During the three and nine months ended November
30, 2012, the Company factored receivables of approximately $103,600 and $538,100, respectively. In connection with the factoring
agreement, the Company incurred fees of approximately $4,900, $17,800, $6,000 and $21,200 during the three and nine months ended
November 30, 2012 and 2011, respectively. Any and all of the Companys indebtedness and obligations to the Factoring Company
is guaranteed by two stockholders and collateralized by the Companys inventory and fixed assets.