COST METHOD INVESTMENTS

3 Months Ended

Mar. 31, 2014

COST METHOD INVESTMENTS

COST METHOD INVESTMENTS

NOTE 9 – COST METHOD INVESTMENTS

On January 15, 2013, the Company entered into an agreement with AC Kinetics, Inc. to purchase 100 shares of AC Kinetics Series A Preferred Stock for $500,000. These shares carry a liquidation preference in the amount of $500,000, are convertible at the companies demand into 3% of the outstanding shares of AC Kinetics common stock and have anti-dilution protection.

In addition, the Company and AC Kinetics have agreed to cooperate in the development and commercialization of consumer and industrial products to be solely owned by the Company.  AC Kinetics will be the Company’s advanced product developer. AC Kinetics will notify the appropriate technology departments at Massachusetts Institute of Technology (“MIT”) of the Company’s ability and desire to commercialize consumer and industrial products developed in the MIT incubator departments.

The Company and AC Kinetics also entered into a royalty agreement whereby, the Company will receive a 7% Royalty on any licensing revenues received by AC Kinetics for products sold by them.  This royalty agreement will terminate upon receipt by the Company of royalties of $500,000.

The aggregate carrying amount of cost method investments at December 31, 2013 and 2012 consisted of the following:

	2013		2012
AC Kinetics Series A Convertible Preferred Stock	$	500,000	$	0

The company’s investment in AC Kinetics has not been evaluated for impairment.

It was not practicable to estimate fair value of AC Kinetics Series A Convertible Preferred Stock and such an estimate was not made because, during the twelve months ended December 31, 2013, there were no events or changes in circumstances that could have had a significant adverse effect on the fair value of such investments.