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Craig A. Smith & Associate, Inc. and MPS3D, LLC <br />Notes to Financial Statements <br />Note 6- Note Payable — Officers & Related Parties <br />In 2013 the Company borrowed funds and executed Demand Promissory Notes Payable (Notes) <br />with a related party totaling $185,000. Interest on the Notes is calculated at 5% per annum based <br />on a year of 365 days. During the years ended December 31, 2013 the Company incurred $3,940 <br />of interest expense related to the Notes. <br />During the year ended December 31, 2014, the Company borrowed an additional $15,000 and <br />repaid $112,413 of these Notes. During the year ended December 31, 2014, the Company <br />incurred $8,405 of interest related to these Notes. <br />Note 7 — Commitments and Contingencies <br />Lease Obligation Pavable <br />The Company has several active leases with Bank of the West and Dell Financial Services. As of <br />December 31, 2014 and 2013 the Company had short term lease obligations of $31,744 and <br />$23,717 respectively. As of December 31, 2014 and 2013 the Company also had long term lease <br />obligations of $58,616 and $52,202 respectively. <br />The Company has equipment leases that are non -cancelable and exceed one year. The future <br />minimum annual lease payments are as follows: <br />Year ended December 31, <br />2015 $ 36,550 <br />2016 35,580 <br />2017 23,638 <br />2018 2,762 <br />$ 98,530 <br />Interest expense relating to the lease obligation payable was $4,333 and $3,771 for the years <br />ended December 31, 2014 and 2013, respectively. <br />Office Lease <br />The Company's current offices are located at 7777 Glades Road, Boca Raton, Florida. On March <br />29, 2013 the Company signed a second amendment to its lease which extended the lease for five <br />years with a commencement date of November 1, 2013 and a term date of October 31, 2018. <br />The Company's base rent was reduced to $11,952 per month with an annual 3% escalation rate <br />and a 6.0% sales tax rate. The Company also incurs monthly operating expenses which are <br />approximately $8,300 and are also subject to annual adjustment and the 6.0% sales tax rate. <br />Future minimum annual payments under these lease agreements are as follows: <br />Year ended December 31, <br />2015 $ <br />254,750 <br />2016 <br />251,861 <br />2017 <br />255,134 <br />2018 <br />216,073 <br />$ 976,398 <br />- 11- <br />76 <br />