DEBT

In connection with the acquisition of Genasys Spain the Company assumed certain debts of Genasys Spain. The balances of the acquired debt consist of loans with governmental agencies as of

September 30, 2019.

Loans with governmental agencies represent interest free loans granted by ministries within Spain for the purpose of stimulating economic development and promoting research and development. Loans with governmental agencies as of

September 30, 2019

are as follows:

Agency	Due Date	Principal
Ministry of Economy and Competitiveness	February 2, 2022		49,355
Ministry of Economy and Competitiveness	February 2, 2024		263,136	(a)
		$	312,491

(a)

This loan is secured by

$263,136

of cash pledged as collateral by Genasys Spain, which is the current balance of the loan. This amount represents

66.6%

of the original principal received. This amount is included in restricted cash at

September 30, 2019.

The Company expects the Ministry of Economy and Competitiveness to declare the terms of the loan satisfied within fiscal year

2020

and that the outstanding balance of the loan will be paid in full during fiscal year

2020.

Accordingly, this has been included in the current portion of notes payable as of

September 30, 2019.

The following is a schedule of future annual payments as of

September 30, 2019:

2020	$	279,588
2021		16,452
2022		16,451
2023		-
Total	$	312,491

As of

September 30, 2019,

the current portion of debt is

$279,588

and the noncurrent portion of debt is

$32,903.