Notes Payable, Long-Term Debt and Other Financing

9 Months Ended

Sep. 30, 2015

Notes to Financial Statements

Notes Payable, Long-Term Debt and Other Financing

Notes payable consisted of the following at:

	September 30, 2015			December 31, 2014
Secured note payable to Credit Managers Association of California, bearing interest at prime plus 3% (6.25% as of September 30, 2015), and is adjusted annually in April through maturity. Principal and unpaid interest due in April 2016. A sinking fund escrow may be funded with 10% of future equity financing, as defined in the Agreement	$	1,238,000		$	1,238,000
Secured note payable to Coca Cola Enterprises in the original amount of $40,000, bearing interest at 10% per annum. Principal and unpaid interest due on demand		40,000			40,000
		1,278,000			1,278,000
Less current portion of notes payable		(1,278,000	)		(40,000	)
Notes payable, net of current portion	$	-		$	1,238,000

As of September 30, 2015 and December 31, 2014, the balance of interest payable amounted to $1,543,000 and $1,482,000, respectively, of which the Credit Managers Association of California note amounted to $1,500,000 and $1,442,000, respectively. Interest expense on notes payable amounted to approximately $20,000 for the three months ended September 30, 2015 and 2014, respectively. Interest expense on notes payable amounted to approximately $61,000 and $60,000 for the nine months ended September 30, 2014 and 2013, respectively.

     In June 2013, the vehicle that secured the note payable due March 10, 2016 was repossessed by the secured lender. The Company was invoiced by the lender for $8,000 for final settlement, which is included in accounts payable at September 30, 2015 and December 31, 2014, respectively.  In the fourth quarter of 2013, three vehicles that secured notes due on February 19, 2014, August 25, 2014 and April 9, 2015 were repossessed by the secured lenders.  The Company has accrued approximately $17,000 for final settlements for the three vehicles, which is included in other accrued liabilities at September 30, 2015 and December 31, 2014, respectively.