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 six months ended June 30, 2015 LSQ has purchased $1,248,138 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 June 30, 2015 LSQ had disbursed $715,787 of funds, less applicable fees, in excess of receivables that it had collected. This amount is credited as a liability until collection of the invoices by LSQ is complete. As of June 30, 2015, the balance of this account is $5,177.