Notes Payable, Long-Term Debt and Other Financing

9 Months Ended

Sep. 30, 2012

Notes to Financial Statements

Note 6. Notes Payable, Long-Term Debt and Other Financing

Notes payable consisted of the following at:

	September 30, 2012			December 31, 2011
Secured note payable to Credit Managers Association of California, bearing interest at prime plus 3% (6.25% as of September 30, 2012), 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 a 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
Secured note payable to a financial institution in the original amount of $38,000, bearing interest at 8.25% per annum, payable in 60 equal monthly installments of principal and interest through February 19, 2014		12,000			18,000
Secured note payable to a financial institution in the original amount of $19,000, bearing interest at 10.50% per annum, payable in 60 equal monthly installments of principal and interest through August 25, 2014		9,000			12,000
Secured note payable to a financial institution in the original amount of $26,000, bearing interest at 7.91% per annum, payable in 60 equal monthly installments of principal and interest through April 9, 2015		14,000			18,000
Secured note payable to a financial institution in the original amount of $25,000, bearing interest at 7.24% per annum, payable in 60 equal monthly installments of principal and interest through March 10, 2016		18,000			22,000
		1,331,000			1,348,000
Less current portion of notes payable		(63,000	)		(62,000	)
Notes payable, net of current portion	$	1,268,000		$	1,286,000

As of September 30, 2012 and December 31, 2011, the balance of long term interest payable with respect to the Credit Managers Association of California note amounted to $1,267,000 and $1,209,000, respectively.  Interest expense on notes payable amounted to $65,000 and $66,000 during the nine months ended September 30, 2012 and 2011, respectively.  Interest expense on notes payable amounted to $22,000 and $22,000 during the three months ended September 30, 2012 and 2011, respectively.