Debt

12 Months Ended

Dec. 31, 2020

Debt consisted of the following (in thousands):


	December 31,
	2020		2019
SVB Loan Principal	$	—	$	5,609
PPP Loan Principal	2,417		—
Total Loan Principal	2,417		5,609
Less: Unamortized SVB debt discount	—		(102)
Net carrying value	2,417		5,507
Less: SVB current maturities, net of debt discount	—		2,664
Less: PPP current maturities	2,014		—
Total current maturities, net of debt discount	2,014		2,664
Long-term SVB obligations, net of current maturities and debt discount	—		2,843
Long-term PPP obligations, net of current maturities	403		—
Total long-term obligations, net of current maturities and debt discount	$	403	$	2,843

Silicon Valley Bank Loan Agreement and Warrant

On October 1, 2019, in connection with the Acquisition of Oblong Industries, the Company and Oblong Industries, as borrowers, and SVB, as lender, executed an amendment to the SVB Loan Agreement. The SVB Loan Agreement provided for a term loan facility of approximately $5,247,000, and a discount of $362,000, for a total liability of $5,609,000 (the “SVB Loan”), all of which was outstanding at December 31, 2019. The Loan had a maturity date of March 1, 2022 with monthly payments of $291,500 (plus accrued and unpaid interest) to begin on October 1, 2020. The SVB Loan accrued interest at a rate equal to the Prime Rate plus 425 basis points (for a total of 7.50% as of September 30, 2020).

In connection with its execution of the amended SVB Loan Agreement on October 1, 2019, the Company issued a warrant to SVB that entitles SVB to purchase 72,394 shares of the Company’s common stock at an exercise price of $0.01 per share (the “SVB Warrant”). The SVB Warrant has a ten (10) year term. The fair value of the SVB Warrant was recorded to additional paid-in capital and was determined to be $72,000 using the Black-Scholes model. The debt discount associated with the SVB Loan was being amortized to interest expense using the effective interest method over the term of the debt. During the year ended December 31, 2020, the Company amortized $83,000 of the debt discount, which is recorded in “Interest and other expense, Net” on our Consolidated Statements of Operations, and $47,000 of the discount was forgiven in the Satisfaction Agreement discussed below.

On October 22, 2020, the Company entered into an agreement (the “Satisfaction Agreement”) with certain of its subsidiaries, Oblong Industries, Inc. and GP Communications, LLC (the “Guarantors”), and SVB as lender, pursuant to which SVB agreed to accept a one-time cash payment of $2,500,000 (the “Satisfaction Payment”) in satisfaction of the Company’s outstanding payment obligations under the SVB Loan Agreement, effective immediately, subject to certain terms and conditions. SVB also agreed to release the security interests and other liens previously granted to or held by SVB as security

for the Company’s obligations under the SVB Loan Agreement, as well as the Guarantors’ guarantees thereof. The Company made the Satisfaction Payment on October 22, 2020. The remaining balance of $3,063,000, net of discount, as well as $54,000 of accrued interest was forgiven and recorded as a “Gain on Extinguishment of Debt” on our Consolidated Statements of Operations. As of December 31, 2020, the Company has no outstanding obligations under the SVB Loan Agreement.

Paycheck Protection Program Loan

On April 10, 2020 (the “Origination Date”), the Company received $2,417,000 in aggregate loan proceeds (the “PPP Loan”) from MidFirst Bank (the “Lender”) pursuant to the Paycheck Protection Program (“PPP”) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The PPP Loan is evidenced by a Promissory Note (the “Note”), dated April 10, 2020, by and between the Company and the Lender. Subject to the terms of the Note, the PPP Loan bears interest at a fixed rate of one percent (1.0%) per annum. Under the terms of the Note, payments of principal and interest are deferred for six months from the origination date. Following the deferral period, the Company will be required to make payments of principal plus interest accrued under the PPP Loan to the Lender in 18 monthly installments based upon an amortization schedule to be determined by the Lender based on the principal balance of the Note outstanding following the deferral period and taking into consideration any portion of the PPP Loan that is forgiven prior to that time. The PPP Loan is unsecured and guaranteed by the U.S. Small Business Administration.

The Paycheck Protection Program provides for forgiveness of up to the full amount borrowed as long as the Company uses the loan proceeds during the 24-week period following disbursement for eligible purposes as described in the CARES Act and related guidance. Under the CARES Act, loan forgiveness is generally available for the sum of documented payroll costs, covered rent payments, covered mortgage interest and covered utilities during the 24-week period. The Company used the majority of the proceeds from the PPP Loan to pay expenses during the applicable period that the Company believes were for eligible purposes; certain reductions in Company payroll costs during this period may reduce the amount of the Note eligible for forgiveness. The Company expects to submit an application to the Lender for forgiveness of the PPP Loan in the second quarter of 2021. There is no guarantee that the Company will receive forgiveness for any fixed amount of any PPP Loan principal received by the Company.

Under the revised rules for the PPP Loan program, the Company will not have to begin principal and interest payments before the date on which the SBA remits the loan forgiveness amount to the Lender (or notifies the Lender that no loan forgiveness is allowed). Following the decision on forgiveness, the Company will be required to pay the Lender equal monthly payments of principal and interest based on the principal amount outstanding on the PPP Loan, plus interest outstanding at the end of the deferment period, and taking into account any reductions in the principal amount due to forgiveness, if any. Interest accrued during the deferment period will be capitalized as principal.

The Company has accounted for the PPP Loan in the same manner as it has for its other loan agreements. Payments that are due within 12 months of balance sheet dates are shown as current liabilities and payments due thereafter are shown as non-current liabilities. We expect our forgiveness application to be processed, and any applicable payments to begin in May 2021. If the Company’s application for forgiveness is approved, the Company will recognize a gain on extinguishment of debt at the time of forgiveness. As of December 31, 2020 the remaining principal balance on the Note is $2,417,000 and $18,000 of interest has been accrued.

Future minimum principal payments are as follows (in thousands):


Future Minimum Principal Payments	PPP Loan1
2021	$	2,014
2022	$	403
	$	2,417

1Future minimum payments is based on the repayment beginning in May 2021.

The Note provides for customary events of default including, among other things, failure to make any payment when due, cross-defaults under any loan documents with the Lender, certain cross-defaults under agreements with third parties, inaccuracy of representations and warranties, events of dissolution or insolvency, certain change of control events, and material adverse changes in the Company’s financial condition. If an event of default occurs, the Lender will have the right to accelerate indebtedness under the PPP Loan and/or pursue other remedies available to the Lender at law or in equity.