NOTE 11 – FACTORING AND SECURITY AGREEMENT

On February 20, 2015, the Company executed a Factoring and Security Agreement with LSQ Funding Group L.C. (“LSQ”) Pursuant to the terms of the agreement LSQ will purchase as absolute owner certain accounts receivable as agreed upon by both parties. LSQ will credit the company’s account the purchase price less applicable fees. During the three months ended March 31, 2015 LSQ has purchased $814,512 of the Company’s receivables. Pursuant to the terms of contract LSQ holds back a 19% reserve on purchased receivables. Once the receivable is collected these funds are released to the company. As of March 31, 2015 LSQ had disbursed $281,637 of funds in excess of receivables that it had collected. This amount is credited as a liability until collection of the invoices by LSQ is complete. Subsequent to March 31, 2015, outstanding invoice totaling $352,795 were collected by LSQ and an additional $388,040 was disbursed to the Company.