Notes Payable

12 Months Ended

Sep. 30, 2022

Notes Payable

Notes Payable

13.     Notes Payable

In September 2019, the Company borrowed $1.0 million with a 5.0% rate of interest related to a multi-year agreement with a customer. See Note 3 Accounts and Long-Term Receivable for the disclosure related to the receivables. This was fully repaid in fiscal year 2022.

In October 2019, the Company borrowed $2.0 million with a 5.1% rate of interest related to a multi-year agreement with a customer. This is the only note payable outstanding as of September 30, 2022.

On April 17, 2021, CSP, Inc. and Modcomp, Inc., its wholly owned subsidiary (collectively, the “Borrowers”) each received a loan in the form of a promissory note from Paragon Bank (“Lender”) in the amounts of $827,000 and $1,353,600, respectively (the “SBA Loans”) under the Paycheck Protection Program (“PPP”), which was established under the recently enacted Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) administered by the U.S. Small Business Administration (“SBA”). The SBA Loans have a two-year term and carry an annual fixed interest rate of 1%.

The SBA Loans provided for customary events of default, including, among others, those relating to failure to make payment, bankruptcy, materially false or misleading representations to Lender or SBA, and adverse changes in the financial condition or business operations that Lender believed could materially affect Borrowers’ ability to pay the SBA Loans. The Borrowers did not provide any collateral or guarantees for the SBA Loans and the Borrowers could prepay the principal of the SBA Loans at any time without penalty.

The Borrowers applied to the Lender for forgiveness of an amount due on the SBA Loans in an amount equal to the sum of certain costs during the 24 week period beginning on the date of the first disbursement of the SBA Loans. The amount of SBA Loans forgiveness was calculated in accordance with the requirements of the PPP, including provisions of Section 1106 of the CARES Act. We used the SBA Loans proceeds in accordance with the applicable SBA guidelines. In November 2021 the SBA Loans were formally forgiven. The $2.2 million gain is presented on the Consolidated Statement of Operations as Gain on forgiveness of debt for the year ended September 30, 2021.

Interest expense related to the notes for the years ended September 30, 2022 and 2021 was $50 thousand and $87 thousand, respectively. Below are details of the notes payable.

Fiscal year ending September 30:	(Amounts in thousands)
2023	$	449
2024		449
Total		898
Less: note discount		22
Total	$	876

	September 30, 2022		September 30, 2021
	(Amounts in thousands)
Current	$	449	$	808
Less: notes discount		22		51
Notes payable - current portion	$	427	$	757
Noncurrent	$	449	$	897
Less: notes discount		—		21
Notes payable - noncurrent portion	$	449	$	876