NOTE 6 - COMMITMENTS AND CONTINGENCIES

Legal Proceedings

From time to time, the Company may be subject to various legal proceedings and claims that arise in the ordinary course of the Company’s business activities. The Company is not aware of any claim or litigation, the outcome of which, if determined adversely to the Company, would have a material effect on the Company’s financial position or results of operations.

Obligation Under Operating Lease

On December 2, 2023, and effective on January 1, 2023, the Company signed a two-year lease of 1,145 square feet for our principal offices in Clearwater, Florida. The monthly rent is $2,134 in year one and increases to $2,198 in year two. The lease expires on December 31, 2024. On January 1, 2023, upon adoption of ASC 842, the Company will recognize right-to-use assets as operating leases and operating lease obligations.

On December 1, 2021, the Company signed a one year lease approximately 2,000 square feet for our principal offices in Boca Raton, Florida. The monthly rent is $2,200. The lease expired on November 30, 2023.

Rent expense incurred during the three months ended June 30, 2024 and 2023 was $8,536 and $6,793, respectively.

Rent expense incurred during the nine months ended June 30, 2024 and 2023 was $21,266 and $19,944, respectively.

Revenue and Accounts Receivable Concentration

For the three months ended June 30, 2024, one customer accounted for 27% of the Company’s revenues.

For the nine months ended June 30, 2024, two customer accounted for 22.95% of the Company’s revenues.

For the nine months ended June 30, 2023, one customer accounted for 17.23% of the Company’s revenues.

As of June 30, 2024, no customer accounted for more than 10% of the Company’s total outstanding accounts receivable.

As of September 30, 2023, no customer accounted for more than 10% of the Company’s total outstanding accounts receivable.

Deferred Revenue Concentration

As of June 30, 2024, one customer accounted for more than 16.90% of the Company’s total outstanding deferred revenue.

As of September 30, 2023, no customer accounted for more than 10% of the Company’s total outstanding deferred revenue.

Major Supplier and Sole Manufacturing Source

The Company relies on no major supplier for its products. The Company has contracted with local manufacturing facilities to provide completed circuit boards used in the assembly of its IP gateway devices. Interruption of adequate supply of components, primarily computer chips, to the manufacturing source presents additional risk to the Company. The Company believes that additional commercial facilities exist at competitive rates to match the resources and capabilities of its existing manufacturing source, but the current worldwide shortage of computer chips does limit our ability to supply our proprietary radio gateways to clients and other buyers.

Exclusive Licensing Agreement

On May 5, 2017, the Company entered into an Exclusive Licensing Agreement with Sublicensing Terms (the “Agreement”) with the University of South Florida Research Foundation, Inc. (“USFRF”) relating to an exclusive license of certain patent rights in connection with one of USFRF’s U.S. Patent Applications. Both parties recognize that the research and development work provided by the Company was sufficient for USFRF to enter into the Agreement with the Company.

The Agreement is effective April 25, 2017 and continues until the later of the date that no Licensed Patent remains a pending application or an enforceable patent or the date on which the Licensee’s obligation to pay royalties expires.

The Company agreed to pay USFRF a royalty of 3% for sales of all Licensed Products and Licensed Processes and agreed to pay USFRF minimum royalty payments of $8,000 for fiscal year 2023 and thereafter on the same date, for the life of the agreement.

In the event the Company proposes to sell any Equity Securities, then USFRF will have the right to purchase 5% of the securities issued in such offering on the same terms and conditions are offered to other purchasers in such financing. As of June 30, 2024 and 2023, the Company has recorded $12,010 and $7,640 for the minimum royalty for the fiscal year ended 2024 and 2023.