NOTE 7– DISTRIBUTION AGREEMENT WITH A RELATED ENTITY

On March 1, 2014, the Company entered into a subcontractor installer agreement with Smartgen Solutions, Inc. (“Smartgen”), a related entity that is engaged in business of equipment rental and provider of maintenance, repair and installation services to mobile telecommunications towers in California. Under the terms of the agreement, Smartgen has been appointed as a non-exclusive, authorized service provider for the installation, repair and service of the Company’s products in Southern California. The agreement has a term of three years from the date of execution and automatically renews for additional one year periods if not terminated.

During the three months ended June 30, 2017 and 2016, Smartgen performed $26,235 and $19,170 in field services, respectively. Smartgen performed $96,882 and $31,104 in field services for the six months ended June 30, 2017 and 2016, respectively.

Smartgen purchased $176 and $1,136 in goods, parts and services from the Company during the three and six months ended June 30, 2017, respectively. Smartgen made no purchases from the Company during the six months ended June 30, 2016.