Equity Method Investment and Note Receivable	3 Months Ended
Dec. 31, 2022
Equity Method Investment And Note Receivable
Equity Method Investment and Note Receivable	10. Equity Method Investment and Note Receivable Hyla US Holdco Limited Effective August 31, 2022, the Company closed the transactions (the “Hyla Transaction Closing Date”) contemplated by a Control Acquisition Agreement (the “Hyla Acquisition Agreement”) with HYLA UK Holdco Limited, a United Kingdom limited company (the “Seller”). Pursuant to the terms of the Hyla Acquisition Agreement, we purchased (the “Hyla Transaction”) 51% of the issued and outstanding capital stock of Hyla US Holdco Limited, a Delaware corporation (“Hyla”), a wholly-owned operating subsidiary of the Seller. We issued to the Seller 4,878,049 shares of our newly constituted Series H Convertible Preferred Stock (the “Hyla Series H Preferred”). We valued those shares at an aggregate of $2,000,000, which was based upon an as-converted-into-our Common Stock value of $0.041 per share. The per-share price was the closing price of our Common Stock, par value $0.0001 per share (our “Common Stock”), as reported by the OTC Markets Group Inc. (the “OTCM”), on August 19, 2022, the date on which certain of the initial set of Hyla Transaction-related draft documents were circulated for signature. As of September 30, 2022, the Company did not control Hyla and recorded an equity method investment for $2,000,000 at December 31, 2022 and September 30, 2022. Additionally, as part of the Hyla Acquisition Agreement, when the Company establishes control of Hyla, the Company is obligated to pay to the Seller a Self-financing Promissory Note (our “Self-financing Note”) with a term of up to nine years. The initial principal balance of the Self-financing Note is $8,000,000 and it bears interest at an annual simple interest rate of 3.15%, which is the Internal Revenue Service’s August 2022 Applicable Federal Rate for promissory notes with terms from three to nine years. Upon an Event of Default (as such term is defined in the Self-financing Note), the interest rate will increase to 6.3% per annum until such Event of Default has been cured or the debt has been paid in full. Under the Note, the Company will be obligated to make payments of principal and interest on a quarterly basis, in arrears (each, a “Quarterly Payment”). The amount of principal and interest due to the Seller for each of our Quarterly Payments is calculated pursuant to a formula set forth in the Self-financing Note, the components of which are derived from a matrix that consists of Hyla’s quarterly gross sales revenues and its gross sales margin. Each Quarterly Payment shall, at the option of the Seller, be paid either in cash or through the issuance of shares of our Common Stock. The pricing of those shares will be determined by the volume weighted average price of our Common Stock as of the last business day of the relevant quarter. The Self-financing Note is subject to an “ownership limitation” such that the Seller cannot request that it be issued shares of our Common Stock as payment if such issuance would result in the Seller holding more than 4.99% of the then-issued and outstanding shares of our Common Stock (a “Conversion or Exercise Blocker”). We may pre-pay our Self-financing Note in whole or in part at any time without premium or penalty. In connection with the Hyla Transaction, Hyla and we entered into an Intercompany Services Agreement (the “Hyla ISA”), pursuant to the provisions of which, we agreed to provide to Hyla certain human resources, marketing, information technology, and other administrative services that are necessary to support its business. We will invoice Hyla on a monthly basis for our performance of the services thereunder, and for which Hyla will pay us in accordance with the provisions of the HYLA ISA. The initial term of the Hyla ISA is nine years and it is subject to renewal for successive 12-month periods. In connection with the Hyla ISA, Hyla issued to us its two-year Promissory Note in the principal amount of $1,500,000, which accrues interest at the rate of 10% per annum (“Hyla’s ISA Note”). Principal and interest payments thereunder are due and payable monthly. Upon an Event of Default (as such term is defined in Hyla’s ISA Note), the interest rate increases to 18% per annum until such Event of Default has been cured or the debt has been paid in full. The principal amount is due and payable on or before August 31, 2024.

Equity Method Investment and Note Receivable

3 Months Ended

Dec. 31, 2022

Equity Method Investment And Note Receivable

Equity Method Investment and Note Receivable

10. Equity Method Investment and Note Receivable

Hyla US Holdco Limited

Effective August 31, 2022, the Company closed the transactions (the “Hyla Transaction Closing Date”) contemplated by a Control Acquisition Agreement (the “Hyla Acquisition Agreement”) with HYLA UK Holdco Limited, a United Kingdom limited company (the “Seller”). Pursuant to the terms of the Hyla Acquisition Agreement, we purchased (the “Hyla Transaction”) 51% of the issued and outstanding capital stock of Hyla US Holdco Limited, a Delaware corporation (“Hyla”), a wholly-owned operating subsidiary of the Seller.

We issued to the Seller 4,878,049 shares of our newly constituted Series H Convertible Preferred Stock (the “Hyla Series H Preferred”). We valued those shares at an aggregate of $2,000,000, which was based upon an as-converted-into-our Common Stock value of $0.041 per share. The per-share price was the closing price of our Common Stock, par value $0.0001 per share (our “Common Stock”), as reported by the OTC Markets Group Inc. (the “OTCM”), on August 19, 2022, the date on which certain of the initial set of Hyla Transaction-related draft documents were circulated for signature.

As of September 30, 2022, the Company did not control Hyla and recorded an equity method investment for $2,000,000 at December 31, 2022 and September 30, 2022.

Additionally, as part of the Hyla Acquisition Agreement, when the Company establishes control of Hyla, the Company is obligated to pay to the Seller a Self-financing Promissory Note (our “Self-financing Note”) with a term of up to nine years. The initial principal balance of the Self-financing Note is $8,000,000 and it bears interest at an annual simple interest rate of 3.15%, which is the Internal Revenue Service’s August 2022 Applicable Federal Rate for promissory notes with terms from three to nine years. Upon an Event of Default (as such term is defined in the Self-financing Note), the interest rate will increase to 6.3% per annum until such Event of Default has been cured or the debt has been paid in full. Under the Note, the Company will be obligated to make payments of principal and interest on a quarterly basis, in arrears (each, a “Quarterly Payment”). The amount of principal and interest due to the Seller for each of our Quarterly Payments is calculated pursuant to a formula set forth in the Self-financing Note, the components of which are derived from a matrix that consists of Hyla’s quarterly gross sales revenues and its gross sales margin. Each Quarterly Payment shall, at the option of the Seller, be paid either in cash or through the issuance of shares of our Common Stock. The pricing of those shares will be determined by the volume weighted average price of our Common Stock as of the last business day of the relevant quarter. The Self-financing Note is subject to an “ownership limitation” such that the Seller cannot request that it be issued shares of our Common Stock as payment if such issuance would result in the Seller holding more than 4.99% of the then-issued and outstanding shares of our Common Stock (a “Conversion or Exercise Blocker”). We may pre-pay our Self-financing Note in whole or in part at any time without premium or penalty.

In connection with the Hyla Transaction, Hyla and we entered into an Intercompany Services Agreement (the “Hyla ISA”), pursuant to the provisions of which, we agreed to provide to Hyla certain human resources, marketing, information technology, and other administrative services that are necessary to support its business. We will invoice Hyla on a monthly basis for our performance of the services thereunder, and for which Hyla will pay us in accordance with the provisions of the HYLA ISA. The initial term of the Hyla ISA is nine years and it is subject to renewal for successive 12-month periods.

In connection with the Hyla ISA, Hyla issued to us its two-year Promissory Note in the principal amount of $1,500,000, which accrues interest at the rate of 10% per annum (“Hyla’s ISA Note”). Principal and interest payments thereunder are due and payable monthly. Upon an Event of Default (as such term is defined in Hyla’s ISA Note), the interest rate increases to 18% per annum until such Event of Default has been cured or the debt has been paid in full. The principal amount is due and payable on or before August 31, 2024.