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11. NOTES PAYABLE, CAPITALIZED LEASES AND LONG TERM DEBT
 6 Months Ended
Mar. 31, 2018
Notes to Financial Statements  
11. NOTES PAYABLE, CAPITALIZED LEASES AND LONG TERM DEBT

Notes payable, capitalized leases and long-term debt as of March 31, 2018 and September 30, 2017 consisted of the following: 

 

    March 31,     September 30,  
    2018     2017  
             
Capital Source Business Finance Group   $ 175,062     $ 365,725  
Note payable to Umpqua Bank     199,935       199,935  
Secured note payable to J3E2A2Z LP - related party     -       600,000  
Total debt     374,997       1,165,660  
Less current portion of long term debt     (374,997 )     (1,165,660 )
Long term debt   $ -     $ -  

 

Capital Source Business Finance Group

 

The Company finances its TransTech operations from operations and a Secured Credit Facility with Capital Source Business Finance Group. Originally entered into on December 9, 2008, TransTech obtained an initial $1,000,000 secured credit facility with Capital Source to fund its operations. On June 6, 2017, TransTech entered into the Fourth Modification to the Loan and Security Agreement. This secured credit facility was renewed until June 12, 2018 with a floor for prime interest of 4.5% (currently 4.5%) plus 2.5%. The eligible borrowing is based on 80% of eligible trade accounts receivable, and is now not to exceed $500,000. The secured credit facility is collateralized by the assets of TransTech, with a guarantee by Visualant, including a security interest in all assets of Visualant. The remaining balance on the accounts receivable line of $175,062 ($253,000 available) as of March 31, 2018 must be repaid by the time the secured credit facility expires on June 12, 2018, or the Company renews by automatic extension for the next successive one year term.

 

Note Payable to Umpqua Bank

 

The Company has a $199,935 Business Loan Agreement with Umpqua Bank. On March 26, 2018, the Umpqua Loan maturity was extended to March 31, 2019 and provides for interest at 4.75% per year. Related to this Umpqua Loan, the Company entered into a demand promissory note for $200,000 on January 10, 2014 with an entity affiliated with Ronald P. Erickson, our Chairman of the Board. This demand promissory note will be effective in case of a default by the Company under the Umpqua Loan. The Company recorded accrued interest of $25,332 as of March 31, 2018.

 

Note Payables to Ronald P. Erickson or J3E2A2Z LP

 

On January 25, 2018, the Company entered into amendments to two demand promissory notes, totaling $600,000 with Mr. Erickson, the Company’s Chief Executive Officer and/or entities in which Mr. Erickson has a beneficial interest. The amendments extend the due date from December 31, 2017 to March 31, 2018 and continue to provide for interest of 3% per annum and a third lien on company assets if not repaid by March 31, 2018 or converted into convertible debentures or equity on terms acceptable to the Holder. On March 16, 2018, the demand promissory notes and accrued interest were converted into convertible notes payable. See Note 10 for additional details.