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LINES OF CREDIT AND LONG-TERM LIABILITIES

12 Months Ended

Sep. 30, 2023

LINES OF CREDIT AND LONG-TERM LIABILITIES

NOTE 16 – LINES OF CREDIT AND LONG-TERM LIABILITIES

Lines of credit

On January 12, 2023, the Company entered into a standstill agreement with Streeterville Capital, LLC. The lender has agreed to refrain and forbear temporarily from making redemptions under the notes for a period ending on April 12, 2023. In addition, the company has agreed to an increase of the outstanding balance of the note issued on September 30, 2021, for the original amount of $5,755,000 by $148,000, and the outstanding balance of the note issued on February 22, 2022, for the original amount of $9,205,000 by $303,422. The aggregate amount of $451,422 has been recorded as interest expense on the Company’s Consolidated Statement of Operations and Consolidated Statements of Cash Flow.

On February 15, 2023, the Company and Fulton Bank agreed to an amendment to the Master Agreement Regarding Financial Covenants and Financial Deliverables dated September 22, 2020.

On March 3, 2023, the Company and NIL Funding agreed at an amendment to the term loan agreement dated September 18, 2018. This agreement amends the maturity date to December 31, 2024, and amends the interest rate to 11.5%. Additionally, the Company paid $10,000 in fees and made an additional principal payment of $100,000 on March 29, 2023, and is required to make another additional principal payment of $100,000 on or before March 29, 2024. The Company has accounted for this amendment as a debt modification.

On May 3, 2023, the Company and Streeterville Capital, LLC. agreed to an amendment to the note issued on September 30, 2021, for the original amount of $5,755,000. The agreement extends the maturity date to June 30, 2024, in exchange for a fee of 5% of the outstanding balance or approximately $252,912 added to the outstanding balance of the note. The Company has accounted for this amendment as a debt modification.

On April 3, 2023, the Company and SeKureID Solutions Corp., entered into a software license agreement, where the company obtained the right to use source code for its security products in exchange for $1,125,000 payable in (15) fifteen equal monthly installments of $75,000. The current balance of $675,000 is presented on the Consolidated Balance Sheets as of September 30, 2023, under Short-term liabilities, net of unamortized original issue discounts.

On July 1, 2023, as part of the Heisey acquisition, the Company issued a note payable to Heisey Mechanical, Ltd. In the amount of $240,000. This note carries interest of 6% and is payable one year from the date of the note. The current balance of $240,000 is presented on the Consolidated Balance Sheets as of September 30, 2023, under the caption Short-term liabilities, net of unamortized original issue discounts.

On July 1, 2023, as part of the Heisey acquisition, the Company acquired a loan from Fulton Bank in the amount of $2,160,000. The loan carries interest at the Secured Overnight Financing Rate (SOFR) plus 2.8% and matures on July 1, 2030.

On August 30, 2023, the Company acquired a mortgage in the amount of $1,200,000 from Fulton Bank to finance the purchase of the properties formerly owned by Heisey Mechanical Ltd. The mortgage carries interest at the Secured Overnight Financing Rate (SOFR) plus 2.8% and matures on September 30, 2043.

	Interest Rate	Maturity	September 30, 2023			September 30, 2022
Fulton Bank loan $5,250,000 for the purchase of AIS $5,000,000 of the proceeds went to the direct purchase of AIS.	SOFR plus 2.37%(5.35% as of September 30, 2022)	12/15/2022		-			247,284

Fulton Bank loan $400,000 fund equipment for AIS.	SOFR plus 2.37% ( 5.35% as of September 30, 2022)	5/1/2023		-			63,280

Fulton Bank - $360,000 fund equipment for AIS. The Company was in compliance with loan covenants as of June 30, 2023. This loan is secured by certain assets of the Company.	SOFR plus 2.37% (7.68% as of September 30, 2023 and 5.35% as of September 30, 2022).	1/31/2025		108,700			183,839

Fulton Bank mortgage $2,476,000. The Company was in compliance with loan covenants as of September 30, 2023. This loan is secured by the underlying asset.	SOFR plus 2.62% (7.93% on September 30, 2023 and 5.6% as of September 30, 2022).	1/28/2040		2,180,115			2,245,664

Fulton Bank (HEISEY) - mortgage loan; requires monthly principal and interest payments through August 1, 2043 with a final payment of remaining principal on September 1, 2043; The loan is collateralized by 615 Florence Street and 740 Barber Street.	SOFR plus 2.80% per annum (8.11% as of September 30, 2023).	9/30/2043		1,200,000			-

Fulton Bank (HEISEY) - promissory note related to purchase of Heisey; requires 84 monthly principal and interest payments; The note is collateralized by all assets and guaranteed by the Parent; matures in 2030.	SOFR plus 2.8% per annum (8.11% as of September 30, 2023)	7/1/2030		2,122,565			-

Note payable - $439,774. For the purchase of VDI. Payable in two installments on October 26, 2021, and October 26, 2022.	5%	10/26/2022		-			219,370

Note payable - $5,755,000 - Less original issue discount $750,000 and legal fees $5,000, net cash received $5,000,000 Unamortized original issue discount balance of $0 and $250,000, as of September 30, 2023 and September 30, 2022 respectively.	8%	6/30/2024		4,596,589			4,943,929

Note payable - $9,205,000. Less original issue discount $1,200,000 and legal fees $5,000,net cash received $8,000,000. 28,572 shares of common stock valued at $700,400 recognized as additional original issue discount. Unamortized original issue discount balance of $0 and $1,064,778 as of September 30, 2023 and September 30, 2022 respectivly.	8%	8/23/2023		11,243,233			9,738,632

Note Payable - $240,000 For the purchase of Heisey Mechanical, Ltd.	6%	7/1/2024		240,000			-

Term Loan Agreement with NIL Funding Corporation (“NIL”) - $5,600,000 The Company was in compliance with loan covenants as of September 30, 2023.	11.50%	12/31/2024		1,979,743			2,804,743

Paycheck Protection Program loan - $121,400 - The issuing bank determined that this loan qualifies for loan forgiveness; however the Company is awaiting final approval from the Small Business Administration.	1%	5/5/2025		91,114			121,400

Software License Agreement - $1,125,000, for the purchase of software source code for use in our Security segment products	N/A	6/3/2024		675,000			-
Total lines of credit and secured liabilities			$	24,437,059		$	20,568,141
Less: Current maturities				(14,507,711	)		(16,894,743	)
Less: Unamortized original issue discount				-			(1,305,778	)
Lines of credit and secured liabilities, Long Term			$	9,929,348		$	2,367,620

Estimated maturities of the Company’s long-term debt over the next 5 years are as follows:

	2024		2025		2026		2027		2028		Thereafter		Total
Fulton Bank - $360,000		80,472		28,228		-		-		-		-	$	108,700
Fulton Bank - $2.16 Mil		241,053		262,135		284,544		308,869		335,063		690,901	$	2,122,565
Fulton Bank - Mortgage #1		66,931		73,009		85,701		92,430		100,563		1,761,481	$	2,180,115
Fulton Bank - Mortgage #2		23,882		26,792		29,087		31,578		34,030		1,054,631	$	1,200,000
NIL Funding		1,300,000		679,743		-		-		-		-	$	1,979,743
PPP Loans		40,551		40,551		10,012		-		-		-	$	91,114
Notes Payable		12,079,822		4,000,000		-		-		-		-	$	16,079,822
Software License Agreement		675,000		-		-		-		-		-	$	675,000
TOTAL	$	14,507,711	$	5,110,458	$	409,344	$	432,877	$	469,656	$	3,507,013	$	24,437,059