DUE FROM FACTOR

3 Months Ended

Sep. 30, 2015

Due From Factor

DUE FROM FACTOR

NOTE 4. DUE FROM FACTOR

On September 9, 2015, we entered a Loan and Security Agreement (the “Summit Loan”) with Summit Financial Resources LP, (the “Factor”) whereby we can borrow up to $1.0 million against our eligible receivables, as defined in the agreement. Borrowed funds will bear interest at a rate of prime plus 2 percent, and incur an additional administrative fee of 0.7 percent on the monthly average outstanding balance. The Summit Loan has an initial period of 18 months with successive one year renewal options and requires an annual facility fee of $10,000. 

As of September 30, 2015, the total amount of receivables that have been assigned to the Factor pursuant to the Summit Loan is $1.4 million and we bear the risk of loss in the event of non-payment by the customers. During the three months ended September 30, 2015, we borrowed $300,000 under the Summit Loan, which amount was paid in full by September 30, 2015. Therefore, at September 30, 2015, we had no outstanding borrowings against the Summit Loan.