LEASES

Operating

Leases

The Company leases

two

facilities including

one

from a related party and certain vehicles and equipment under operating leases expiring through

June 30, 2026.

The Company's minimum commitment under these operating leases is as follows:

	Facility		Equipment

2018	$	588,271	$	74,911
2019		592,353		68,728
2020		596,477		60,214
2021		600,642		6,296
2022		604,848		-
Thereafter		1,283,628		-
Total minimum lease payments	$	4,266,219	$	210,149

Rental expense was

$245,029

and

$48,819

for the

three

months ending

December 31, 2017 and

2016,

respectively,

and

$361,539,

$57,767

and

$11,382

for the fiscal years ending

September 30, 2017,

2016

and

2015,

respectively.

Capital

Leases

	December 31, 2017		September 30, 2017		September 30, 2016

Capital lease obligation on computer equipment and software, payable in monthly installments of $2,059 including interest at approximately 1.04% per annum through December, 2017.	$	-	$	2,059	$	28,828

Capital lease obligation on IT computer equipment and software, payable in monthly installments of $3,888 including interest at approximately 6.57% per annum, through February, 2021.		129,912		139,339		175,538

Capital lease obligation on manufacturing equipment, payable in monthly installments of $891 including interest at approximately 6.99% per annum, through February, 2020.		22,196		24,455		-

Capital lease obligation on IT computer equipment and software, payable in monthly installments of $633 including interest at approximately 10.68% per annum, through July 2019.		10,482		12,072		-
Total capital lease obligations		162,590		177,925		204,366
Less current portion		55,735		56,610		59,369
Capital lease obligations non current portion	$	106,855	$	121,315	$	144,997

Capital Lease Obligations

Year Ending	Total Minimum Lease Payment		Less Amount Representing Interest		Present Value of Minimum Lease Obligation
2018	$	65,142	$	9,407	$	55,735
2019		61,573		6,017		55,556
2020		49,327		1,895		47,432
2021		3,888		21		3,867
2022		-		-		-
	$	179,930	$	17,340	$	162,590

The fixed assets related to the capital leases are as follows:

	December 31, 2017		September 30, 2017		September 30, 2016

Cost	$	255,304	$	304,724	$	247,811
Depreciation		81,577		82,527		27,673
Net Book Value	$	173,727	$	222,197	$	220,138

Commitments and Contingencies

From time to time, the Company is involved in legal matters arising in the ordinary course of business. While the Company believes that such matters are currently

not

material, there can be

assurance that matters arising in the ordinary course of business for which the Company is, or could be, involved in litigation, will

not

have an adverse effect on its business, financial condition or results of operations.