NOTES PAYABLE

12 Months Ended

Sep. 30, 2016

NOTES PAYABLE [Abstract]

NOTES PAYABLE

NOTE 10: NOTES PAYABLE

On November 1, 2014, the Company’s subsidiary entered into a Loan Modification Agreement with Aton, a related party to the Company, to borrow an additional $2,475,000 for a total loan amount of $14,963,861 which includes accrued interest of $677,836. In addition, the maturity date was extended from December 31, 2015 to December 31, 2016 and the ability of the Company to pay interest in shares of the Company’s common stock was terminated. On December 31, 2016, the Company renewed the note and extended the maturity date to December 31, 2017. As the note was renewed on a long term basis, the loan has been reclassified from current liabilities to long term liabilities at September 30, 2016.

Arkanova evaluated the November 1, 2014 modification under the guidance found in ASC 470-50 and ASC 470-60 and determined that the carrying value of the 2013 Note did not exceed the total future cash payments of the 2014 Note and that the notes were not substantially different. As a result, it was concluded that the revised terms constituted a debt modification rather than a debt extinguishment and no gain or loss was recorded.

On June 25, 2013, the Company entered into a loan agreement in the amount of $79,300 to purchase equipment. The loan bears interest at 3.95% and is to be repaid in 48 equal monthly installments commencing July 28, 2013. During the year ended September 30, 2016, the Company repaid a principal amount of $20,407 (2015 – $18,860). The balance of the loan is $15,843 at September 30, 2016 (2015 - $36,250).

The following principal payments for notes payable are required:

2017	$	15.843
2018	$	14.963.861