Debt
Debt consisted of the following (in thousands):
| | | | | | | | | | | |
| December 31, |
| 2021 | | 2020 |
| PPP Loan Principal | $ | — | | | $ | 2,417,000 | |
| Less: current portion of long-term debt | — | | | 2,014,000 | |
| Long-term debt, net of current portion | $ | — | | | $ | 403,000 | |
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 was 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 bore interest at a fixed rate of one percent (1.0%) per annum. The PPP Loan was unsecured and guaranteed by the U.S. Small Business Administration.
The PPP provided for forgiveness of up to the full amount borrowed as long as the Company uses the loan proceeds disbursement for eligible purposes as described in the CARES Act and related guidance. On July 28, 2021, the Company received notice that the PPP Loan had been forgiven in its entirety.
As of December 31, 2020, the Company accounted for payments that are due within 12 months of the balance sheet date as current liabilities and payments due thereafter as non-current liabilities. As of December 31, 2021, there is no remaining principal balance or accrued interest on the Note due to the forgiveness of the Note. The Company recognized a gain on debt extinguishment of $2,448,000 during the year ended December 31, 2021, comprised of $2,417,000 of Note principal and $31,000 of accrued interest as of the date of forgiveness. This gain is recorded as a “Gain on extinguishment of debt” in our consolidated Statement of Operations.
About Debt Disclosures
Debt disclosures detail a company's borrowing structure — the types of instruments, interest rates, maturity schedule, and covenant restrictions that define its financial obligations and flexibility. This section is essential for assessing refinancing risk, interest rate exposure, and the margin of safety against financial distress.
Key signals: the maturity schedule reveals concentration risk — large maturities within 1-2 years during tight credit markets can force dilutive refinancing or asset sales. Compare the fair value of debt against carrying amount to gauge whether the market views the company's credit risk differently than the balance sheet suggests. Watch covenant compliance disclosures for tightening cushions, especially leverage and interest coverage ratios. Variable-rate debt exposure quantifies sensitivity to interest rate changes. Secured versus unsecured mix affects recovery rates and future borrowing capacity. Compare net debt-to-EBITDA against industry peers and covenant limits to assess financial health.