NOTES PAYABLE

Convertible Notes Payable

December

30,

2011,

management entered into a Convertible Loan Agreement (“Convertible Loan”) with Roundball, LLC (“Roundball”). The Convertible Loan provides approximately

$467,000

of liquidity to meet on-going working capital requirements of the Company and allows

$250,000

of borrowing on the agreement at the Company's discretion at an interest rate of

0.25%.

Roundball, a major shareholder of the Company, is an affiliate of Steven Rosen and Matthew Crawford, Directors of the Company.

There have been several amendments to the original agreement over the years for the purpose of extending the existing terms of the Convertible Loan. On

December

20,

2016,

management entered into Amendment No.

of the Convertible Loan Agreement with Roundball. The amended Convertible Loan:

●

Continues to provide approximately

$467,000

of liquidity to meet on going working capital requirements;

●

Continues to allow

$250,000

of borrowing on the agreement at the Company's discretion at an interest rate of

0.34%;

and

●

Extends the due date of the loan agreement from

December

30,

2016

December

30,

2017.

The outstanding balance on the Convertible Loan as of

December

31,

2016,

and

September

30,

2016

200,000

As part of the Convertible Loan Agreement between the Company and Roundball, the parties entered into a Warrant Agreement, dated

December

30,

2012,

whereby the Company issued a warrant to Roundball to purchase, at its option, up to

100,000

shares of Class A Common Stock of the Company at an exercise price of

$2.50

per share, subject to certain anti-dilution and other adjustments. The warrant agreement, as amended, expires

December

30,

2017.

Short-Term Financing

June

2016,

management entered into an unsecured revolving credit agreement with First Francis Company Inc. First Francis Company Inc., became a major shareholder of the Company on

July

2016

when the Company completed the acquisition of Federal Hose Manufacturing Company, LLC. The agreement provides for a revolving credit facility of

$250,000

with interest at

4.0%

per annum and is unsecured. Each loan made under the credit arrangement will be due and payable in full on the expiration date of the revolver note. In addition, the agreement generally allows for borrowing based on an amount equal to

eighty

percent of eligible accounts receivables or

$250,000.

The revolving line of credit expires on

May

31,

2017.

The Company had

$250,000

outstanding borrowings on the credit facility at

September

30,

2016.

December

31,

2016,

the outstanding balance was

$0.

Notes Payable – Related Party

Notes payable - related parties is a result of the acquisition of a business on

July

2016

and consists of the following:

	Current December 31, 2016		Total December 31 , 2016		Total September 30 , 2016
In connection with the acquisition, the Company entered into a promissory note on July 1, 2016 for $2,000,000 loan due to First Francis Company, payable in quarterly installments of $60,911 beginning on October 31, 2016, bearing interest at 4%. The remaining balance of the note shall be payable in full on July 1, 2022. Collateralized by all of the assets of the Company.	$	167,507	$	1,965,730	$	2,000,000

In connection with the acquisition, the Company entered into a promissory note on July 1, 2016 for $2,768,662 loan due to First Francis Company, payable in quarterly installments of $84,321 beginning on October 31, 2016, bearing interest at 4%. The remaining balance of the note shall be payable in full on July 1, 2022. Collateralized by all of the assets of the Company.		231,886		2,721,221		2,768,662

	$	399,393		4,686,951		4,768,662

Less current portion				399,393		379,761

			$	4,287,558	$	4,388,901