NOTE 7. NOTES PAYABLE

6 Months Ended

Jun. 30, 2016

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

NOTE 7.  NOTES PAYABLE

On August 29, 2012, we issued Peter Dalrymple, a director of the Company, a $1,000,000 three-year secured promissory note bearing interest at 12% per year.  This promissory note is secured by $3,000,000 in gross accounts receivable.  On the maturity date, one balloon payment of the entire outstanding principal amount plus any accrued and unpaid interest is due.  On August 20, 2014, in connection with a Financing Agreement with Mr. Dalrymple, the promissory note was amended to extend the term by one year to mature on August 29, 2016 and the interest rate was reduced to 6%.  Additionally, $500,000 of advances under the line of credit with Wells Fargo (as described below) was used as payment of principal and interest on the promissory note.  As of June 30, 2016, the note has a principal balance of $500,000.  For the six months ended June 30, 2016 and 2015, we recorded interest expense of $15,000, each period, related to this note. For the three months ended June 30, 2016 and 2015, we recorded $7,500, each period,  in interest expense related to this note.

In June 2013, we extended the maturity date of a $50,000 third party note originally due March 9, 2015 to a maturity date of March 9, 2017 in exchange for warrants to purchase 50,000 shares at $0.45 per share. For the three months ended June 30, 2016 and 2015, we recorded $1,250, each period, in interest expense related to this note. For the six months ended June 30, 2016 and 2015, we recorded $2,500, each period, in interest expense related to this note.

Line of Credit

On September 3, 2015, we entered into a $2,000,000 revolving line of credit agreement with Wells Fargo Bank, N.A. Outstanding principal on the line of credit bears interest at the 30 day London Interbank Offered Rate (“LIBOR”) plus 2%, resulting in an effective rate of 2.44% at June 30, 2016.  The line of credit matures on August 31, 2017 and is personally guaranteed by Peter Dalrymple, a director of the Company. As of June 30, 2016 and December 31, 2015, outstanding borrowings under the line of credit totaled $1,125,000 and $1,145,000, respectively. For the three and six months ended June 30, 2016, we recorded interest expense of $6,447 and $13,127, respectively. There was no interest expense related to this note for the three and six months ended June 30, 2015.