Related-party Transactions | 9 Months Ended |
Jun. 30, 2014 |
Notes to Financial Statements | ' |
(18) Related-party Transactions | ' |
The Company entered into transactions with certain related parties during the nine months ended June 30, 2014. These transactions consist largely of financing transactions and service arrangements. All transactions with related parties are reviewed in advance and approved by the independent members of the Company’s Board of Directors. |
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Loan Agreement |
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On February 1, 2013, the Company entered into a loan agreement with Sapinda Asia (the “Loan”), a significant shareholder. Under the agreement, the Company may borrow up to $1,200,000 at an interest rate stated at three percent per annum for unused funds and 10% per annum for borrowed funds. On October 24, 2013 the Company drew down $1,200,000 for use in a performance bond required under a sales contract with an international customer. As of June 30, 2014, the Company owed $1,200,000 of principal and $79,550 of accrued interest on the Loan. The Loan initially matured on June 30, 2014; however, subsequent to June 30, 2014, the parties agreed to extend the note to the new maturity date of December 31, 2015 (see note 24 below). |
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Related-Party Promissory Note |
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On November 19, 2013, the Company borrowed $1,500,000 from Sapinda Asia, a significant shareholder. The unsecured note bears interest at a rate of 8% per annum and initially matured on November 18, 2014. Subsequent to June 30, 2014, the parties agreed to extend the note which now matures on November 19, 2015(see note 24 below). As of June 30, 2014, the Company owed $1,500,000 of principal and $43,726 of accrued interest on the note. |
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Related-Party Service Agreement |
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During the fiscal year ended September 30, 2013, the Company entered into an agreement with Paranet Solutions, LLC (“Paranet”) to provide certain (“IT”) services including (1) procurement of hardware and software necessary to ensure vital backup and disaster recovery services; and (2) security services of all data and the integrity of such data against all loss of data, misappropriation of data, by its employees and affiliates. During the nine months ended June 30, 2014 and 2013, Paranet invoiced the Company $404,885 and $13,052, respectively for computer equipment and services. David S. Boone, a Director and member of the Company’s Executive Committee, is also the Chief Executive Officer of Paranet. |
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Facility Agreement |
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On January 3, 2014, the Company entered into a loan agreement (“Facility Agreement”) with Tetra House Pte. Ltd. (“Tetra House”) to provide unsecured debt financing to the Company for acquisitions and working capital. In consideration of the Facility Agreement, the Company paid Tetra House an arrangement fee equal to 3% of the aggregate maximum amount under the Facility Agreement or $750,000. Tetra House is a private company incorporated under the laws of the Republic of Singapore and is controlled by Mr. Guy Dubois who is a director and member of the Company’s Executive Committee, and currently serves as the Chairman of the Company’s Board of Directors. Under this agreement, the Company may borrow up to $25,000,000, through May 31, 2014. On May 30, 2014, the parties amended the Facility Agreement such that the Company could borrow the remaining principal balance available under the Facility Agreement up to June 30, 2014. Borrowed amounts under the Facility Agreement bear interest at a rate of 8% per annum and interest is payable in arrears semi-annually. All outstanding principal under the Facility Agreement, together with accrued and unpaid interest, is due and payable on January 3, 2016. The Company may prepay, without penalty, in minimum amounts of $1,000,000, the borrowed amounts. |
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On January 14, 2014 the Company was informed that Tetra House had assigned all of its rights and interests in the Facility Agreement to Conrent Invest, S.A. Safety II (“Safety”), a securitization company established under the Luxembourg Law of 22 March 2004. Conrent Invest, S.A. Safety II is not a related party. As of June 30, 2014, the Company had borrowed $10,000,000 of principal and $168,767 of interest had accrued on the Facility Agreement, which amounts are due and payable on January 3, 2016. As of June 30, 2014, the Company had received proceeds totaling $14 million from this loan agreement. |
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On June 10, 2014 the Company submitted a utilization request under the amended Facility Agreement to Safety requesting the remaining $10,000,000. On August 13, 2014 Safety provided $6,000,000 to the Company. The balance of $4,000,000 is expected to be funded within 30 days. While the funding of this utilization request is a technical default by Safety under the terms of the Facility Agreement; the Company and Safety are working together to remedy the default. The Company is realizing $2,500 per day and an interest benefit which will offset accumulated interest owed to Safety under the Facility Agreement. Management expects this matter to be resolved within 30 days and the delayed funding will not materially affect operations of the Company. |
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Summary of All Related-Party Debt |
| | June 30, | | | September 30, | |
2014 | 2013 |
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Loan from a significant shareholder with an interest rate of 8% per annum. Principal and interest due at maturity on December 30, 2015. | | $ | 1,200,000 | | | $ | - | |
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Promissory note with a significant shareholder with an interest rate of 8% per annum. Principal and interest due at maturity on November 19, 2015. | | | 1,500,000 | | | | - | |
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Convertible debenture of $16,700,000 from a significant shareholder with an interest rate of 8% per annum. On September 30, 2013, $16,640,000 plus accrued interest of $936,627 was converted into 3,905,917 shares of common stock and in October 2013, the Company paid $60,000 in cash to pay off the debenture. | | | - | | | | 60,000 | |
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Total related-party debt obligations | | | 2,700,000 | | | | 60,000 | |
Less current portion | | | - | | | | (60,000 | ) |
Long-term debt, net of current portion | | $ | 2,700,000 | | | $ | - | |
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