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Note 5 - Payment Obligation
12 Months Ended
Sep. 30, 2019
Notes  
Note 5 - Payment Obligation:

NOTE 5 – PAYMENT OBLIGATION:

 

On September 12, 2017, the Company entered into an agreement (the “Payment Agreement”) with a creditor (the “Creditor”) to pay by way of a payment plan an existing obligation of $250,000 (the “Payment Obligation”) related to a potential corporate transaction in 2015 that was not completed. Pursuant to the Payment Agreement, the Company agreed to pay the Payment Obligation to the Creditor, including interest, on or before September 12, 2020. Interest accrues on the unpaid principal amount of the Payment Obligation at the prime rate (5.00% at September 30, 2019), as such rate may change from time to time, plus 3% per annum. The Company agreed to pay the Creditor 5% of the gross proceeds of any funds raised, whether though equity sales, debt offerings, or sales of assets.

 

If the gross proceeds of any equity financing are at least $1 million, then the Company agreed to also commence monthly installment payments of $10,000 until the Payment Obligation is paid. The balance of the Payment Obligation was $178,533 and $198,806 at September 30, 2019 and 2018, respectively.

 

During the year ended September 30, 2019, the Company paid $30,000 including interest of $9,728. At September 30, 2019, an additional cash payment of $52,970 is due to the Creditor, representing 5% of the private placements of $80,000, $160,000 and $269,395 respectively and 5% on the two Senior unsecured notes payable totaling $550,000. That payment when made will be applied first to accrued interest payable and then to principal due under the Payment Agreement.

 

On December 30, 2019, the Company entered into Addendum 1 to the Payment Agreement under which Creditor has agreed to waive a default condition in consideration of a $5,000 fee and a payment of $12,500 relating to the second Senior unsecured note of $250,000. Payment of the remaining $40,470 of delinquent amounts will be paid from the next equity or debt raise in addition to any 5% fee due thereon. The obligation to commence monthly installment payments of $10,000 until the Payment Obligation is paid has not yet been triggered because the Company has not completed a financing with gross proceeds of at least $1 million.