NOTE

– LONG-TERM

DEBT

December 31, 2019

and

2018,

the carrying amount of the Company’s outstanding debt is summarized as follows (dollars in thousands):

	December 31,
	201 9			201 8

Senior secured debt due May 25, 2021 Interest accrues at 8% per annum	$	72,341		$	67,401
Convertible note instrument due March 5, 2020 Interest accrues at 7% per annum		65,514			73,158
Other loans		45			104
Debt discount and debt issuance costs, net of accumulated accretion		(304	)		(4,358	)
Total outstanding long-term debt		137,596			136,305

Less current portion		31			59

Total outstanding debt	$	137,565		$	136,246

The carrying value of the Company’s Senior Secured Debt approximates fair value. The fair value of the Company’s Senior Secured Debt (Level

) is determined based on an estimation of discounted future cash flows of the debt at rates currently quoted or offered to the Company by its lenders for similar debt instruments of comparable maturities by its lenders.

The fair value of the Company’s convertible debt exceeds its carrying value of approximately

$65.2

million, which includes accreted interest, by approximately

$41.4

million due to the increased value of its conversion feature. The conversion feature’s fair value increases as the Company’s common stock price increases. The fair value of the conversion feature (Level

) is determined using the Black-Scholes model. Significant inputs to the model were the conversion price (

$6.75

), the number of shares of common stock that could be acquired upon conversion as of

December 31, 2019,

the Company’s stock price as of

December 31, 2019

$11.02

and stock volatility of

32%,

which was determined using our publicly-traded stock price over the last year.

Pursuant to the Company’s loan agreements, annual maturities of long-term debt outstanding on

December 31, 2019,

are as follows:

Year Ending December 31	($ in thousands)

2020	$	65,545
2021		72,355
2022		-
2023		-
2024+		-
Total	$	137,900

Credit Agreement

May 25, 2017 (

“Closing Date”), the Company entered into a new

$60

million credit agreement with funds affiliated with Apollo Global Management, LLC (“Apollo”) that replaced and refinanced the Company’s then existing

$45

million senior secured mortgage debt and provided

$15

million of new senior debt to fund immediate construction related expenditures. Further, in

March 2020,

the Company entered into an agreement with Apollo that allows the Company to extend the maturity of the Apollo debt for an additional year from

May 2021

May 2022

at the Company’s option (“Extension Option”) (see Note

14,

“Subsequent Events”).

Interest on the Senior Secured Debt is due quarterly on each

March 31,

June 30,

September 30

and

December 31 (

each an “Interest Date”) beginning on

June 30, 2017.

Interest on the Senior Secured Debt will (i) accrete to the outstanding principal amount at a rate per annum equal to

(the “PIK Rate”) compounded quarterly on each Interest Date and (ii) accrue on the outstanding principal amount at a rate per annum equal to

(the “Cash Rate”). The Company, in its discretion,

may

make any quarterly interest payment in cash on the applicable Interest Date at the PIK Rate, in lieu of accretion of such interest to the principal amount at the PIK Rate.

The Accreted Loan Value plus the Applicable Prepayment Premium will be due and payable on the Maturity Date. “Accreted Loan Value” means, as of the date of determination, the outstanding principal amount of the applicable Loan, plus all accreted interest as of the calendar day immediately prior to such date of determination. “Applicable Prepayment Premium” means with respect to any repayment of the Senior Secured Debt (a) the Accreted Loan Value of the Senior Secured Debt being prepaid or repaid, as applicable, multiplied by (b)

3.00%.

The Applicable Prepayment Premium was further modified in connection with the Extension Option described above (see Note

14,

“Subsequent Events”).

The Company paid Apollo an upfront fee of

2.00%

of the aggregate principal amount of the Senior Secured Debt funded on the Closing Date. This amount was recorded as additional debt discount and is being amortized over the remaining term of the loan.

In conjunction with the closing of the Senior Secured Debt in

May 2017,

the Company issued to its lender a warrant to purchase an aggregate

362,500

shares of its common stock (“Warrant”). The warrant has a

five

-year term and had an initial exercise price of

$14.94

per share, subject to adjustment. The warrant exercise price was further modified in connection with the Extension Option described above (see Note

14,

“Subsequent Events”).

The Company recorded a debt discount at the time of the closing of the Senior Secured Debt in the amount of

$2.9

million which was the fair value of the Warrant at the time it was issued. The debt discount was amortized through

December 2019.

January 1, 2019,

the Company adopted ASU

2017

11.

As a result, the Company reclassified a warrant liability in the amount of

$865

thousand to additional paid-in capital, as the Company’s Warrant

longer met the definition of a derivative. In addition, during the years ended

December 31, 2018

and

2017,

the Company recognized annual gains of

$1.5

million and

$0.5

million, respectively, related to the historical remeasurement of the warrant derivative liability at fair value. Upon adoption of this guidance as of

January 1, 2019,

the Company recorded

$2.0

million in additional paid-in capital with a corresponding adjustment to the opening balance of accumulated deficit related to these previously recorded gains.

During

2019,

the Company sold shares of common stock under the

November 2018

ATM at a per-share price less than the Warrant’s initial exercise price, which triggered a down-round, reset provision and resulted in an adjusted exercise price of

$14.54

as of

December 31, 2019.

In addition, the Company recorded an adjustment of

$30

thousand in additional paid-in capital related to the increase in the value of the effect of the down-round feature as of

December 31, 2019.

Convertible Notes

The Convertible Notes accrue interest at

7.00%

per year, with

principal or interest payments due prior to maturity on

March 5, 2020.

The Convertible Senior Notes were either converted into common stock pursuant to the terms of the existing Indenture or exchanged for a new Preferred stock prior to their maturity in

March 2020 (

see Note

14,

“Subsequent Events”).

The Company’s Senior Secured Debt and its Convertible Senior Notes contain representations, warranties and covenants that are typical for agreements of this type, including restrictions that would limit the Company’s ability to incur additional indebtedness, incur liens, pay dividends or make restricted payments, dispose of assets, make investments and merge or consolidate with another person. However, while there are affirmative covenants, there are

financial maintenance covenants and

restrictions on the Company’s ability to issue additional common stock to fund future working capital needs. The debt covenants associated with the Senior Secured Debt were negotiated by the parties with a view towards the Company’s operating and financial condition as it existed at the time the agreements were executed. At

December 31, 2019,

the Company was in compliance with its debt covenants.