5.  NOTES PAYABLE:

Unsecured Notes Payable - The Company issued senior unsecured notes payable totaling $90,000 on December 11, 2013.  The notes bear interest at a rate of 12% per annum.  Interest is payable monthly on the first day of each month.  The principal amount and all then-accrued and unpaid interest is payable on June 11, 2014.

Interest on the unsecured notes payable totaling $562 was outstanding at December 31, 2013. 

Senior Secured Notes Payable - The Company issued senior secured promissory notes totaling $1,000,000 on May 22, 2013. The notes bear interest at a rate of 12% per annum and is payable monthly on the first day of each month.  The entire principal balance and all accrued interest were due September 15, 2013. In August, principal in the amount of $749,982 was retired through the issuance of Series D preferred shares.  On September 15^th the remaining principal in the amount of $250,018 and accrued interest was paid in full.

Senior Subordinated Note Payable - The Company issued a senior subordinated note payable in the amount of $1,000,000 on April 15, 2011 to Richard Giles, a founder, stockholder and former director of the Company.  The note bears interest at a rate of 6% per annum and matures on April 15, 2014. The holder of the senior subordinated note has agreed to subordinate to the lenders of the senior secured notes his security interest in our assets granted under the Subordinated Security Agreement dated April 15, 2011. Mandatory principal payments of $250,000 each were made on October 15, 2013 and December 15, 2013. As of December 31, 2013, the note was subject to mandatory principal payments of $250,000 on February 15, 2014 and April 15, 2014.  The required principal payment of $250,000 was made on February 15, 2014.

Interest on the senior subordinated note payable totaling $1,250 and $2,630 was outstanding at December 31, 2013 and 2012, respectively.  See Note 13 for further discussion of the Senior Subordinated Note Payable.

Loan Payable - In September 2012, the Company financed the purchase of equipment used for transport and demonstration of our equipment.  The note, in the original amount of $142,290, bears interest at a rate of 2.6% per annum and matures on September 4, 2017.  In August 2013, the Company financed the purchase of a truck to transport our equipment used in demonstrations.  The loan, in the amount of $83,507, bears interest at a rate of 6.1% per annum and matures on December 1, 2018.

As of December 31, 2013, the loans are subject to mandatory principal payments as follows: