NOTE 3 - ACCOUNTS RECEIVABLE AND FACTORING

In December 2011 the Company entered into an agreement with a Factoring company whereby the Company will assign, in the Factor's sole discretion, selected accounts receivable to the Factor in exchange for initial cash funding ("factor advances") for up to 80% of the factored receivable. The minimum 20% reserve held back by the Factor is released after collection of the account receivable by the Factor. The company pays a 3% factor fee for each factored receivable. Since the factoring agreement provides for full recourse against the Company for factored accounts receivable that are not collected by the Factor for any reason, and the collection of such accounts receivable are fully secured by substantially all assets of the Company, the factoring advances have been treated as secured loans on the accompanying balance sheets. The total accounts receivable factored in 2012 and 2011 was $334,641 and $143,908, respectively. The factor fees paid in 2012 was $14,942. Total outstanding accounts receivable factored at December 31, 2012 and 2011 which is included in Accounts Receivable on the accompanying balance sheets was $30,734 and $143,908, respectively.

The Company has total Accounts Receivable as of December 31, 2012 and 2011 as follows: