Notes Payable

12 Months Ended

Dec. 31, 2013

Notes to Financial Statements

Notes Payable

Notes payable at December 31, consisted of the following:

	2013			2012
Secured note payable to Credit Managers Association of California, bearing interest at prime plus 3% (6.25% as of December 31, 2013), 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		—			11,000
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		—			8,000
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
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		—			17,000
		1,278,000			1,328,000
Less current portion of notes payable		(40,000	)		(66,000	)
Notes payable, net of current portion	$	1,238,000		$	1,262,000

As of December 31, 2013 and 2012, the balance of long term interest payable amounted to $1,401,000 and $1,318,000, respectively, of which the Credit Managers Association of California note amounted to $1,365,000 and $1,286,000, respectively. Interest expense on notes payable amounted to approximately $85,000 and $88,000 during the years ended December 31, 2013 and 2012, 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 December 31, 2013.  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 $18,000 for final settlements for the three vehicles, which is included in other accrued liabilities at December 31, 2013.

Future minimum principal payments of notes payable at December 31, 2013 consisted of the following:

Year Ending December 31	Principal Amounts
2014	$	40,000
2015		—
2016		1,238,000
Thereafter		—
Total	$	1,278,000