|9 Months Ended|
Sep. 30, 2021
On September 27, 2019 (Closing Date), we entered into a Credit and Security Agreement (Credit Agreement) with MidCap Financial Trust (MidCap). The Credit Agreement provides for a $60.0 million term loan credit facility with the following tranches: (i) on the Closing Date, $10.0 million aggregate principal amount of term loans (Tranche 1), (ii) until December 31, 2020, an additional $10.0 million term loan facility at our option (Tranche 2), (iii) until March 31, 2021, an additional $20.0 million term loan facility subject to the satisfaction of certain conditions and at our option (Tranche 3) and (iv) until March 31, 2022, an additional $20.0 million term loan facility subject to the satisfaction of certain conditions and at our option (Tranche 4). The obligations under the Credit Agreement are secured by a perfected security interest in all of our assets except for intellectual property and certain other customary excluded property pursuant to the terms of the Credit Agreement.
At the Closing Date, $10.0 million was funded in an initial tranche. In March 2020, we signed a credit extension form for Tranche 2 amounting to $10.0 million, which we received in May 2020. In April 2021, we amended the Credit Agreement to extend the period through which Tranche 3 will be available through March 31, 2022, subject to the satisfaction of certain conditions and at our option. To date, the facility gives us the ability to access an additional $40.0 million at our option, subject to the achievement of certain customary conditions.
The outstanding principal balance of the loan bears interest at an annual rate of one-month LIBOR (or a comparable applicable index rate determined pursuant to the Credit Agreement. if the LIBOR is no longer available)
plus 5.65%, subject to a LIBOR floor of 1.50% and is payable monthly in arrears. Commencing on October 1, 2019, the Credit Agreement provides that we initially make interest-only payments for 24 months followed by 36 months of amortization payments. The interest-only period can be extended to 36 months and again to 48 months upon the satisfaction of certain conditions set forth in the Credit Agreement. In June 2021, we satisfied the conditions under the Credit Agreement which effectively extended the interest-only period to 36 months or through October 1, 2022. All unpaid principal and accrued interest are due and payable no later than September 1, 2024. A final payment fee of 2.5% of principal is due on the final payment of the term loan.
We may make voluntary prepayments, in whole or in part, subject to certain prepayment premiums and additional interest payments. The Credit Agreement also contains certain provisions, such as event of default and change in control provisions, which, if triggered, would require us to make mandatory prepayments on the term loan, which are subject to certain prepayment premiums and additional interest payments.
As of September 30, 2021 and December 31, 2020, the outstanding balance of the loan, net of unamortized debt discount, was $19.9 million and $19.8 million, respectively. Debt issuance costs are recorded as a direct deduction from the term loan on the balance sheet and are being amortized ratably as interest expense over the term of the loan, using the effective interest method. As of September 30, 2021 and December 31, 2020, the unamortized issuance costs and debt discounts amounted to $113,000 and $185,000, respectively.
For the three and nine months ended September 30, 2021, interest expense, including amortization of the debt discount and accretion of the final fees related to the Credit Agreement was $427,000 and $1.2 million, respectively. For the three and nine months ended September 30, 2020, interest expense, including amortization of the debt discount and accretion of the final fees related to the Credit Agreement was $429,000 and $1.0 million, respectively. Accrued interest of $351,000 was included within other accrued liabilities in the condensed balance sheet as of September 30, 2021.
The following table presents the future minimum principal payments of the outstanding loan as of September 30, 2021 under the current Credit Agreement (in thousands):
The Credit Agreement contains certain covenants which, among others, require us to deliver financial reports at designated times of the year and maintain minimum net revenues and $10.0 million of cash to draw Tranche 3 or Tranche 4. As of September 30, 2021, we were not in violation of any covenants.
The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef