Convertible Notes and PPP Term Note
|9 Months Ended|
Sep. 30, 2021
|Debt Disclosure [Abstract]|
|Convertible Notes and PPP Term Note||CONVERTIBLE NOTES AND PPP TERM NOTE
4.0% Senior Secured Convertible Notes Due 2024 (“2024 Notes”)
The fair value of the 2024 Notes as of September 30, 2021 and December 31, 2020 was $180,300,000 and $197,700,000, respectively. The change in fair value of the 2024 Notes was primarily driven by changes in our stock price and synthetic credit rating during the three and nine months ended September 30, 2021. The Company recognizes changes in fair value attributable to changes in stock price in Interest (Income) Expense and changes in fair value attributable to credit spread in Other Comprehensive Loss.
The contractual principal balance of the 2024 Notes was $200.0 million as of September 30, 2021 and December 31, 2020. Interest is payable quarterly beginning January 15, 2021 at a rate of 4.0% per annum. Interest expense for the three and nine months ended September 30, 2021 related to the 2024 Notes was $2.0 million and $6.0 million, respectively.
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 and nine months ended September 30, 2021.
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. As of September 30, 2021, the Company is not aware of any default or breach of any covenant under the 2024 Notes.
See Note 13, Fair Value Measurements, for additional information regarding the fair value measurement of the 2024 Notes and Note 15 for subsequent event disclosures related to the 2024 Notes.
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 debt and 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 approximately $1.4 million in gain on the forgiveness of the PPP Term Note, which was recorded in Interest Income for the nine months ended September 30, 2021.
The entire disclosure for long-term debt.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef