Borrowings

3 Months Ended

Mar. 31, 2020

The following table summarizes the outstanding borrowings from the term loan described below, as of the dates presented:


	March 31, 2020		December 31, 2019
	(in thousands)
Principal outstanding	$	40,000	$	40,000
Less: Unamortized debt issuance costs	(712)		(777)
Outstanding debt, net of debt issuance costs	$	39,288	$	39,223
Classified as:
Current portion of long-term borrowings	$	8,731	$	4,358
Long-term borrowings	$	30,557	$	34,865

The outstanding debt is related to a term loan entered by the Company with Biopharma Credit Investments IV Sub LP, or Pharmakon, in October 2017 for total loan proceeds of $40.0 million. The term loan includes an interest-only period for 35 months through September 2020 and is then repaid in equal quarterly principal payments plus interest through December 2022 and carries a fixed interest rate of 11.5%. The term loan includes a pre-payment fee equal to the remaining interest due for the first 30 months of the agreement if it is prepaid within the first 30 months, a 2% prepayment penalty for months 31-48, and a 1% penalty for months 49-60. The loan is a senior obligation secured with a blanket first lien on the assets of the Company. The effective interest rate for the three months ended March 31, 2020 and 2019 was 12.3% and 12.2%, respectively.

The table below summarizes annual future minimum principal payments under the loan agreement as of March 31, 2020:


Year ending December 31,	(in thousands)
2020 (remaining nine months)	$	4,444
2021	17,778
2022	17,778
Total future minimum payments	40,000
Less: Amount representing debt issuance costs	(712)
Long-term borrowings	$	39,288

The term loan requires the Company to maintain a minimum cash balance of $5.0 million and to meet either minimum net sales or trailing 12-month consolidated earnings before interest, taxes, depreciation, and amortization targets. The Company was in compliance with all debt covenants as of March 31, 2020. Due to uncertainties surrounding the impact of the COVID-19 pandemic, there is a substantial risk that the Company may not meet the remaining minimum net sales or the trailing 12-month consolidated EBITDA targets in future quarters. If the Company is not in compliance with these requirements, the loan may become due immediately at Pharmakon's option.