Note F - Notes Payable

6 Months Ended

Jun. 30, 2014

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

NOTE F — NOTES PAYABLE

As of June 30, 2014 and December 31, 2013, notes payable consists of the following:

	June 30,		December 31,
	2014		2013
Copy Machine (1)	$	3,000	$	3,000
Engineering Design Software (2)		2,000		14,000
Test Equipment and Supplies (3)		0		27,000
Automobile (4)		7,000		10,000
	$	12,000	$	54,000

(1)

In November 2010, we entered into a capital lease for a copy machine over a 5 year term, with a fair market value buyout. The capitalized value of the lease was approximately $8,900, and the monthly payment is approximately $170 with an implicit interest rate of approximately 5.3%. At December 31, 2013, the outstanding balance on this note was approximately $3,000, of which $2,000 was classified as a non-current liability. At June 30, 2014, the outstanding balance on this note was approximately $3,000, of which $1,000 was classified as a non-current liability.

(2)

In August 2011, we financed the purchase of engineering design software, along with a one-year maintenance agreement, through a three year loan maturing in August 2014, and collateralized by the software. The total cost of the software and the maintenance agreement was approximately $64,800. The monthly payments are approximately $2,100 per month with an implicit interest rate of approximately 9.6%. At December 31, 2013, the outstanding balance on this note was approximately $14,000, which was classified as a current liability. At June 30, 2014, the outstanding balance on this note was approximately $2,000, which was classified as a current liability.

(3) In April 2012, we financed the purchase of various test equipment, office furniture, and supplies from KBE⁺, Inc. (of which our former chief technology officer is an officer) through a 24 month promissory note for a total amount to be paid of $162,500. Based on an imputed interest rate of approximately 5%, the initial principal of the note was approximately $154,000. The monthly payments are approximately $6,800 per month. At December 31, 2013, the outstanding balance on this related party note was approximately $27,000, which was classified as a current liability. During the second quarter of 2014, this note was fully paid.

(4) In August 2012, we purchased an automobile for $16,600, a vehicle that we had previously been leasing. We financed this purchase with a 36- month promissory note. The interest rate on the loan is approximately 10%, and the payments are approximately $540 per month. At December 31, 2013, the outstanding balance on this note was approximately $10,000, of which $4,000 was classified as a non-current liability. At June 30, 2014, the outstanding balance on this note was approximately $7,000, of which $1,000 was classified as a non-current liability.