as the lead underwriter in the offering. In February 2018, the Company entered into a note distribution agreement under which the Company may sell up to $25,000 principal amount of additional Senior Notes in an "at the market" offering. During the three months ended March 31, 2018, the Company sold $4,536 principal amount of Senior Notes pursuant to the "at the market" offering. Ladenburg is acting as the representative of the agents named in the note distribution agreement in the "at the market" offering and may receive commissions of up to 2% of gross sales.