10. Debt and Interest

Debt

Total debt consists of the following as of June 30, 2021 and December 31, 2020:

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Oaktree Note

On August 27, 2020 (the “Closing Date”), Fortress, as borrower, entered into a $60.0 million senior secured credit agreement (the “Agreement”) with Oaktree.  The Oaktree Note bears interest at a fixed annual rate of 11.0%, payable quarterly and maturing on the fifth anniversary of the Closing Date, August 27, 2025, the (“Maturity Date”). The Company is required to make quarterly interest-only payments until the Maturity Date, at which point the outstanding principal amount is due. The Company may voluntarily prepay the Oaktree Note at any time subject to a Prepayment Fee as defined in the Terms section. The Company is required to make mandatory prepayments of the Oaktree Note under various circumstances as defined in the Terms section. No amounts paid or prepaid may be reborrowed without Oaktree consent.

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Pursuant to the terms of the Agreement on the Closing Date the Company paid Oaktree an upfront commitment fee equal to 3% of the $60.0 million, or $1.8 million.  In addition, the Company paid a $35,000 Agency fee to the Agent which was due on the Closing Date and will be due annually, together with fees of $2.5 million, directly to third parties involved in the transaction.  

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In connection with the Oaktree Note, the Company issued warrants to Oaktree and certain of its affiliates to purchase up to 1,749,450 shares of common stock (see Note 14) with a relative fair value of $4.4 million.

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The Company recorded the fees totaling $8.7 million ($1.8 million to Oaktree, $2.5 million of expenses paid to third-parties and $4.4 million representing the relative fair value of the Oaktree Warrants) to debt discount.  These costs are being amortized over the term of the Oaktree Note.

Partner Company Installment Payments – Licenses

The following tables show the details of partner company installment payments – licenses for the periods presented.

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Note 2:  Imputed interest rate of 4.03%and maturity date of July 29, 2023.

Note 3:  Imputed interest rate of 4.25%and maturity date of January 1, 2022.

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Interest Expense

The following table shows the details of interest expense for all debt arrangements during the periods presented. Interest expense includes contractual interest; fees include amortization of the debt discount and amortization of fees associated with loan transaction costs, amortized over the life of the loan.

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Note 2: Imputed interest expense related to Ximino, Accutane and inti-itch cream acquisitions.  

Journey Working Capital Line of Credit

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On March 31, 2021 (the “Closing Date”), Journey entered into a Loan and Security Agreement with East West Bank (“EWB Loan”) under which Journey may request advances in aggregate not exceeding the lesser of: (i) the Revolving Line of $7.5 million and (ii) a Borrowing Base representing approximately 85% of Journey’s eligible accounts receivable.  Advances bear interest on the outstanding daily balance, at a floating rate of 1.0% above the Prime Rate set by EWB.  Interest is due and payable on the last day of the month. The EWB Loan matures on March 31, 2024.

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Journey paid an origination fee of $56,250 on the Closing Date in connection with the issuance of the EWB Loan. In addition, Journey agreed to pay certain third party fees incurred by EWB, as well as legal fees incurred by Journey in connection with the EWB Loan totaling approximately $0.1 million. As of June 30, 2021 fees totaling approximately $0.1 million were recorded as a deferred asset on the condensed consolidated balance sheet. As of June 30, 2021 Journey had no outstanding advances under the EWB Loan.