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Long-Term Debt | 12 Months Ended
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Dec. 31, 2021
Debt Disclosure [Abstract] |
Long-Term Debt | LONG-TERM DEBT The following table summarizes the net carrying amount of the Term Loan (as defined below) as of December 31, 2021 and December 31, 2020, net of debt issuance costs (in thousands):
| December 31, 2021 |  | December 31, 2020
| Outstanding principal |  | Debt issuance costs |  | Net carrying amount |  | Outstanding principal |  | Debt issuance costs |  | Net carrying amount
Term loan | $ | 65,000 |  |  | $ | (1,422) |  |  | $ | 63,578 |  |  | $ | 65,000 |  |  | $ | (2,789) |  |  | $ | 62,211 |
Total debt | $ | 65,000 |  |  | $ | (1,422) |  |  | $ | 63,578 |  |  | $ | 65,000 |  |  | $ | (2,789) |  |  | $ | 62,211 |
Current portion | $ | 30,789 |  |  | $ | — |  |  | $ | 30,789 |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Long term | 34,211 |  |  | (1,422) |  |  | 32,789 |  |  | 65,000 |  |  | (2,789) |  |  | 62,211 |
Total debt | $ | 65,000 |  |  | $ | (1,422) |  |  | $ | 63,578 |  |  | $ | 65,000 |  |  | $ | (2,789) |  |  | $ | 62,211 |
The Company entered into a Loan and Security Agreement (the “Term Loan Agreement”) on September 30, 2019 with Runway Growth Credit Fund Inc. (the “Lender”) for a $40.0 million term loan, of which $35.0 million was defined as the First Tranche Term Loan and $5.0 million was the Second Tranche Term Loan. The $35.0 million First Tranche Term Loan was drawn on September 30, 2019. Payments were interest only through October 15, 2021 (first scheduled amortization payment) after which equal monthly payments of principal were due through April 15, 2023 (maturity date). Interest was at a variable rate equal to LIBOR (floor of 2.15%) plus 8.25%. The Term Loan (the “Term Loan”) under the Term Loan Agreement is secured by substantially all assets of the Company, and the Company is required to comply with certain covenants, including a covenant that requires the Company to reach certain minimum liquidity requirements of cash and cash equivalents as defined in the Term Loan Agreement. Prepayment fees of 3.00% declining to 0.00% were provided based on the anniversary date of payment. Debt issuance costs of $2.6 million were capitalized and are being amortized to interest expense as an adjustment to yield using the effective interest method. Included in the debt issuance costs is the present value of a $1.6 million final payment due on April 15, 2023 (the “Final Payment”) which is being accreted to full value over the term. In connection with the origination of the Term Loan Agreement, a warrant for 333,333 Class P Units was issued. The fair value of the warrant was $0.1 million at the time of issuance which was accounted for as a debt origination cost (contra-liability). The warrants had a carrying value of $6.4 million as of September 22, 2021 (after the mark-to-market adjustment as of the date of exercise) and were converted upon exercise into 534,589 newly issued LLC Units on a net settlement basis, elected at the option of the holder. On December 17, 2020, the Company entered into a First Amendment to the Term Loan Agreement with the Lender (the “First Amendment”) to expand the Second Tranche Term Loan from $5.0 million to $30.0 million for a total commitment of $65.0 million. Up to $30.0 million of the proceeds from the Second Tranche Term Loan could be distributed to the holders of the equity interests within 90 days of closing. Other modifications in the First Amendment include: •Closing fee of $0.3 million related to this new facility; •Reduction in the LIBOR Floor on the entire facility from 2.15% to 1.00% (effective interest rate reduced from 10.40% to 9.25% based on LIBOR); •Extension of the maturity to October 15, 2023; •Extension of the interest-only period by 6 months (first scheduled amortization payment on April 15, 2022); •Allowance of quarterly tax distributions to members; •Extension of the prepayment term trigger dates by 6 months; •Modification of the Final Payment, as defined, to include the present value of an additional $1.4 million, which represents the incremental increase in the Final Payment due to the increase in the Term Loan principal, and an additional $0.2 million, which are included in the debt issuance costs and are being accreted to full value as an adjustment to the interest rate; and •Issuance of 25,000 new warrants to the Lender with an exercise price of $10.00 per Unit with a term of 10 years. These warrants were accounted for using a similar methodology to the valuation of the original warrants discussed above, and the fair value was determined to be less than $0.1 million. The warrants were converted into LLC Units at the time of the IPO. On August 6, 2021, a second amendment was executed primarily to allow for contributions to the Brilliant Earth Foundation. On August 29, 2021, a third amendment was executed to among other matters, permit the Reorganization Transactions that were consummated by the Company in connection with the Up-C structure of the IPO transaction and reduce the variable interest rate from 8.25% to 7.75%; and the LIBOR Floor from 1.00% to 0.50%. The amendments were treated as debt modifications for accounting purposes. The effective interest rate was 11.68%, 13.01%, and 11.90% for the years ended December 31, 2021, 2020, and 2019, respectively. Interest expense was $5.9 million, $3.8 million and $2.0 million; and the amortization of deferred issuance costs was $1.7 million, $1.1 million and $0.3 million for the years ended December 31, 2021, 2020, and 2019, respectively. The Company was in compliance with all covenants as of December 31, 2021. As of December 31, 2021, the aggregate future principal payments under the Term Loan, including the Final Payment payable to the lender, are as follows (in thousands):
| Principal |  | Final payment |  | Total
Years ending December 31, |  |  |  |  |
2022 | $ | 30,789 |  |  | $ | — |  |  | $ | 30,789 |
2023 | 34,211 |  |  | 3,151 |  |  | 37,362 |
Total aggregate future principal payments | $ | 65,000 |  |  | $ | 3,151 |  |  | $ | 68,151 |
Note under Paycheck Protection Program In April 2020, in connection with the significant negative business impact of the COVID-19 pandemic, the Company applied for and received a $2.7 million PPP Loan under the CARES Act that bore interest at 1.00% per annum. The Company elected to repay the PPP Loan in full early during the year ended December 31, 2020, including interest expense of less than $0.1 million. Note Payable with Related Parties Prior to January 1, 2019, the Company entered into a Note Purchase Agreement representing an aggregate $11.0 million in secured promissory notes due November 2020 at 10.00% interest per annum payable quarterly. The holders of these notes were investors in or affiliates of investors in the entity, which consisted of the Company’s principal outside equity investors, holding all the Class P Units. The promissory notes were repaid in September 2019 in connection with the Term Loan Agreement. Interest expense, related to these notes, was $1.0 million for the year ended December 31, 2019.

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- Definition The entire disclosure for long-term debt. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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