Convertible Note and PPP Term Note
|3 Months Ended|
Mar. 31, 2021
|Debt Disclosure [Abstract]|
|Convertible Note and PPP Term Note||CONVERTIBLE NOTES AND PPP TERM NOTE
4.0% Senior Secured Convertible Notes Due 2024 (“2024 Notes”)
The contractual principal balance of the 2024 Notes was $200.0 million as of March 31, 2021 and December 31, 2020, and the fair value of the 2024 Notes was approximately $182.2 million and $197.7 million as of March 31, 2021 and December 31, 2020, respectively. The $15.5 million decrease in the fair value of the 2024 Notes was primarily due to the decline in our stock price and was recorded in Interest Income. No portion of the change in fair value for the period was related to change in credit risk.
Proceeds from the 2024 Notes were required to be held in escrow until the Company completed certain requirements related to the collateral. In January 2021, such requirements were met and the proceeds were released from escrow.
The 2024 Notes are due October 14, 2024 and are convertible at a rate of $35.29 per share, subject to change for anti-dilution adjustments and adjustments for certain corporate events. No portion of the principal balance was converted during the three months ended March 31, 2021.
Interest is payable quarterly beginning January 15, 2021 at a rate of 4.0% per annum. Interest expense for the three months ended March 31, 2021 related to the 2024 Notes was $2.0 million.
There are no required redemptions of the 2024 Notes and they will generally not be redeemable at the option of the Company prior to the third anniversary of their issue date. Accordingly, the Company has classified the full balance of the 2024 Notes as long-term on the Condensed Consolidated Balance Sheets.
The 2024 Notes include certain covenants, including limitations on liens, additional indebtedness, investments, dividends and other restricted payments, and customary events of default. The Company is also required to have a minimum sales backlog of at least $25.0 million as of the period ending March 31, 2022, $50.0 million as of the period ending June 30, 2022, $75.0 million as of the period ending September 30, 2022 and $100.0 million as of the period ending December 31, 2022.
PPP Term Note
On April 14, 2020, the Company entered into a Paycheck Protection Program Term Note (“PPP Term Note”) with PNC Bank, N.A. under the Paycheck Protection Program of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). The Company received total proceeds of approximately $1.4 million from the PPP Term Note, which was due on April 13, 2022. In accordance with the requirements of the CARES Act, the Company used the proceeds primarily for payroll costs. Interest accrued on the PPP Term Note at the rate of 1.0% per annum. The Company elected to account for the PPP Term Note as debtand accrued interest over the term of the note. The Company did not make any repayments on any amount due on the PPP Term Note.On January 15, 2021, the outstanding principal and interest accrued on the PPP Term Note were fully forgiven. The Company recognized an approximate $1.4 million gain on the forgiveness of the PPP Term Note, which was recorded in Interest Income for the three months ended March 31, 2021.
The entire disclosure for long-term debt.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef