Notes Payable and Advances-Related Parties

9 Months Ended

Sep. 30, 2011

Notes Payable and Advances-Related Parties

Note 7.              Notes Payable and Advances-Related Parties

Notes payable to unrelated parties consist of:

	September 30,		December 31,
	2011		2010
	(Unaudited)
Asher Enterprises, Inc., $75,000 Convertible Promissory Note issued March 9, 2010; interest rate 8% per annum, due December 10, 2010	$	—	$	56
White, White & Van Etten PC, $68,750 non-interest bearing Promissory Note issued September 30, 2010; payable in eleven equal payments of $6,250; interest imputed at 5% per annum, due August 24, 2011		13		49
Robert Shaw, $25,000 Promissory Note issued September 20, 2001; interest rate 9% per annum, due December 20, 2001		. 15		15
Ventana Medical Systems, Inc. $62,946 Promissory Note issued November 30, 2003; due December 31, 2003; interest rate 8% per annum payable after December 31, 2003		21		21
Xillix Technologies Corporation $361,000 Promissory Note issued June 26, 1998;Interest rate Canadian Prime plus 6% per annum, due December 27, 1999; represents a debt of AccuMed		34		34
	$	83	$	175

In March 2010, the Company received $75,000 in exchange for a Convertible Promissory Note payable to Asher Enterprises, which is convertible into unregistered, restricted common stock at any time. The conversion price is variable and was determined as 58% of the average of the lowest three trading prices during the ten trading day period prior to the conversion notice. In accordance with Financial Accounting Standards Board (“FASB”) guidance related to convertible debt issued with a variable conversion feature, the Company has recorded a discount and derivative liability in the amount of $55,000 equal to the fixed monetary amount known at inception for the conversion option. The discount was amortized over the term of the note using the effective interest method. Upon issuance of the shares to settle the liability, equity will be increased by the amount of the liability and no gain or loss will be recognized on any difference between the fixed monetary amount known at inception and the ending market price. As of June 30, 2011, the Company had reduced the liability and increased equity by approximately $55,000 due to conversions of the entire principal into common stock.

The Company has failed to make principal and interest payments when due and is in breach of certain warranties and representations under the notes included above. Such notes require the holder to notify CCI in writing of a declaration of default at which time a cure period, as specified in each individual note, would commence. CCI has not received any written declarations of default from holders of its remaining outstanding notes payable.

During the nine months ended September 30, 2011, the Company was advanced $555,000 from related parties. These advances are non-interest bearing and are due on demand. However, using an 8% annual interest rate, the Company has recorded a non-cash interest expense totaling approximately $124,000 on the outstanding balance for the nine months ended September 30, 2011. Additional paid-in-capital was increased by the amount of the non-cash interest expense.