Note 15 - Notes Payable and Line of Credit

3 Months Ended

Mar. 31, 2022

Notes to Financial Statements

Debt Disclosure [Text Block]

15. NOTES PAYABLE AND LINE OF CREDIT

Notes payable is summarized as follows:

(in thousands)	As of March 31, 2022			As of December 31, 2021
Syndicated debt (1)	$	105,000		$	105,000
Seller Financed notes payable - Front Line Power Construction, LLC acquisition (2)		86,730			86,730
Note Payable - Financing notes (3)		672			1,357
Seller Financed notes payable - Reach Construction Group, LLC acquisition (4)		3,510			3,480
Vehicle and equipment loans (5)		1,268			222
Non-recourse payable agreements (6)		4,223			8,269
Notes payable - Institutional investor (7)		29,086			33,922
Conditional settlement notes payable agreement (8)		2,500			3,000
Full Moon and CFS - loans to prior owners (9)		31			2
Subtotal		233,020			241,982
Unamortized prepaid financing fees		(11,043	)		(12,603	)
Total long-term debt		221,977			229,379
Less: notes payable, current		(68,563	)		(72,774	)
Notes payable, less current portion	$	153,414		$	156,605

⁽¹⁾ On  November 17, 2021, the Company entered into a credit agreement and associated documents (the “Credit Agreement”) with Alter Domus (US), LLC (“Alter Domus”), as administrative agent and collateral agent and various lenders (the “Lenders”) in order to enable the Company to finance the acquisition of Front Line Power Construction, LLC. The Lenders made a Term Loan to Front Line in the initial principal amount of $105,000,000 for the purposes of financing the acquisition and the associated expenses. The term loan initially bears interest at the three-month Adjusted LIBOR Rate, plus the Applicable Margin, of which 2.5%  may be paid in-kind. The Term Loan shall be repaid in consecutive quarterly installments of $262,500, commencing on  June 30, 2022. The Credit Agreement provides for mandatory prepayments on the occurrence of events such as sales of assets, Consolidated Excess Cash Flow and Excess Receipts during the term. The credit agreement provides for prepayment premiums (initially 5% on prepayments made in the first 30 months of the term, declining to 1% in the final year of the term). The Term Loan matures on  November 17, 2026, subject to acceleration on Events of Default. Interest rate on the term notes is 13.5% at March 31, 2022.

⁽²⁾ On  November 17, 2021, the Company entered into two unsecured promissory notes, one with Kurt A Johnson, Jr, for $34,256,000 and the second for $51,384,000 with Tidal Power Group LLC. These promissory notes bear an interest rate of 6% per annum and as modified, $20 million is due on May 6, 2022, $15 million is due on December 31, 2022, and $52 million is due on May 31, 2023.  On  December 10, 2021, Kurt A Johnson Jr. received an additional unsecured promissory note in the principal sum of $1,090,000 also with a 6% per annum interest rate in exchange for a reduction of shares issued to Mr. Johnson of 400,000. Additionally in a Q1 2022 amendment to the note, the Company also agreed to reduce the restriction period under the Tidal Lockup letter from two years to one year and to the extent that if the value of the shares previously issued to Tidal Power were less than $4.00 per share upon expiration of the restriction period, the Company has agreed to pay additional consideration to Tidal Power so that the value of Tidal Power's shares are equal to no less than $28,852,844. For the Johnson lockup letter, the Company agreed to pay additional consideration to Mr. Johnson upon expiration of the restriction period so that the value of his stock consideration is no less than $17,635,228, which is equal to $4.00 per common share. Any shortfall would be made up by issuing Mr. Johnson additional common shares.  See Subsequent Event footnote 20 for more information on amendments to these Promissory notes. See Debt modification subheading below for more information on the debt modification of the unsecured promissory notes.

(3)	The Company has three notes payable to First Insurance Funding executed in 2021 for the purposes of financing a portion of the Company's insurance coverage. Two of these notes have an annual percentage rate of 4.35% and one note with an annual percentage rate of 3.00%, all three notes to be paid in ten monthly payments. The notes are set to mature in May, July and September of 2022.
(4)	Includes two seller-financed notes payable, one for $5 million and the second for $1.5 million. In August 2021, the $5 million note was amended from its original 18-month term; the Company paid $1 million in cash and exchanged 155,763 shares of common stock in exchange for an additional $1 million reduction in principal. The new loan had a face value of $2.0 million at a rate of 6% per annum and was recorded based on an estimated market interest rate of 10% per annum with an original issue discount of $48 thousand. The second seller financed note payable is due 36-months from the April 1, 2020 acquisition date. Both notes had an original stated interest rate of 6% per annum. The Company recently filed and served a Federal Civil Complaint asserting various causes-of-action against the holder of the note, including misrepresentations made during the course of negotiating this transaction.  Based on that complaint, the evidence contained therein, and the conduct described, the Company reasonably believes that it owes no additional compensation as a result of this transaction.
(5)	Includes vehicle and equipment loans with interest rates ranging from 1.00% to 9.15%.
(6)	The Company entered into a non-recourse agreement with C6 which was originated in  November 2021 with a face amount of $9.5 million. The Company received net cash proceeds of $6.9 million. The Company recorded a liability of $9.5 million and a debt discount of $2.6 million. Under the terms of the agreement, for the first 12 weeks, the Company makes weekly payments of $148 thousand and for the final 20 weeks, the Company makes payments of $384 thousand. The agreement had no stated interest rate, but the discount and loan origination fees are being amortized based on an 89% interest rate.  As of  March 31, 2022, the future payments for this financing agreement was approximately $4.2 million ($3.8 million net of discount). See Subsequent Events footnote 20 for information on amendments to this note.

(7)	On March 23, 2021, the Company completed a note payable agreement with an institutional investor with a face amount of $10.7 million, a stated interest rate of 9.0%, an estimated effective interest rate of 19.6%, and an original issue discount of $1.0 million.  The carrying value was $4.5 million at March 31, 2022. The note payable is payable within eighteen (18) months after the purchase date and the creditor may request payment of up to $1 million per calendar month beginning 6 months after initial issuance. On May 11, 2021, the Company completed note payable agreement with the institutional investor with a face amount of $10.7 million, a stated interest of 9.0% per annum and a combined original issue discount and unamortized prepaid fees of $1.0 million and a carrying value of $7.8 million at March 31, 2022. The net proceeds were to be used for working capital, future acquisitions and general corporate purposes. Beginning six (6) months from the purchase price date, investor has the right, in its sole and absolute discretion, to redeem all or any portion of the Note (such amount, the “Redemption Amount”) subject to the maximum monthly redemption amount of $1 million per calendar month, by providing Company with a “Redemption Notice," and is payable in full within 18 months of issuance. On  December 20, 2021, the Company completed a note payable agreement with the institutional investor with a face amount of $16.1 million, a stated interest rate of 9.0%, an estimated effective interest rate of 16.3%, and an original issue discount of $1.1 million. The note payable is payable within eighteen (18) months after the purchase date and the creditor   may request payment of up to $1.5 million per month beginning 6 months after initial issuance. The carrying value was $15.7 million at March 31, 2022. The Company has not made any payments on this note as of March 31, 2022. For payments made by exchanging stock for payments against the debt in 2022, the Company recorded a total loss of $0.7 million on the exchanges due to the Company issuing shares at a lower price than the current market price on the dates of exchange.
(8)	In  October 2020, the Company entered into a conditional settlement agreement with a subcontractor to make payments of $3.5 million at zero interest over three years. The Company made a $0.5 million payment in the fourth quarter of 2021. In the current period, the Company made a $150,000 payment in  February 2022, and a $350,000 payment in March 31, 2022. The Company is scheduled to make a $1 million payment by  November 2022 and the final $1.5 million payment by  November 2023.
(9)	Represents Coax Fiber Solutions and  Full Moon Telecom, LLC opening balance sheet loans to prior Coax Fiber Solutions and Full Moon Telecom, LLC owners.

Line of Credit

On August 19, 2021, the Company's GTS subsidiary entered into a $4.0 million variable rate line of credit agreement. Interest accrues at a rate of 2.05% over the Daily Simple Secured Overnight Financing Rate ("SOFR") index rate. At March 31, 2022 the Company had an outstanding balance on the line of credit of $4.0 million with zero dollars available for borrowing.

Debt Modifications

In the first quarter of 2022, the Company entered into a loan modification on the Front Line Seller Financed notes payable. In order to extend the maturity date of these loans from the original maturity date of May 16, 2022, the Company agreed to reduce the restriction period on the stock granted to the sellers from two years to one and guarantee a $4.00 stock value upon the expiration of the restriction period. The stock price guarantee was valued as a put option and the additional expected cost of the debt from the put option was determined to be an extinguishment of debt and for this transaction, the Company recorded a $25.3 million loss on extinguishment. The put option was valued at $25.9 million and the difference between the put option value and the discount on the orginal and amended seller notes was recorded as a loss on extingusihment. The put option was valued as of the March 29, 2022 modification date. Between the inception date and the quarter-end date of March 31, 2022, the Company's stock fluctuated by $.01 and the Company determined that any revaluation of the put option for a change in value during those three days would be immaterial.