Convertible Subordinated Notes

9 Months Ended

Sep. 30, 2020

Convertible Subordinated Notes [Abstract]

Convertible Subordinated Notes

CONVERTIBLE SUBORDINATED NOTES On September 9, 2020, we completed privately-negotiated repurchases (the “Repurchases”) of $3.8 million in aggregate principal amount of the Convertible Notes for $4.5 million in cash (plus accrued interest of $0.1 million totaling $4.6 million) and recorded $0.8 million for the reacquisition of the equity component. The Repurchases represented approximately 60% of the aggregate principal amount of Convertible Notes then outstanding. Following the settlement of the Repurchases, the aggregate principal amount of the Convertible Notes was reduced to approximately $2.6 million.

The carrying values of the liability and equity components of our Convertible Notes at December 31, 2019 and September 30, 2020 are reflected on our Consolidated Balance Sheet as follows (in thousands):

	December 31, 2019		September 30, 2020
Current liabilities:
Principal amount	$	6,319	$	2,559
Unamortized discount of liability component	(319)		(35)
Convertible Notes issuance costs, net of accumulated amortization of $130 and $63, respectively	(29)		(2)
Carrying value of the liability component	$	5,971	$	2,522
Carrying value of the equity component	$	789	$	319

The carrying value of the liability component and the carrying value of the equity component are recorded in Convertible subordinated notes due 2021 and Additional paid-in capital, respectively, on our Consolidated Balance Sheet at December 31, 2019 and September 30, 2020.

The fair value of the Convertible Notes, which are Level 2 measurements, was $2.9 million at September 30, 2020. The Convertible Notes are due in March 2021 and bear interest at 2.75% per year, which is payable semi-annually in arrears on March 15 and September 15 of each year.

At September 30, 2020, the adjusted conversion rate of the Convertible Notes was 45.8380 shares of our common stock per $1,000 principal amount of Convertible Notes, equivalent to an adjusted conversion price of $21.82 per share of common stock.

The interest expense and accretion of debt discount and debt issuance costs related to our Convertible Notes during the three and nine months ended September 30, 2019 and 2020 is as follows (in thousands):

	Three months ended September 30,				Nine months ended September 30,
	2019		2020		2019		2020
Convertible Notes interest expense	$	43	$	43	$	131	$	130
Convertible Notes accretion of debt discount	61		69		178		200
Convertible Notes amortization of debt issuance costs	6		9		19		21

The remaining unamortized debt discount and the remaining unamortized debt issuance costs are being amortized using the effective interest method over the remaining term of approximately five months of the Convertible Notes. The effective interest rate on the unamortized debt discount for both the three and nine months ended September 30, 2019 and 2020 was 11.4%. The effective interest rate on the debt issuance costs for both the three months ended September 30, 2019 and 2020 was 3.2% and for the nine months ended September 30, 2019 and 2020 was 3.2% and 3.1%