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LINES OF CREDIT AND LONG-TERM LIABILITIES

9 Months Ended

Jun. 30, 2023

LINES OF CREDIT AND LONG-TERM LIABILITIES

NOTE 15 – LINES OF CREDIT AND LONG-TERM LIABILITIES

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 Condensed Statement of Operations and Condensed 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 $900,000 is presented on the Condensed Consolidated Balance Sheets as of June 30, 2023, under Short-term liabilities, net of unamortized original issue discounts.

The following table outlines the Company’s lines of credit and secured liabilities.

					June 30,			September 30,
	Interest Rate		Maturity		2023			2022
Fulton Bank line of credit $3,500,000 - The terms of this line of credit are subject to the bank’s review annually on February 1.	Secured Overnight Financing Rate (“SOFR”) plus 2.37% (7.46% as of June 30, 2023 and 5.35% as of September 30, 2022)			N/A	$	-		$	-

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%(7.46% as of June 30, 2023 and 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% (7.46% as of June 30, 2023 and 5.35% as of September 30, 2022)			05-01-2023		-			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% (7.46% as of June 30, 2023 and 5.35% as of September 30, 2022).			01-31-2025		128,086			183,839

Fulton Bank mortgage $2,476,000. The Company was in compliance with loan covenants as of June 30, 2023. This loan is secured by the underlying asset	SOFR plus 2.62% (7.71% as of June 30, 2023 and 5.6% as of September 30, 2022).			01-28-2040		2,195,515			2,245,664

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 June 30, 2023 and September 30, 2022 respectively.	8	%		06-30-2024		4,899,908			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 $105,578 and $1,064,778 as of June 30, 2023 and September 30, 2022 respectivly.	8	%		08-23-2023		10,491,283			9,738,632

Term Loan Agreement with NIL Funding Corporation (“NIL”) - $5,600,000 The Company was in compliance with loan covenants as of June 30, 2023.	11.50	%		12-31-2024		2,179,743			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	%		05-05-2025		101,246			121,400

Software License Agreement - $1,125,000, for the purchase of software source code for use in our Security segment products	N/A			06-03-2024		900,000			-
Total lines of credit and secured liabilities					$	20,895,781		$	20,568,141
Less: Current maturities						(17,185,167	)		(16,894,743	)
Less: Unamortized original issue discount						(105,578	)		(1,305,778	)
Lines of credit and secured liabilities, Long Term					$	3,605,036		$	2,367,620