COST METHOD INVESTMENTS

6 Months Ended

Jun. 30, 2016

COST METHOD INVESTMENTS

COST METHOD INVESTMENTS

NOTE 8 – COST METHOD INVESTMENTS AND NOTE RECEIVABLE

On January 15, 2013, the Company entered into an agreement with AC Kinetics, Inc. ("AC Kinetics") 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 Company's demand into 3% of the outstanding shares of AC Kinetics common stock and have anti-dilution protection.

In addition, the Company and AC Kinetics 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 the 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 would receive a 7% royalty on any licensing revenues received by AC Kinetics for products sold by them.  This royalty agreement would terminate upon receipt by the Company of royalties of $500,000.

The aggregate carrying amount of cost method investments at June 30, 2016 and December 31, 2015 consisted of the following:

	2016		2015
AC Kinetics Series A Convertible Preferred Stock	$	-	$	500,000

On June 8, 2016 the Board of Directors approved a Resolution to accept an offer from AC Kinetics to sell back the 100 shares of AC Kinetics Series A Preferred Stock.  With acceptance of this offer the royalty agreement will also terminate.  For consideration, the Company received a note for $1,500,000 that will be immediately paid to the Company on completion and funding of a Securities Purchase Agreement with a national company to purchase AC Kinetics.  The note is subject to a Subordination Agreement for loans made to AC Kinetics by the national company involved in the Securities Purchase Agreement.  As the note is subject to a subordination agreement, and the Securities Purchase Agreement between the national company and AC Kinetics has not been concluded, the Company has determined a $500,000 fair value of this note at June 30, 2016. As further consideration the Company also, received an option to repurchase 1,666,667 shares of Company Common Stock held by Involve L.L.C. at an exercise price of $.15. The Agreements were signed June 27, 2016 and the option period is the 12-month period between the first option exercise date and the 36-month anniversary of the effective date of the option agreement.