4. Debt AND CAPITAL LEASES:

Note payable with PFGI II, LLC with monthly payments of principal and interest (8.65%, with a 25 year amortization) and a balloon payment of all unpaid principal due on December 31, 2012. The loan is secured by one Real Property Deed of Trust, four Leasehold Deeds of Trust and Security Agreements and Assignment of Rents and Fixture Filings and two Security Agreements and Assignment of Rents and Fixture Filings related to those six corporate restaurants. The promissory note constitutes a line of credit which may be repaid but not re-advanced, at any time.	$1,645,000

Note payable with Wells Fargo Bank, NA with scheduled payments of principal and interest (prime rate less .5%) due monthly, additional principal payments of $7,500 due monthly through January 2012 and the final payment due in November 2014. The loan is secured by four Security Agreements related to the furniture, fixtures and equipment of the four corporate restaurants.	529,000

Capital signage lease with Yesco, LLC with payments of principal and interest (8%) due monthly and the final payment due in August 2016.	90,000

Note payable with Ally Financial with payments of principal and interest (1.9%) due monthly and the final payment due in July 2015. The loan is secured by a 2011 GMC utility van.	31,000
Unamortized note discount related to warrants issued in connection with the above note payable with PFGI II, LLC.	( 33,000 )
	2,262,000
Less current portion	( 195,000 )
Long term portion	$2,067,000

In conjunction with the Wells Fargo Bank term loan, the Company entered into a variable to fixed interest rate swap agreement with Wells Fargo Bank effective May 9, 2007, with a notional amount of $1,100,000, a pay rate of 7.77% and a receive rate based on the bank prime rate less .50%. The swap agreement has an eight-year term and has the effect of normalizing the effective interest rate at 7.77%. As of September 30, 2011, the fair value of the contract was a loss of $57,000. The unrealized loss has been recorded in interest expense.

As of September 30, 2011, principal payments on debt become due as follows:

Years Ending September 30,
2012	$195,000
2013	1,797,000
2014	196,000
2015	55,000
2016	19,000
	$2,262,000

As previously disclosed in the Company’s current report on Form 8-K filed December 17, 2010, we entered into a new Credit and Loan Agreement with Wells Fargo Bank that modified the loan covenants and provided additional collateral to Wells Fargo for the remaining loan balance of $529,000. As of September 30, 2011 we were in compliance with all of the modified loan covenants.

As previously disclosed in the Company’s current report on Form 8-K filed December 9, 2011, we received notice from Wells Fargo Bank, N.A. (the “Bank”) that the Company is currently not in compliance with certain covenants under the Amended and Restated Credit Agreement dated December 10, 2010 (the “Credit Agreement”), including covenants requiring that the Company’s tangible net worth not be less than $2,500,000 at any time and that the Company deliver certain landlord’s disclaimer and consent documents to the Bank. As previously disclosed in the Company’s current report on Form 8-K filed December 27, 2011 we entered into a First Amendment to the Amended Credit Agreement and Waiver of Defaults and a Second Amended and Restated Term Note with Wells Fargo Bank (together, the “Amendments”) that waived the current covenant defaults and modified the loan covenants and note terms. The Amendments are conditioned upon the closing of the sale of the Littleton restaurant described above and provide for a prepayment of $100,000 in principal from the proceeds from the sale of the Littleton, Colorado restaurant, the release of collateral associated with that restaurant, the waiver of certain other collateral requirements, and a revision to the amortization and maturity date of the remaining loan balance as of January 2, 2012 of $349,000 to December 31, 2013. There was no change to the interest rate of the loan.