Debt Obligations

9 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Debt Obligations

On July 14, 2015, we entered into an Amended and Restated Facility Agreement (the “Amended Facility Agreement“) with Conrent Invest S.A. (“Conrent“) to amend certain provisions of the Company’s existing $25.0 million unsecured debt facility. Pursuant to the terms and conditions of the Amended Facility Agreement, effective June 30, 2015, the Company was able to borrow an additional $5.4 million of unsecured debt, which, together with the $25.0 million of unsecured debt previously borrowed under the debt facility, now accrues interest at a rate of 8% per annum and mature on July 31, 2018. The Amended Facility Agreement also provides the Company with a voluntary prepayment option, whereby the Company may pay all amounts borrowed, including all accrued but unpaid interest, prior to the maturity date without any penalty or prepayment fee. In connection with the execution of the Amended Facility Agreement, the Company used the available $5.4 million to pay to Conrent an arrangement fee of $500,000 and $822,222 of accrued but unpaid interest. During the year ended September 30, 2015, the Company received the remaining $4.08 million as working capital.

On September 25, 2015, the Company entered into a Loan Agreement (the “Loan Agreement“) with one of the Company’s related parties, Sapinda Asia Limited (“Sapinda“) to provide the Company with a $5.0 million line of credit that accrues interest at a rate of 3% per annum for undrawn funds, and 8% per annum for borrowed funds. Pursuant to the terms and conditions of the Loan Agreement, available funds may be drawn down at the Company’s request at any time until the Loan Agreement matures on September 30, 2017 (the “Maturity Date“), when all borrowed funds, plus all accrued but unpaid interest will become due and payable. The Company, however, may elect to satisfy any outstanding obligations under the Loan Agreement prior to the Maturity Date without penalties or fees. The Company drew $1,399,644 of this line of credit during the nine months ended June 30, 2016.

On February 8, 2016 the Company submitted, under the terms of the Loan Agreement, to Sapinda a second Notice of Borrowing in the amount of $2.0 million, with a funding date of February 26, 2016.  As of June 30, 2016 Sapinda had failed to fund the $2.0 million.  Under the terms of the Loan Agreement Sapinda incurs a penalty of $1,000 per day beginning on the third calendar day from the date specified for funding under the Notice of Borrowing.  As of June 30, 2016 Sapinda has incurred penalties of $210,000. The penalty has been treated as a gain contingency and has therefore not been reflected in the financial statements as of June 30, 2016. Subsequent to June 30, 2016, the Company received $2.0 million requested under a Related-Party Loan Agreement from Sapinda Asia Limited on July 14, 2016 (See Notes 17 and 18).

On May 1, 2016, the Company entered into an unsecured Loan Agreement with Conrent Invest, acting with respect to its Compartment Safety III (the “Conrent Loan Agreement”).  Under the Conrent Loan Agreement, the Company can borrow $5.0 million for working capital, repayment of debt, and operating purposes.  When funded, the unsecured loan will bear interest at a rate of 8% per annum, payable in arrears semi-annually, with all principal and accrued unpaid interest due on July 31, 2018.  In addition, the Company anticipates paying the lender an arrangement fee of $112,500 when it receives proceeds from this loan. As of June 30, 2016, the Company had not received the funds under this Loan Agreement.

Table of Contents

Debt obligations as of June 30, 2016 and September 30, 2015, respectively, are comprised of the following: 

	June 30,			September 30,
	2016			2015
Unsecured facility agreement with an entity whereby, as of June 30, 2015, the Company may borrow up to $30.4 million bearing interest at a rate of 8% per annum, payable in arrears semi-annually,with all principal and accrued and unpaid interest due on July 31, 2018. A $1.2M origination fee was paid and recorded as a debt discount and will be amortized as interest expense over the term of the loan. The remaining debt discount was $464,527 and $631,757 at June 30, 2016 and September 30, 2015, respectively.	$	29,935,473		$	29,768,242
Loan Agreement whereby the Company can borrow up to $5 million at 8% per annum on borrowed funds maturing on September 30, 2017.	$	1,399,644			-
The Company entered into an agreement whereby the Company was granted a non-exclusive, irrevocable, perpetual and royalty-free license to certain patents with an entity. The Company agreed to pay $4,500,000 over two years or $187,500 per month through February 2016.		-			937,500
Capital leases of office equipment with effective interest rates ranging from 9%-12%. Leases mature on various dates between November 2017 and August 2019.		20,048			24,754
Non-interest bearing notes payable to a governmental agency assumed in conjunction with the G2 acquisition.		199,488			254,917
Total debt obligations	$	31,554,653		$	30,985,414
Less current portion		(69,494	)		(796,225	)
Long-term portion of related party debt		-			-
Long-term debt, net of current portion	$	31,485,159		$	30,189,188

The following table summarizes the Company’s future maturities of debt obligations, net of the amortization of debt discounts as of June 30, 2016:

Fiscal Year	Total
2016	$	22,795
2017		1,469,139
2018		30,453,750
2019		42,503
2020 & thereafter		30,993
Debt discount		(464,527	)
Total	$	31,554,653

In connection with the TGA Acquisition, as described in Note 8 above, the Company assumed three notes payable to the Atlantic Canada Opportunities Agency (“ACOA“). The notes are non-interest bearing and are payable in monthly increments ranging from $3,125 to $4,125.