SMG Indium Resources Ltd. (Form: 8-K/A, Received: 10/27/2017 17:32:02)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

CURRENT REPORT

Pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 27, 2017 (September 19, 2017)

SMG INDIUM RESOURCES LTD.

(Exact name of registrant as specified in its charter)

Delaware	000-54391	51-0662991
(State or other jurisdiction	(Commission	(IRS Employer
of incorporation)	File Number)	Identification No.)

710 N. Post Oak Road, Suite 400
Houston, Texas		77024
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code:

(713-821-3153)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation to the registrant under any of the following provisions:

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

MG Cleaners LLC

Explanatory Note

This Current Report on Form 8-K/A is being filed in connection with the acquisition by the Company (as defined below) of MG Cleaners, LLC and certain related actions by the Company.

This Current Report on Form 8-K/A responds to the following items of Form 8-K:

Item 1.01

Entry into a Material Definitive Agreement.

Item 2.01

Completion of Acquisition or Disposition of Assets.

Item 3.02

Unregistered Sale of Equity Securities.

Item 4.01

Changes in Registrant’s Certifying Accountant.

Item 5.01

Changes in Control of Registrant.

Item 5.02

Departure of Directors, or Certain Officers, Election of Directors; Appointment of Certain Officers’; Compensatory Arrangement of Certain Officers.

Item 5.06

Change in Shell Company Status.

Item 8.01

Other Matters.

Item 9.01

Financial Statements and Exhibits.

Unless otherwise noted, references in this Current Report on Form 8-K/A to “SMGI”, the “Company”, “we”, “our” or “us” means SMG Indium Resources Ltd., a Delaware corporation, the registrant, and, unless the context otherwise requires, together with its wholly-owned subsidiary, MG Cleaners LLC, a Texas limited liability company. The Company’s web site address is www.smg-indium.com. This web site and information contained on, or that can be accessed through, the web site are not part of this report.

Special Note Regarding Forward-Looking Statements

There are statements in this Current Report on Form 8-K/A that are not historical facts. These “forward-looking statements” can be identified by use of terminology such as “anticipate,” “believe,” “estimate,” “expect,” “hope,” “intend,” “may,” “plan,” “positioned,” “project,” “propose,” “should,” “strategy,” “will,” or any similar expressions. You should be aware that these forward-looking statements are subject to risks and uncertainties that are beyond our control. For a discussion of these risks, you should read this entire Current Report on Form 8-K carefully, especially the risks discussed under the section entitled “Risk Factors.” Although we believe that our assumptions underlying such forward-looking statements are reasonable, we do not guarantee our future performance, and our actual results may differ materially from those contemplated by these forward-looking statements. Our assumptions used for the purposes of the forward-looking statements specified in the following information represent estimates of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances, including the development, acceptance and sales of our products and our ability to raise additional funding sufficient to implement our strategy. As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment. In light of these numerous risks and uncertainties, we cannot provide any assurance that the results and events contemplated by our forward-looking statements contained in this Current Report on Form 8-K/A will in fact transpire. These forward-looking statements are not guarantees of future performance. You are cautioned to not place undue reliance on these forward-looking statements, which speak only as of their dates. We do not undertake any obligation to update or revise any forward-looking statements.

ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

Acquisition of MG Cleaners, LLC

On September 19, 2017 (“ Closing Date ”), we entered into an Agreement and Plan of Share Exchange dated as of such date (the “ Exchange Agreement ”) with MG Cleaners LLC, a Texas limited liability company (“ MG ”) and all of the members of MG (the “ MG Members ”). On the Closing Date, pursuant to the Exchange Agreement, we acquired one hundred percent (100%) of the issued and outstanding membership interests of MG (“ MG Membership Interests ”) from the MG Members pursuant to which MG became our wholly owned subsidiary (“ Acquisition ”). In accordance with the terms of the Exchange Agreement, and in connection with the completion of the Acquisition, on the Closing Date we issued 4,578,276 shares of our common stock, par value $0.001 per share, and agreed to pay $300,000 in cash ($250,000 at closing) to the MG Members in exchange for all of the issued and outstanding MG Membership Interests. Additionally, on the Closing Date we issued 350,000 restricted shares of our common stock to certain officers and directors of the Company that resigned in connection with the Acquisition pursuant to our 2008 Long-Term Compensation Plan.

In connection with the terms of the Acquisition, all of our Officers and Directors prior to the completion of the Acquisition resigned on the Closing Date and new Officers and Directors were appointed. The names and biographies of our new Officers and Directors are set forth in Section 2.01 below.

All shares of our common stock issued in connection with the Acquisition are restricted securities, as defined in paragraph (a) of Rule 144 under the Securities Act of 1933, as amended (the “ Securities Act ”). Such shares were issued pursuant to an exemption from the registration requirements of the Securities Act, under Section 4(a)(2) of the Securities Act and the rules and regulations promulgated thereunder.

For a further discussion of the Acquisition and its effects on our business, please see the information contained in Item 2.01 below on this Current Report on Form 8-K.

ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS

See Item 1.01 above. On the Closing Date and pursuant to the terms and conditions of the Exchange Agreement, we consummated the Acquisition, and MG became the Company’s wholly owned subsidiary. More specifically, pursuant to and in connection with the Exchange Agreement:

in exchange for 100% of the issued and outstanding MG Membership Interests being transferred to the Company, the Company issued to the former MG Members an aggregate of 4,578,276 shares of the Company’s common stock and agreed to pay $300,000 in cash ($250,000 at closing) to the former MG Members;

Matthew C. Flemming, John Boylan, Steven Paulson and Michael Gilbert were appointed as Directors of the Company concurrent with the closing of the Acquisition. In addition, Matthew C. Flemming was appointed as Chief Executive Officer and Meggen E. Rhodes as Chief Financial Officer on the closing date of the Acquisition.

As a result, on the Closing Date, beneficial ownership of the Company’s common stock was as follows:

The former MG Members acquired in the aggregate beneficial ownership of approximately 69.3% of our issued and outstanding common stock;

The holders of the Company’s common stock immediately prior to the consummation of the Acquisition continue to hold approximately 30.7% of our issued and outstanding common stock upon the completion of the Acquisition.

A discussion of the beneficial ownership of the Company’s Directors, Officers and principal stockholders is set forth below in the section entitled “Item 4.—Security Ownership of Certain Beneficial Owners and Management ” beginning on page 23 of this Current Report on Form 8-K/A and is incorporated herein by reference.

As a consequence of our acquisition of MG, we intend to conduct the business described under the Section of this Current Report on Form 8-K/A under the heading “Item 1.—Business—” as our sole business.

Upon the closing of the Acquisition the following persons held the following positions with our Company:

Name		Position with the Company

Matthew C. Flemming		Chief Executive Officer and Chairman
Meggen E. Rhodes		Chief Financial Officer
John P. Boylan		Director
Steven E. Paulson		Director
Michael A. Gilbert II		Director

Change Resulting from the Acquisition

Following the Acquisition, the Company intends to conduct the business described under the Section of this Current Report on Form 8-K/A under the heading “Item 1.—Business” as its sole business.

Change in Directors Serving on our Board

In connection with the Acquisition, the number of Directors serving on the Company’s Board of Directors (the “Board”) increased from three (3) Directors to four (4) Directors and Matthew Flemming, John Boylan, Steven Paulson and Michael Gilbert were appointed concurrent with the closing of the Acquisition.

All directors hold office for one (1) year terms until the election and qualification of their successors. Officers are appointed by the Board and serve at the discretion of the Board.

Reference is made to the disclosures set forth below in Item 5.02 of this Current Report on Form 8-K/A, which disclosures are incorporated herein by reference. Additionally, information with respect to each of our directors may be found in the section entitled “Directors and Executive Officers” beginning on page 24 of this Current Report on Form 8-K/A.

Change in Control and Shell Company Status

As a result of the Acquisition, the Company experienced a change in control and ceased to be a “shell” company as defined in Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Accounting Treatment

The Acquisition will be accounted for as a “reverse merger” and recapitalization since, immediately following the completion of the transaction, the MG Members will have effective control of SMGI. For accounting purposes, MG will be deemed to be the accounting acquirer in the transaction and, consequently, the transaction will be treated as a recapitalization of MG. Accordingly, MG’s assets, liabilities and results of operations will become the historical financial statements of the registrant, and the Company’s assets, liabilities and results of operations will be consolidated with SMGI effective as of the date of the closing of the Merger. No step-up in basis or intangible assets or goodwill will be recorded in this transaction.

FORM 10 INFORMATION

Item 1.

Business

The following describes the business of SMG Indium Resources Ltd., a Delaware corporation. Because the business operations of MG became the sole business operations of SMG Indium Resources Ltd. upon the consummation of the Acquisition, unless the context indicates otherwise, the words “we,” “us” “our” or the “Company” refer to MG before the closing of the Acquisition or to SMG Indium Resources LTD. and MG as a combined company after the closing of the Acquisition.

Our Corporate History and Background

We were incorporated under the laws of the State of Delaware on January 7, 2008. From inception through December 31, 2014, our primary business purpose was to stockpile indium, a specialty metal that is used as a raw material in a wide variety of consumer electronics manufacturing applications. As of December 31, 2014, we sold all of the indium from our stockpile. As a result, at such time we were no longer in the business of purchasing and selling indium. In December 2015, our Board of Directors approved a cash distribution to our stockholders in the amount of $1.75 per share (or approximately $3.05 million). The distribution was classified as a return of capital for tax purposes. The aggregate cash distribution was recorded against additional paid in capital for accounting purposes. During the third quarter of 2015, our Board of Directors approved a program to repurchase up to $650,000 worth of our shares of common stock. In connection therewith, we repurchased 139,070 shares of our common stock in September 2015 for approximately $200,000, or $1.40 per share. After completion of the share repurchase program and immediately prior to the Acquisition, we had 1,744,569 shares issued and outstanding.

On September 19, 2017, pursuant to the Exchange Agreement described above in Item 1.01, we acquired one hundred percent of the issued and outstanding membership interests of MG (“MG Membership Interests”) pursuant to which MG became our wholly-owned subsidiary. In connection with the Acquisition, we issued 4,578,276 shares and agreed to pay $300,000 in cash to the MG Members, payable with $250,000 at closing and the remaining $50,000 paid to the MG Members upon the completion of the Company’s sale of a minimum of $500,000 of its securities in a private offering to investors.

Upon completion of the closing of the Acquisition, our business operations will be those of our wholly-owned subsidiary, MG Cleaners.

The Business of MG Cleaners LLC

General

MG Cleaners was organized as a limited liability company in Texas in 2005. In 2010, Stephen Christian, acquired MG Cleaners from its prior owner and has served as its Managing Member and President since. Mr. Christian was a former Rig Supervisor for Nabors Drilling (“Nabors”) from 2004 until 2010. Nabors Industries (NYSE: NBR), the parent company of Nabors Drilling, owns and operates the nation's largest land-based drilling rig fleet and is one of our larger customers.

We are an emerging growth oilfield service company focused on the drilling rig operator market segment in the domestic United States pursuant to which we offer the following products and services: (i) product sales for the oilfield industry focused on drilling rig wash, oilfield cleaning, industrial cleaning, fleet and equipment cleaning; (ii) equipment sales for the oilfield industry including, industrial pressure washers; (iii) parts sales for our installed base on equipment, including water guns, hoses and fittings, and (iv) service crews for the oilfield industry related to rig wash and repairing drilling rigs on location.

Industry Overview

On June 30, 2017, the North American Rig Count, as measured by Baker Hughes, stood at 1,129, up 122% from 507 on June 30, 2016. Rig Counts are a measurement of oilfield activity particularly relevant to us as we sell products to drilling rig operator customers. As a result of favorable operating economics for oil and gas companies, there is a high concentration of rigs and oilfield activity in Texas relative to other areas in the domestic United States. On June 30, 2017, Texas and the adjacent New Mexico (Permian and Delaware basins) had 521 rigs operating, representing about 46% of the entire North American rigs concentrated in these West Texas basins, an increase of 217 rigs, or 140%, from a year earlier.

MG Cleaner’s Products and Services

Proprietary Products

Our branded products have proprietary formulations that perform in specific applications. These products include soaps, surfactants and degreasers which are environmentally friendly and sold primarily to drilling rig operators, exploration and production companies, and distribution and supply companies serving this market segment.

Our branded products have proprietary formulations that have been sold direct via our sales force and through distribution supply companies for over ten years. Miracle Blue™, a powerful degreaser, Luma Brite™, an aluminum brightener and descaler, and Wicked Green™, an enviro-friendly emulsifier used in oil remediation jobs, that is bio-degradable, are some of the Company’s top selling products. In total, we currently offer 12 branded and proprietary products used by industry leading drilling contractors in the domestic United States including Nabors, UTI-Patterson, and Cactus Drilling. MG’s products are sold throughout Texas using direct sales employees in the East Texas market (based in Carthage, Texas) and distributors/suppliers in the West Texas Permian and Delaware basins (based in Midland, Texas).

Equipment and Parts Sales

Additionally, through long-standing relationships with manufacturers, we sell equipment and related parts, to our customers which strategically promote our future product sales. We currently offer a full line of Mi-T-M Corporation industrial and oilfield pressure washers along with compressors, heaters, water pumps and combination units. We also sell spare parts to customers who have purchased equipment, which include water guns, hoses and fittings.

Service Crews

MG’s service crews consist of Company employees who perform cleaning and repair for drilling rig operator customers typically invoicing on a day-rate basis. Other customers prefer to purchase equipment and perform their own maintenance on their equipment, using a variety of our cleaning products. In other examples, customers prefer to outsource cleaning and repair services where our service crews become strategic to MG’s business solving customer problems and using our products during service. Select, MG customers include drilling rig operators such as Nabors, UTI-Patterson, Cactus Drilling; oil companies such as Chesapeake and Chevron; and other oilfield service companies.

Our Strategy

Continued Development of Texas business. Currently, almost half of the rigs in North America are located in Texas due to favorable economics in Texas’ resource basins, such as the Permian Basin, relative to other parts of the United States. We believe developing a direct sales presence in West Texas, based out of Midland, Texas, to complement our existing distribution channels for that market area will allow us to further penetrate that market. In West Texas, the Company has enjoyed good market penetration via distribution and supply companies. We believe that high activity levels in West Texas’ Permian and Delaware basins should allow for growth with new direct sales. In July 2017, we hired a strategic level employee, from Midland, Texas, experienced with many of our customers, to support and grow our presence in that market. Currently, the Company has a sales force in East Texas servicing Haynesville Shale, Woodbine, Cotton Valley and other oil & gas resource plays in the area.

Sell New Products and Additional Services to Existing Customers. We have over 50 customers, many of which are leading companies in their field. We believe we can further monetize our relationships with our customers by bringing other products and services to them that we develop or acquire when there is a demand.

Acquire Complementary Oilfield Service Companies. Our management team has prior experience acquiring owner/operated companies. The Company believes this acquisition strategy can be an attractive way to grow more quickly than organic growth allows. In our experience, operating companies that want to be acquired often have complementary non-overlapping customers that could have a positive strategic impact to our future.

Maintaining High Quality Service . Our success and history has been built on a reputation of high-quality service. We try to ingrain this philosophy in our Company culture and employee attitudes. The oilfield service business is demanding and keeping a 24/7 service policy is a priority that we intend to continue to focus on and maintain.

Leverage Access to Public Company Markets . We believe that the public capital markets can facilitate funding access for our long-term growth initiatives, including making strategic acquisitions, however, there can be no assurance that we will identify acquisition targets or if we do identify acquisition targets that we will be able to acquire them on terms acceptable to us. Additionally, there can be no assurance that we will be able to access the public capital markets to facilitate funding for our long-term growth initiatives, or if funding is available that it will be on terms acceptable to us.

Sales. The Company’s sales plan includes continuing to support its East Texas direct sales presence and establishing a direct sales force in West Texas to complement the distribution and supply channels already present in that area. This will be led by a recently hired strategic employee who has a significant number of customer and sales contacts. We also have meaningful sales through distributors and supply firms that benefit from their customers’ requests for our products. Any demand for the Company’s products outside the state of Texas are typically fulfilled through a distribution supply channel.

Manufacturing. The Company manufacturers its products in its facility in Carthage, Texas. Raw materials are procured by the Company and the proprietary formulas for our brands are utilized throughout the process. Mixing tanks and other process equipment are used to make the products. The final product is then stored in large gravity-fed containers onsite or in transportation quantities such as totes or gallons. Third party shipping and distribution companies are currently utilized for certain shipments of product to West Texas. We may install manufacturing capabilities in our Midland, Texas facility as activity increases in that market area.

Marketing Plan. The Company’s marketing plan focuses around supporting its product brands such as Miracle Blue™, Luma Brite™, and Wicked Green™, as well as supporting its direct sales force. MG will participate in industry trade shows, sponsorships and community events that allow its products to be featured. Social media, including LinkedIn, will be utilized to facilitate discussion groups focused around these product cleaning applications. The Company’s web site is also undergoing a revision to create higher relevance for our target market customers and promote testimonials of our products and equipment. For our service crews, the marketing plan is to increase crew counts so as to increase availability and service hours.

Market Segment Description. The Company views the oilfield services market in three principal segments: Drilling, Completions and Production. MG’s position in the market is to focus on the Drilling segment. In our opinion, the Drilling market is very elastic resulting in its segment being the first to recover on industry up-cycles.

Market Activity. In a given unconventional well typically drilled in Texas, the completion and fracturing costs can be two to three times the cost of drilling. Therefore, a trend has developed over the last couple of years referred to as ‘fraclog’ illustrating the number of Drilled Uncompleted Wells (DUCs). When industry economics improve, the Company believes that the Completions market segment could become much more attractive. Today, however, MG believes the Drilling market segment is where we should focus our resources and attention. The Production market segment has been relatively steady, compared to Drilling and Completion, as wells already online maintaining positive economics can maintain operations and continued production.

The Company currently believes the price of oil and gas may stay at present levels for several years therefore, we believe its focus and positioning on the drilling market segment is critical to the Company’s future profitability.

Management . The Company’s Chief Executive Officer, Matthew Flemming, is located in Houston, Texas. Mr. Flemming was the CEO of HII Technologies (“HII”) when it was a small public company with approximately $300,000 in cash, no debt and plans to enter the oilfield services business through an initial platform acquisition. HII had no revenues prior to its first acquisition in September 2012, when it acquired AES Water Solutions for approximately $2.3 million in cash, a seller note and stock. Following this initial acquisition, HII conducted two more acquisitions as well as two additional subsidiary startups in the power and safety segments of the oilfield services business. By December 2014, HII consolidated revenues had grown to $4.2 million for that month. Falling rig counts, industry activity and oil & gas prices created an industry down-turn by 2015. HII defaulted on its EBITDA covenants with its senior lenders and ultimately filed a voluntary Chapter 11 petition with US Bankruptcy court in Houston, Texas in September 2015. On April 15, 2016, HII emerged from bankruptcy protection.

Mr. Flemming has been a CEO and CFO for twenty years in high growth capital intensive businesses with ten years’ experience in a public company environment. He has significant relationships in the oilfield market place that help provide access to products and company acquisition targets.

Stephen Christian has been the President of MG Cleaners, LLC since October 2010, when he acquired MG Cleaners’ membership interests and will continue to have operational responsibility for MG, our wholly-owned subsidiary. Prior to MG, Stephen was employed by the largest drilling rig operator in the United States, known as Nabors Drilling, a subsidiary of Nabors Industries (NYSE:NBR), as a Rig Manager from 2004 to 2010. Over the six years he was employed by Nabors, Mr. Christian developed a strong reputation with Nabors’ employees and industry partners. He purchased MG Cleaners in 2010 and has operated the business as its President since its acquisition. The Company believes Mr. Christian’s industry relationships and reputation will continue to assist its growth.

Geographic Diversification

All of our operations are based in Texas. Most of our products and all of our service work is conducted in Texas. Our products are sold outside of Texas through several long-standing relationships with distributors.

Competition

The markets in which we operate are highly competitive. We provide services and sell our products in the State of Texas. Our competitors include many large and small oilfield service companies. In addition, the business segments in which we compete are highly fragmented. We believe that the principal competitive factors in the markets we serve are reputation for service and technical expertise, equipment and personnel capacity, work force competency, efficiency, safety record and price. Our branded products compete against other cleaning products, surfactants and degreasers, some of which are branded retail and some industrial. Because of our dealer status with certain equipment, we do not frequently compete for equipment sales on selected items. With our service crews, we compete with the human resources that drilling rig operators and oil companies employ. These firms may have their own service personnel in which case we may not get awarded that service job. While we seek to be competitive in our pricing, we believe many of our customers elect to work with us based on safety, performance and quality of our crews, equipment and services. We seek to differentiate ourselves from our competitors by delivering the highest-quality services, experienced personnel and equipment possible, coupled with superior execution and operating efficiency in a safe working environment. Many of our competitors have greater financial and personnel resources than we do.

Cyclical Nature of Industry

We operate in a highly cyclical industry. The key factor driving demand for our services is the level of drilling activity by E&P companies, which in turn depends largely on current and anticipated future crude oil and natural gas prices and production depletion rates. Global supply and demand for oil and the domestic supply and demand for natural gas are critical in assessing industry outlook. Demand for oil and natural gas is cyclical and subject to large, rapid fluctuations. Producers tend to increase capital expenditures in response to increases in oil and natural gas prices, which generally results in greater revenues and profits for oilfield service companies such as ours. Increased capital expenditures also ultimately lead to greater production, which historically has resulted in increased supplies and reduced prices, which in turn tend to reduce activity levels for oilfield services. For these reasons, the results of our operations may fluctuate from quarter to quarter and year to year. These fluctuations may distort comparisons of results across periods.

Dependence on One or a Few Major Customers

The Company serves several major drilling companies and independent oil & gas companies that are active in our core areas of operations.

As of June 30, 2017, two customers comprised more than 10% of our accounts receivable balance at approximately 37.8% and 20.2%, respectively. During the six-month period ended June 30, 2017, three customers represented more than 10% of our revenues at 30.7%, 16.4% and 14.6%, respectively, and no other customer represented more than 10% of our revenues during this period.

As of December 31, 2016, four customers comprised more than 10% of our accounts receivable balance at approximately 30%, 19%, 11% and 11%, respectively. Revenues from these four customers represented 23%, 12%, 7% and 6%, respectively, for the year ended December 31, 2016.

Seasonality

Weather conditions affect the demand for, and prices of, oil and natural gas and, as a result, demand for our services. Demand for oil and natural gas is typically higher in the fourth and first quarters resulting in higher prices. Due to these seasonal fluctuations, results of operations for individual quarterly periods may not be indicative of the results that may be realized on an annual basis.

Raw Materials

The Company purchases a wide variety of raw materials, parts and components that are made by other manufacturers and suppliers for our use. The Company is not dependent on any single source of supply for those parts, supplies or materials and we believe that such parts, supplies and materials are readily available from multiple sources. We do not foresee significant price fluctuations in our raw material costs.

Intellectual Property

We do not have any patents on our current products and do not intend to file any patents on such products. We protect our trademarks and may from time to time file for registration of those trademarks.

We currently protect our trade secrets and in-house intellectual property through contractual arrangements, including confidentiality, non-competition and non-disclosure agreements with employees, and will continue to use such contractual arrangements in the future to help protect our proprietary intellectual property.

Government Regulation

We are not currently subject to any direct regulation by any government agency, other than regulations generally applicable to businesses.

General business regulations include the packaging, labeling, distribution, advertising and sale of our chemical products, such as those we sell, are subject to regulation by one or more federal agencies, principally the Federal Trade Commission, or FTC, and to a lesser extent the Consumer Product Safety Commission.

Federal agencies, primarily the FTC, have a variety of procedures and enforcement remedies available to them, including the following:

	·	initiating investigations,
	·	issuing warning letters and cease and desist orders,
	·	requiring corrective labeling or advertising,
	·	requiring consumer redress, such as requiring that a company offer to repurchase products, previously sold to consumers,

	·	seeking injunctive relief or product seizures,
	·	imposing civil penalties, or,
	·	commencing civil action and/or criminal prosecution.

In addition, certain state agencies have similar authority. These federal and state agencies have in the past used these remedies in regulating participants in the industry, including the imposition by federal agencies of civil penalties. We cannot assure you that the regulatory environment in which we operate will not change or that such regulatory environment, or any specific action taken against us, will not result in a material adverse effect on our operations.

We cannot predict the nature of any future laws, regulations, interpretations, or applications, nor can we determine what effect such additional regulation, when and if it occurs, would have on our business in the future. Such additional regulation could require, however, any or all of the actions listed below, which could have a material adverse effect on our operations:

	·	the reformulation of certain products to meet new standards,
	·	the recall or discontinuance of certain products,
	·	additional record keeping,
	·	expanded documentation of the properties of certain products,
	·	revised, expanded or different labeling, or
	·	additional scientific substantiation.

Property

Our principal executive office is located at 710 N. Post Oak Road, Suite 400, Houston, Texas, where we lease approximately 700 square feet of office space on a month to month basis at a rate of $500 per month. We also have offices located in Carthage, Texas and Midland, Texas. Our Carthage facility is comprised of a 2,500 square foot building and one acre of property that is leased for $2,500 per month. The Carthage lease is on a month to month basis and is used for our operations throughout East Texas. Effective July 15, 2017, we leased a facility in Midland, Texas for a three year period ending July 15, 2020 at a rate of $3,000 per month. The Midland, Texas facility is comprised of approximately 2,400 square feet of space and a shared yard with several acres of storage area used for our operations in West Texas including the Permian Basin.

Currently, we believe that our facilities are adequate for our present and future needs.

Legal Proceedings

From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of our business. We are not currently a party to any material legal proceedings.

Employees

As of June 30, 2017, we had 17 employees of whom 2 were administrative, 3 were in sales and marketing and 12 were in service or operations. In addition, we may employ independent contractors from time to time. Our employees are not represented by a labor union, and we believe our relations with our employees are satisfactory. Our independent contractors are either paid day rates or hourly commensurate with the job. Employees and independent contractors are required to execute agreements with us that set forth terms of engagement and contain customary confidentiality and non-competition provisions.

Item 1A.

Risk factors

Risks Related to Our Business

We depend on several significant customers, and a loss of one or more significant customers could adversely affect our results of operations.

Our customers consist primarily of drilling rig operators and oil and natural gas companies. During the six months ended June 30, 2017, three of our customers accounted for approximately 61% of our total gross revenues. During fiscal year 2016, two of our customers accounted for approximately 35% of our total gross revenues, with one customer accounting for 23% and another accounting for 12%. No other customers exceeded 10% of revenues during 2016. These customers do not have any ongoing commitment to purchase our services. While additional customers have been sourced since December 31, 2016, significant customer concentration still exists. The loss of or a sustained decrease in demand by these customers could result in a substantial loss of revenues and could have a material adverse effect on our results of operations. In addition, should these large customers default in their obligations to pay, our results of operations and cash flows could be adversely affected.

Our business depends on domestic (United States) spending by the crude oil and natural gas industry which has suffered significant negative price volatility since July 2014, and such volatility may continue; our business has been, and may in the future be, adversely affected by industry and financial market conditions that are beyond our control.

We depend on our customers’ ability and willingness to make operating and capital expenditures to explore, develop and produce crude oil and natural gas in the United States. Customers’ expectations for future crude oil and natural gas prices, as well as the availability of capital for operating and capital expenditures, may cause them to curtail spending, thereby reducing demand for our services and equipment. Major declines in oil and natural gas prices from July 2014 (when WTI prices were at approximately $100 per barrel) through 2015 resulted in substantial declines in capital spending and drilling programs across the industry in which we operate. As a result of the declines in oil and natural gas prices, most exploration and production companies shut down or substantially reduced drilling programs. Any significant decline in oil and natural gas prices or a significant decline in the North American rig count could have a material adverse effect on our business.

Industry conditions and specifically the market price for crude oil and natural gas are influenced by numerous domestic and global factors over which the Company has no control, such as the supply of and demand for oil and natural gas, domestic and worldwide economic conditions, weather conditions, political instability in oil and natural gas producing countries, and merger and divestiture activity among oil and natural gas producers. The volatility of the oil and natural gas industry and the consequent impact on commodity prices as well as exploration and production activity could adversely impact the level of drilling and activity by some of our customers. Where declining prices lead to reduced exploration and development activities in the Company’s market areas, the reduction in exploration and development activities also may have a negative long-term impact on the Company’s business. Continued decline in oil and natural gas prices may result in increased pressure from our customers to make pricing concessions in the future and may impact our borrowing arrangements with our principal bank.

There has also been significant political pressures for the United States economy to reduce its dependence on crude oil and natural gas due to the perceived impacts on climate change. These activities may make oil and gas investment and production less attractive.

Higher oil and gas prices do not necessarily result in increased drilling activity because our customers’ expectation of future prices also drives demand for drilling services. Oil and gas prices, as well as demand for the Company’s services, also depend upon other factors that are beyond the Company’s control, including the following:

	·	Supply and demand for crude oil and natural gas,
	·	political pressures against crude oil and natural gas exploration and production,
	·	cost of exploring for, producing, and delivering oil and natural gas,
	·	expectations regarding future energy prices,
	·	advancements in exploration and development technology,

	·	adoption or repeal of laws regulating oil and gas production in the U.S.,
	·	imposition or lifting of economic sanctions against foreign companies,
	·	weather conditions,
	·	rate of discovery of new oil and natural gas reserves,
	·	tax policy regarding the oil and gas industry,
	·	development and use of alternative energy sources, and,
	·	the ability of oil and gas companies to generate funds or otherwise obtain external capital for projects and production operations.

Ongoing volatility and uncertainty in the domestic and global economic and political environments have caused the oilfield services industry to experience volatility in terms of demand. While our management is generally optimistic for the continuing development of the onshore North American oil and gas industry, there are a number of political and economic pressures negatively impacting the economics of continuing production from some existing wells, future drilling operations, and the willingness of banks and investors to provide capital to participants in the oil and gas industry. These cuts in spending will continue to curtail drilling programs as well as discretionary spending on well services, and will continue to result in a reduction in the demand for the Company’s services, the rates and equipment utilization can be charged. In addition, certain of the Company’s customers could become unable to pay their suppliers, including the Company. Any of these conditions or events could adversely affect our operating results.

New cleaning technologies and products may render our products and services obsolete.

As technology continues to develop, our clients and our competitors may develop or discover new cleaning technologies that are superior to, or more cost effective than, the cleaning products and services we provide. In the event that any such technologies are developed, and we are unable to adapt to such new products or services, our business could be materially adversely effected.

We are dependent on third-parties to procure the chemicals required to manufacture our products.

We do not manufacture the chemicals that are required to manufacture our products and we rely on third-parties to supply such chemical products to us. In the event that there is a shortage in the supply of chemicals that are required to manufacture our products and we are unable to acquire any such chemicals from another source, our sales and results of operations will be materially adversely effected.

The loss of one or more key members of our management team, or our failure to attract, integrate and retain other highly qualified personnel in the future, could harm our business.

Our success is largely dependent on the skills, experience and efforts of our people. We currently depend on the continued services and performance of the key members of our management team, including Matthew Flemming, our Chief Executive Officer, and Stephen Christian, President of MG Cleaners, LLC, our operating subsidiary. The loss of key personnel could disrupt our operations and have an adverse effect on our ability to grow our business if we are unable to replace them.

We operate in a highly competitive environment, which could adversely affect our sales and pricing.

We operate in a highly competitive environment. We expect competition to intensify in the future. We compete on the basis of our brands and branding, customer service, quality and price. There can be no assurance that we will be able to compete successfully with other companies. Thus, revenues could be reduced due to aggressive pricing pursued by competitors. Many of our competitors are entities that are more established, larger and have greater financial and personnel resources than we do. If we do not compete successfully, our business and results of operations will be materially adversely affected.

The line of credit with Crestmark Bank contains restrictive covenants which limit management’s discretion to operate MG’s business and is secured by all of MG’s assets.

In order to obtain the line of credit from Crestmark Bank, MG, our wholly-owned subsidiary, agreed to certain covenants that place certain restrictions on MG, among other things, MG’s ability to incur additional indebtedness, to create liens or other encumbrances, and to sell or otherwise dispose of MG’s assets. Any failure to comply with the covenants included in the Crestmark Bank loan agreements could result in an event of default, which could trigger an acceleration of the related debt. If MG were unable to repay the debt upon any such acceleration, Crestmark Bank could seek to foreclose on MG’s assets in an effort to seek repayment under the loans. If Crestmark Bank were successful, we would be unable to conduct our business as it is presently conducted and our ability to generate revenues and fund our ongoing operations would be materially adversely affected.

The interest rate on a significant portion of our indebtedness varies with the market rate of interest. An increase in the interest rate could have a material adverse effect on our results of operations.

The interest on the line of credit and term loan from Crestmark Bank is payable monthly and is at a rate per annum equal to the prime plus 7.50%, per annum (provided that at no time shall be less than 11.5%). The interest under the Crestmark Credit Facility will fluctuate over time, and if the prime rate significantly increases, our interest expense will increase. This could have a material adverse effect on our results of operations.

We may need additional financing to further our business plans.

We may require additional funds to finance our business development projects. We may not be successful in raising additional financing as and when needed. If we are unable to obtain additional financing in sufficient amounts or on acceptable terms, our operating results and prospects could be adversely affected.

We may not realize all of the anticipated benefits of our acquisitions, joint ventures or divestitures, or these benefits may take longer to realize than expected.

Our business strategy includes growth through the acquisitions of other businesses in the areas of drilling, completions or production business segments. We may not be able to continue to identify attractive acquisition opportunities or successfully acquire those opportunities that are identified. There is always the possibility that even if there is success in integrating our current or future acquisitions into the existing operations, we may not derive the benefits, such as administrative or operational synergy or earnings obtained, that were expected from such acquisitions, which may result in the commitment of capital resources without the expected returns on the capital. The competition for acquisition opportunities may increase which in turn would increase our cost of making further acquisitions or causing us to curb our activities of making additional acquisitions.

In pursuing our business strategy, from time to time we evaluate targets and enter into agreements regarding possible acquisitions, divestitures and joint ventures. To be successful, we conduct due diligence to identify valuation issues and potential loss contingencies, negotiate transaction terms, complete transactions and manage post-closing matters such as the integration of acquired businesses. Our due diligence reviews are subject to the completeness and accuracy of disclosures made by third parties. We may incur unanticipated costs or expenses following a completed acquisition, including post-closing asset impairment charges, expenses associated with eliminating duplicate facilities, litigation, and other liabilities.

The risks associated with our future acquisitions also include the following:

	·	the business culture of the acquired business may not match well with our culture,
	·	we may fail to retain, motivate and integrate key management and other employees of the acquired business,
	·	we may experience problems in retaining customers and integrating customer bases, and
	·	we may experience complexities associated with managing the combined businesses and consolidating multiple physical locations.

We believe that we have sufficient resources to integrate these acquisitions successfully, such integration involves a number of significant risks, including management’s diversion of attention and resources. There can be no assurance as to the extent to which the anticipated benefits of these acquisitions will be realized, if at all, or that significant time and cost beyond that anticipated will not be required with the integration of new acquisitions to the existing business. If we are unable to accomplish the integration and management successfully, or achieve a substantial portion of the anticipated benefits of these acquisitions within the time frames anticipated by management and within budget, it could have a material adverse effect on our business.

Many of these factors will be outside of our control and any one of them could result in increased costs, decreases in the amount of expected revenues and diversion of management’s time and attention. They may also delay the realization of the benefits we anticipate when we enter into a transaction. Failure to implement our acquisition strategy, including successfully integrating acquired businesses, could have an adverse effect on our business, financial condition and results of operations.

We are vulnerable to the potential difficulties associated with rapid growth

We believe that our future success depends on our ability to manage the rapid growth that we expect to experience organically and through acquisitions. Our anticipated growth will place additional demands and responsibilities on our management to maintain existing customers and attract new customers, recruit, retain and effectively manage employees, as well as expand operations and integrate customer support and financial control systems. The following could present difficulties:

	·	Lack of sufficient executive level personnel,
	·	Increased administrative burden,
	·	Availability of suitable acquisitions,
	·	Additional equipment to satisfy customer requirements, and,
	·	The ability to provide focused service attention to our customers.

If we are unable to manage our expected future growth, our business could be materially adversely effected.

Compliance with climate change legislation or initiatives could negatively impact our business.

The U.S. Congress has considered legislation to mandate reductions of greenhouse gas emissions and certain states have already implemented, or may be in the process of implementing, similar legislation. Additionally, the U.S. Supreme Court has held in its decisions that carbon dioxide can be regulated as an “air pollutant” under the Clean Air Act, which could result in future regulations even if the U.S. Congress does not adopt new legislation regarding emissions. At this time, it is not possible to predict how legislation or new federal or state government mandates regarding the emission of greenhouse gases could impact our business; however, any such future laws or regulations could require us or our customers to devote potentially material amounts of capital or other resources in order to comply with such regulations. These expenditures could have a material adverse impact on our financial condition, results of operations, or cash flows.

Changes in accounting guidance could have an adverse effect on our results of operations, as reported in our financial statements.

Our consolidated financial statements are prepared in accordance with GAAP, which is periodically revised and/or expanded. Accordingly, from time to time we are required to adopt new or revised accounting guidance and related interpretations issued by recognized authoritative bodies, including the Financial Accounting Standards Board and the SEC. Market conditions have prompted these organizations to issue new guidance that further interprets or seeks to revise accounting pronouncements related to various transactions as well as to issue new guidance expanding disclosures. An assessment of proposed standards is not provided, as such proposals are subject to change through the exposure process and, therefore, their effects on our financial statements cannot be meaningfully assessed. It is possible that future accounting guidance we are required to adopt could change the current accounting treatment that we apply to our consolidated financial statements and that such changes could have an adverse effect on our results of operations, as reported in our consolidated financial statements.

Unexpected events, including natural disasters, may increase our cost of doing business or disrupt our operations.

The occurrence of one or more unexpected events, including fires, tornadoes, tsunamis, hurricanes, earthquakes, floods and other forms of severe weather in the United States or in other countries in which our suppliers may be located could adversely affect our operations and financial performance. Natural disasters, pandemic illness, equipment failures, power outages or other unexpected events could result in physical damage to and complete or partial closure of one or more of our offices and disrupt our ability to deliver our products and services. Existing insurance arrangements may not provide protection for all of the costs that may arise from such events.

Failure to obtain and retain skilled technical personnel could impede our operations.

We require skilled personnel to operate and provide technical services and support for our business. Competition for the personnel required for our businesses intensifies as activity increases. In periods of high utilization it may become more difficult to find and retain qualified individuals. This could increase our costs or have other adverse effects on our operations.

Our operations are subject to inherent risks, some of which are beyond our control. These risks may not be fully covered under our insurance policies.

Our operations are subject to hazards inherent in the oil and natural gas industry, such as, but not limited to, accidents, blowouts, explosions, fires and oil spills. These conditions can cause:

Personal injury or loss of life,

Damage to or destruction of property, equipment and the environment, and

Suspension of operations by our customers.

The Company maintains insurance coverage that we believe to be customary in the industry against these hazards. However, we do not have insurance against all foreseeable risks, either because insurance is not available or because of the high premium costs. As such, not all of our property is insured. The occurrence of an event not fully insured against, or the failure of an insurer to meet its insurance obligations, could result in substantial losses. In addition, we may not be able to maintain adequate insurance in the future at reasonable rates. Insurance may not be available to cover any or all of the risks to which we are subject, or, even if available, it may be inadequate, or insurance premiums or other costs could rise significantly in the future so as to make such insurance prohibitively expensive. It is likely that, in our insurance renewals, our premiums and deductibles will be higher, and certain insurance coverage either will be unavailable or considerably more expensive than it has been in the recent past. In addition, our insurance is subject to coverage limits. The occurrence of a significant event or adverse claim in excess of the insurance coverage that we maintain or that is not covered by insurance could have a material adverse effect on our financial condition and results of operations.

Risks Related to Our Securities

There is a limited trading market for our shares. You may not be able to sell your shares if you need money.

Our common stock is traded on the OTC Pink Market, an inter-dealer automated quotation system for equity securities. During the three months preceding filing of this report, the average daily trading volume of our common stock was less than 1,000 shares traded per day, on average, and currently is thinly traded. As of September 19, 2017, we had 164 record holders of our common stock (not including an indeterminate number of stockholders whose shares are held by brokers in “street name”). There has been limited trading activity in our stock, and when it has traded, the price has fluctuated widely. We consider our common stock to be “thinly traded” and any last reported sale prices may not be a true market-based valuation of the common stock. Stockholders may experience difficulty selling their shares if they choose to do so because of the illiquid market and limited public float for our common stock.

We are subject to the penny stock rules and these rules may adversely affect trading in our common stock.

Our common stock is a “low-priced” security under rules promulgated under the Securities Exchange Act of 1934. In accordance with these rules, broker-dealers participating in transactions in low-priced securities must first deliver a risk disclosure document which describes the risks associated with such stocks, the broker-dealer’s duties in selling the stock, the customer’s rights and remedies and certain market and other information. Furthermore, the broker-dealer must make a suitability determination approving the customer for low-priced stock transactions based on the customer’s financial situation, investment experience and objectives. Broker-dealers must also disclose these restrictions in writing to the customer, obtain specific written consent from the customer, and provide monthly account statements to the customer. The effect of these restrictions probably decreases the willingness of broker-dealers to make a market in our common stock, decreases liquidity of our common stock and increases transaction costs for sales and purchases of our common stock as compared to other securities.

Transfers of our securities may be restricted by virtue of state securities “blue sky” laws which prohibit trading absent compliance with individual state laws. These restrictions may make it difficult or impossible to sell shares in those states.

Transfers of our common stock may be restricted under the securities or securities regulations laws promulgated by various states and foreign jurisdictions, commonly referred to as “blue sky” laws. Absent compliance with such individual state laws, our common stock may not be traded in such jurisdictions. Because the securities registered hereunder have not been registered for resale under the blue sky laws of any state, the holders of such shares and persons who desire to purchase them should be aware that there may be significant state blue sky law restrictions upon the ability of investors to sell the securities and of purchasers to purchase the securities. These restrictions may prohibit the secondary trading of our common stock. Investors should consider the secondary market for our securities to be a limited one.

Our Officers, Directors and significant shareholders collectively own a substantial portion of our outstanding common stock, and as long as they do, they may be able to control the outcome of stockholder voting.

Our Officers, Directors and significant shareholders are collectively the beneficial owners of approximately 59.2% of the outstanding shares of our common stock as of the date of this report. As long as our Officers, Directors and significant shareholders collectively own a significant percentage of our common stock, our other shareholders may generally be unable to affect or change the management or the direction of our company without the support of our Officers, Directors and significant shareholders. As a result, some investors may be unwilling to purchase our common stock. If the demand for our common stock is reduced because our Officers, Directors and significant shareholders have significant influence over our company, the price of our common stock could be materially depressed. The Officers, Directors and significant shareholders will be able to exert significant influence over the outcome of all corporate actions requiring stockholder approval, including the election of Directors, amendments to our certificate of incorporation and approval of significant corporate transactions.

We have the ability to issue additional shares of our common stock and shares of preferred stock without asking for stockholder approval, which could cause your investment to be diluted.

Our Certificate of Incorporation authorizes the Board of Directors to issue up to 25,000,000 shares of common stock and up to 1,000,000 shares of preferred stock. The power of the Board of Directors to issue shares of common stock, preferred stock or warrants or options to purchase shares of common stock or preferred stock is generally not subject to stockholder approval. Accordingly, any additional issuance of our common stock, or preferred stock that may be convertible into common stock, may have the effect of diluting your investment.

By issuing preferred stock, we may be able to delay, defer or prevent a change of control.

Our Certificate of Incorporation permits us to issue, without approval from our shareholders, a total of 1,000,000 shares of preferred stock. Our Board of Directors can determine the rights, preferences, privileges and restrictions granted to, or imposed upon, the shares of preferred stock and to fix the number of shares constituting any series and the designation of such series. It is possible that our Board of Directors, in determining the rights, preferences and privileges to be granted when the preferred stock is issued, may include provisions that have the effect of delaying, deferring or preventing a change in control, discouraging bids for our common stock at a premium over the market price, or that adversely affect the market price of and the voting and other rights of the holders of our common stock.

Our stock price is volatile.

The trading price of our common stock has been and continues to be subject to fluctuations. The stock price may fluctuate in response to a number of events and factors, such as quarterly variations in operating results, the operating and stock performance of other companies that investors may deem as comparable and news reports relating to trends in the marketplace, among other factors. Significant volatility in the market price of our common stock may arise due to factors such as:

	·	our developing business,
	·	relatively low price per share,
	·	relatively low public float,
	·	variations in quarterly operating results,
	·	general trends in the industries in which we do business,
	·	the number of holders of our common stock, and,
	·	the interest of securities dealers in maintaining a market for our common stock.

As long as there is only a limited public market for our common stock, the sale of a significant number of shares of our common stock at any particular time could be difficult to achieve at the market prices prevailing immediately before such shares are offered, and could cause a severe decline in the price of our common stock.

There are limitations in connection with the availability of quotes and order information on the OTC Markets.

Trades and quotations on the OTC Markets involve a manual process and the market information for such securities cannot be guaranteed. In addition, quote information, or even firm quotes, may not be available. The manual execution process may delay order processing and intervening price fluctuations may result in the failure of a limit order to execute or the execution of a market order at a significantly different price. Execution of trades, execution reporting and the delivery of legal trade confirmation may be delayed significantly. Consequently, one may not be able to sell shares of our common stock at the optimum trading prices.

There are delays in order communication on the OTC Markets.

Electronic processing of orders is not available for securities traded on the OTC Marketplace and high order volume and communication risks may prevent or delay the execution of one's OTC Marketplace trading orders. This lack of automated order processing may affect the timeliness of order execution reporting and the availability of firm quotes for shares of our common stock. Heavy market volume may lead to a delay in the processing of OTC Marketplace security orders for shares of our common stock, due to the manual nature of the market. Consequently, one may not able to sell shares of our common stock at the optimum trading prices.

There is a risk of market fraud on the OTC Marketplace.

OTC Marketplace securities are frequent targets of fraud or market manipulation. Not only because of their generally low price, but also because the OTC Pink Market reporting requirements for these securities are less stringent than for listed or NASDAQ traded securities, and no exchange requirements are imposed. Dealers may dominate the market and set prices that are not based on competitive forces. Individuals or groups may create fraudulent markets and control the sudden, sharp increase of price and trading volume and the equally sudden collapse of the market price for shares of our common stock.

There is a limitation in connection with the editing and canceling of orders on the OTC Markets.

Orders for OTC Pink Market securities may be canceled or edited like orders for other securities. All requests to change or cancel an order must be submitted to, received and processed by the OTC Markets. Due to the manual order processing involved in handling OTC Markets trades, order processing and reporting may be delayed, and one may not be able to cancel or edit one's order. Consequently, one may not be able to sell its shares of our common stock at the optimum trading prices.

Increased dealer compensation could adversely affect our stock price.

The dealer's spread (the difference between the bid and ask prices) may be large and may result in substantial losses to the seller of shares of our Common Stock on the OTC Markets if the stock must be sold immediately. Further, purchasers of shares of our Common Stock may incur an immediate "paper" loss due to the price spread. Moreover, dealers trading on the OTC Markets may not have a bid price for shares of our Common Stock on the OTC Markets. Due to the foregoing, demand for shares of our Common Stock on the OTC Markets may be decreased or eliminated.

Item 2.

Financial Information

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The financial data discussed below is derived from our audited financial statements for the fiscal years ended December 31, 2016 and 2015, and our unaudited condensed consolidated financial statements for the six months ended June 30, 2017 and 2016 which are found elsewhere in this Current Report on Form 8-K. Our financial statements are prepared and presented in accordance with generally accepted accounting principles in the U.S. The financial data discussed below is only a summary and investors should read the following discussion and analysis of our financial condition and results of our operations in conjunction with our financial statements and the related notes to those statements included elsewhere in this Current Report on Form 8-K. This discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties. Our actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed in the section entitled “Risk Factors”, and elsewhere in this Current Report on Form 8-K.

The following discussion should be read in conjunction with the consolidated financial statements and notes. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions, which could cause actual results to differ materially from management's expectations. Factors that could cause differences include, but are not limited to, continued reliance on external sources on financing, development risks for new products and services, commercialization delays and customer acceptance risks when introducing new products and services, fluctuations in market demand, pricing for raw materials as well as general conditions of the energy and oilfield marketplace.

Business Overview

Our Corporate History and Background

Upon completion of the closing of the Acquisition, our business operations will be those of our wholly-owned subsidiary, MG Cleaners.

Recent Developments

Simultaneously with the completion of the Acquisition of MG Cleaners, we entered into Securities Purchase agreements for the sale of 1,500,000 shares of our common stock with accredited investors in a private offering exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”) pursuant to Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation D promulgated thereunder. The shares are being sold at a price of $0.20 per share and we are offering up to an aggregate of 5,000,000 shares of our common stock in this offering (“Offering”). We intend to use the net proceeds from the Offering for capital expenditures associated with increasing our drilling rig wash crews, additional vehicles and equipment, additional inventory, marketing expenditures, repayment of indebtedness and working capital and general corporate purposes. One of our Directors subscribed for 125,000 shares of Common Stock in the Offering.

Corporate Information

Our executive offices are located at 710 N Post Oak Road, Suite 400, Houston, Texas 77024. Our telephone number is (713) 821-3153 and our internet address is www.smg-indium.com . The information on, or that may be, accessed from our website is not part of this annual report.

Results of Operations

Six Months Ended June 30, 2017 Compared to the Six Months Ended June 30, 2016

Our sales for the six months ended June 30, 2017 were $1,182,402, an increase of $479,595, or approximately 68%, from $702,807 for the six months ended June 30, 2016. The increase in revenue for the six months ended June 30, 2017 is primarily attributable to an increase in the domestic drilling rig count for the Texas market driving increased activity from our customers. This increase was primarily driven by additional service revenues from drilling wash work and product sales, while pricing remained relatively constant during the period.

During the six months ended June 30, 2017, cost of sales increased to $719,462, or approximately 61% of revenues, compared to $378,320 or 53% of revenues for the comparable 2016 period. The increase in cost of revenues as a percentage of sales is primarily attributable to increased costs of materials and supplies, higher labor costs and fuel expenses. During the six month period ended June 30, 2017, we expanded our operations into the West Texas market, which represents a larger and more remote territory, which resulted in an increase in fuel costs, housing costs, travel expenses and direct labor.

Selling, general and administrative expenses for the six months ended June 30, 2017 increased to $339,508, or approximately 29%, of revenues, an increase of $172,234, from $167,274, or 24% of revenues, for the six months ended June 30, 2016. This increase in selling, general and administrative costs in 2017 is primarily due to $61,020 in financial advisory consulting fees, higher wages from additional employees, higher insurance costs, and an increase in accounting, legal and consulting expenses associated with the company’s first time company audit and its merger transaction described in this Current report on Form 8-K.

Other expense, net, increased to $53,162 from $28,672 from the comparable 2016 period, resulting from higher interest expense during the six months ended June 30, 2017.

Net income during the six months ended June 30, 2017 was $70,209 as compared to net income of $105,715 for the six months ended June 30, 2016. Our reduction in net income during the first six months of 2017 compared to the 2016 period was primarily attributable to our higher cost of revenues including material and additional labor expense, as well as increased accounting, legal and consulting expenses associated with the company’s first-time company independent audit and its merger transaction described in this Current Report on Form 8-K. These higher costs in 2017 were partially offset by lower bad debt expense.

Year Ended December 31, 2016 Compared to the Year Ended December 31, 2015

Sales for the year ended December 31, 2016 increased slightly to $1,603,395, or approximately 0.66%, from $1,592,940 for the year ended December 31, 2015. The slight increase in revenue during the year ended 2016 is primarily attributable to the domestic drilling rig count increasing in the markets that we operate in the latter part of 2016. In response to the industry downturn during the year ended 2015 and 2016, we reduced the scope of our activities and product sales in the West Texas market, which was offset by expanding service crews in East Texas.

During the year ended December 31, 2016, cost of sales decreased to $939,780, or approximately 58.6% of sales, compared to $942,209, or 59.2% of sales, for the comparable 2015 period. The decrease in cost of sales in 2016 was primarily attributable to lower materials and supplies expense, lower equipment rental costs, repairs and maintenance, partially offset by higher wages and contract labor costs.

Selling, general and administrative expenses for the year ended December 31, 2016 decreased to $363,584, or approximately 22.7% of revenues, a decrease of 29.4%, from $514,977 for the year ended December 31, 2015. This decrease in selling, general and administrative expenses in 2016 was primarily due to reduced wage expense and employee count, lower rent & leases expense, and reduced legal expenses, partially offset by higher bad debt expense and insurance costs in the year 2016.

The impairment loss in 2016 of $24,905 was from an inventory write down in the period. There was no impairment loss in 2015.

Bad debt expense was $55,872 in 2016, resulting from a customer filing for bankruptcy protection, and as a result, our entire accounts receivable with that customer were charged off. Bad debt expense in 2015 was $4,894 by comparison.

The gain on settlement of accrued liability in 2016 of $10,971 resulted from the settlement of a liability for inventory purchases payable in the period. There was no gain on settlement of accounts payable in 2015.

Interest expense, net, increased to $52,603 during the year ended December 31, 2016 from $39,401 for the comparable 2015 period.

Net Income during the year ended December 31, 2016 was $178,015 as compared to net income of $91,459 for the year ended December 31, 2015. Our Net Income increase in 2016 was primarily attributable to improved cost of sales as a percentage of sales, and reduced selling, general and administrative expenses as compared to 2015.

Liquidity and Capital Resources

As of December 31, 2016, our total assets were $543,919 comprised of $22,461 in cash, $285,923 in trade receivables, $10,948 in inventories, and $224,587 in net property and equipment. This is an increase in total assets of $98,324 over December 31, 2015. Our working capital as of December 31, 2016 was a negative $347,980, compared to a negative working capital of $341,109 as of December 31, 2015.

During the year ended December 31, 2016, we had cash provided by operating activities of $219,668 compared to $393,897 of cash provided by operating activities for the year ended December 31, 2015. Our net cash provided by operating activities for the year ended December 31, 2016 resulted primarily from our net income, our reduction in accounts receivable of $132,825 and inventory of $24,210, which amounts were offset by depreciation of $77,458, impairment loss of $24,905, bad debt expense of $55,872, gain on settlement of accrued liability of $10,971, and increases in accounts payable of $13,959 and accrued liabilities of $37,858.

During the year ended December 31, 2016, we used $5,200 of cash in investing activities of which $6,200 was used for the purchase of property and equipment, offset partially by cash received from equipment sales of $1,000. By comparison, we used $63,108 of cash in investing activities for the purchase of property and equipment in the year ended December 31, 2015.

We had a negative $192,400 of net cash used in financing activities in the year ended December 31, 2016 as compared to a negative $334,092 of net cash used in financing activities for year ended December 31, 2015. Our net cash provided by financing activities for the year ended December 31, 2016 resulted primarily from proceeds from notes payable of $70,700 and proceeds from member contributions of $71,898, offset by payments of notes payable of $95,005 and payments for member distributions of $239,993.

Our net increase in cash for the year ended December 31, 2016 was $22,068 as compared to a net decrease of $3,303 in the year ended December 31, 2015.

Our cash flows from operations and our available capital including the new line of credit of $1 million obtained in May 2017 are presently sufficient to sustain our current level of operations for the next 12 months. However, we may require up to an additional $1 million to expand and market our business in active areas of Texas. Of this amount, currently we believe we will require $80,000 in capital expenditures for additional service crews equipment, $15,000 to increase inventory to allow for West Texas and $10,000 to make our new facility fully operational to directly support Permian Basin customers. We plan to improve our cash position by focusing on increasing sales, buying larger quantities of our raw materials used in our products for improved unit costs, improving profitability by reducing logistical costs with local presents in the West Texas market, and a combination of capital sources, including debt and equity financings. Failure to secure these additional funds will result in a less aggressive growth plan. Historically, we have funded our capital expenditures internally through cash flow, leasing and financing arrangements. We intend to continue to fund future capital expenditures through cash flow, as well as through capital available to us pursuant to our line of credit, capital from the sale of our equity securities and through commercial leasing and financing programs.

On May 31, 2017, MG entered into a $1 million revolving accounts receivable financing facility with Crestmark Bank. The financing facility provides for MG to have access to the lesser of (i) $1 million or (ii) 85% of the net amount of eligible receivables (as defined in the financing agreement). The financing facility is paid for by the assignment of MG’s accounts receivable to Crestmark Bank and is secured by MG’s assets. The financing facility has an interest rate of 7.25% in excess of the prime rate reported by the Wall Street Journal per annum, with a floor minimum rate of 11.5%. Interest and maintenance fees will be calculated on the higher of the average monthly loan balance from the prior month or a minimum average loan balance of $200,000. The financing facility is for an initial term of two-years and will renew on a year to year basis, unless terminated in accordance with the financing agreement. Pursuant to the terms of the financing facility, Crestmark has been granted a security interest in all of our assets and the assets of MG and we have agreed to guaranty all amounts due under the facility upon an event of default, however, the guaranty does not restrict the Company’s ability to incur debt in connection with financing its operations.

Pursuant to the terms of the financing facility, MG is not allowed to incur additional indebtedness, to create liens or other encumbrances, or to sell or otherwise dispose of MG’s assets, without the prior written consent of Crestmark. The Crestmark facility does not restrict the Company’s ability to finance its operations through the sale of its equity securities.

On April 7, 2017 MG received $100,000 in return for an assignment and transfer to Capital Stack LLC of a specified percentage of the proceeds of each future sale made by MG, collectively “Future Receipts” until MG has received the purchased amount of $143,000. Pursuant to the terms of the Capital Stack agreement, MG cannot sell any portion of its future sales that have previously been sold to Capital Stack, however, it does not restrict the Company’s ability to incur any additional debt, or sell its equity securities, in connection with financing its operations. The final payment to Capital Stack will be made in October 2017, at which point the Capital Stack agreement shall terminate by its terms.

On August 10, 2017 MG received $51,150 in return for an assignment and transfer to Libertas Funding LLC of a specified percentage of the proceeds of each future sale made by MG, collectively “Future Receipts” until MG has received the purchased amount of $67,100. Pursuant to the terms of the Libertas agreement, MG cannot sell any portion of its future sales that have previously been sold to Libertas, however, it does not restrict the Company’s ability to incur any additional debt, or sell its equity securities, in connection with financing its operations. The final payment to Libertas will be made in November 2017, at which point the Libertas agreement shall terminate by its terms

On August 14, 2017, MG refinanced one of its notes with a community bank for $66,348. The unsecured note bears an interest rate of 7.25% per annum, has 47 monthly payments of $1,400, with a balloon payment of $12,086 at maturity on August 1, 2021. This note does not restrict the Company’s ability to incur any additional indebtedness, or the sale of its equity securities, in connection with financing its operations.

Critical Accounting Policies

Acquisition

The acquisition of MG Cleaners LLC by SMG Indium Resources Ltd. on September 19, 2017, was accounted for as a reverse acquisition with MG Cleaners as the acquirer of SMG Indium Resources for accounting purposes. The financial statements presented in this Current Report on Form 8-K are presented as a continuation of the operations of MG Cleaners LLC with one adjustment to retroactively adjust the membership interests of MG Cleaners LLC to reflect the legal capital of SMG Indium Resources prior to the September 19, 2017 acquisition, and one adjustment to eliminate the accumulated deficit of SMGI in accordance with the recapitalization of MG.

Revenue Recognition

The Company records revenue when all four of the following criteria are met: (i) there is persuasive evidence that an arrangement exists; (ii) delivery of the products and/or services has occurred; (iii) the selling price is fixed or determinable; and (iv) collectability is reasonably assured.

The Company recognizes sales when products are delivered or services rendered to the customer. Postage and handling charges billed to customers are also recognized as sales upon shipment of the related equipment. Shipping terms are generally FOB destination, and title passes to the customer at the time and place of delivery or purchase by customers at a retail location. The company does no consignment sales. The customer has no cancellation privileges after shipment or upon purchase at our locations, other than customary rights of return. The Company excludes sales tax collected and remitted to various states from sales and cost of sales. Sales from items sold through the Company’s locations are recognized at the time of sale.

Revenue received from online sales are recognized when products are delivered to the customer.

Shipping and Fulfillment Costs

Freight costs incurred related to shipment of products or equipment from MG’s facilities to customers are recorded in cost of sales.

Concentrations

The Company sells direct to drilling rig operators, oilfield service companies, Oil and Gas operating companies, distributors and suppliers and performs ongoing credit evaluations of trade receivables due from customers. Generally, the Company does not require collateral for terms. An allowance for doubtful accounts is determined with respect to those amounts that the Company has determined to be doubtful of collection using specific identification of doubtful accounts and an aging of receivables analysis based on invoice due dates. Generally, trade receivables are past due after 45-60 days after an invoice date, unless special payment terms are provided. Based on this analysis, the Company recorded an allowance for doubtful accounts of $21,134 and $292 at December 31, 2016 and 2015, respectively.

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of accounts receivable. Two customers accounted for more than 35% of revenues for the year ended December 31, 2016 and two customers represented 30% of revenues for the year ended December 31, 2015. No other customers exceeded 10% of revenues during 2016 and 2015. Four customers accounted for more than 72% of accounts receivable at December 31, 2016, and two customers accounted for more than 38% of accounts receivable at December 31, 2015. No other customers exceeded 10% of accounts receivable as of December 31, 2016 and 2015. The Company believes it will continue to reduce the customer concentration risks by engaging new customers and increasing activity of existing less active customers and smaller, newer customer relationships. While the Company continues to acquire new customers in an effort to grow and reduce its customer concentration risks, management believes these risks will continue for the foreseeable future.

Three vendors accounted for more than 36% of accounts payable at December 31, 2016, and one vendor accounted for more than 14% of accounts payable at December 31, 2015. No other vendors exceeded 10% of accounts payable at December 31, 2016 and 2015.

The Company maintains demand deposits with commercial banks. At times, certain balances held within these accounts may not be fully guaranteed or insured by the U.S. federal government. The uninsured portion of cash are backed solely by the assets of the underlying institution. As such, the failure of an underlying institution could result in financial loss to the Company.

Inventories

Inventory, consisting of raw materials, work in progress and finished goods, is valued at the lower of the inventory’s costs or market, using the first in, first out method to determine the cost. Management compares the cost of inventory with its market value and an allowance is made to write down inventory to market value, if lower, which resulted in impairment loss recognized of $24,905 in 2016 and $0 in 2015.

Advertising

Advertising costs are expensed as incurred. Advertising expense was approximately $11,407 and $16,894 for the years ended December 31, 2016 and 2015, respectively, and is included in selling, general and administrative expenses in the accompanying statements of income.

Item 3.

Properties

Our principal executive office is located at 710 N. Post Oak Road, Suite 400, Houston, Texas, where we lease approximately 700 square feet of office space on a month to month basis at a rate of $500 per month. We also have offices located in Carthage, Texas and Midland, Texas. Our Carthage facility is comprised of a 2,500 square foot building and one acre of property that we lease for $2,500 per month. The Carthage lease is on a month to month basis. Effective July 15, 2017, we leased a facility in Midland, Texas for $3,000 per month for approximately 2,400 square feet of space and a shared yard with several acres of storage area. The Midland lease is for a period of 3 years and expires on July 15, 2020.

Item 4.

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth, as of September 19, 2017, information regarding the beneficial ownership of our common stock based upon the most recent information available to us for: (i) each person known by us to own beneficially five percent (5%) or more of our outstanding common stock, (ii) each of our officers and directors, and (iii) all of our officers and directors as a group. Unless otherwise indicated, each of the persons listed below has sole voting and investment power with respect to the shares beneficially owned by them. As of September 19, 2017, there were 6,672,845 shares of our common stock issued and outstanding upon consummation of the Acquisition. Except as otherwise listed below, the address of each person is 710 N Post Oak Road, Suite 400, Houston Texas 77024.

Name	Amount of Beneficial Ownership of Common Stock(1)		Percent of Common Stock
Stephen Christian(7)		1,408,276		21.1	%
Raging Capital Master Fund Ltd.(8)		782,498		11.7	%
Raging Capital Management LLC(9)		782,498		11.7	%
William Martin(10)		783,884		11.7	%
Ramsey Financial Fund One LLC (11)		760,000		11.4	%

Directors and Executive Officers:
Matthew Flemming(2)		600,000		9.0	%
Meggen Rhodes(3)		100,000		1.5	%
John Boylan(4)		100,000		1.5	%
Steven Paulson(5)		100,000		1.5	%
Michael A. Gilbert II(6)		100,000		1.5	%
All Directors and Executive Officers as a group (5 persons) (1)(2)(3)(4)(5)(6)				15.0	%

*less than one percent

(1)

Pursuant to the rules and regulations of the Securities and Exchange Commission, shares of common stock that an individual or group has a right to acquire within 60 days pursuant to the exercise of options or warrants are deemed to be outstanding for the purposes of computing the percentage ownership of such individual or group, but are not deemed to be outstanding for the purposes of computing the percentage ownership of any other person shown in the table.

(2)

Flemming Family Trust, an irrevocable trust, is the owner of the shares. Rolf O. Flemming, Father to Matthew Flemming is the Grantor of the trust and Matthew Flemming is the Trustee. His immediate relatives are the beneficiaries.

(3)	Ms. Rhodes is our Chief Financial Officer. Her address is 710 N Post Oak Road Suite 400, Houston, Texas 77024.
(4)	Includes 100,000 shares of common stock.
(5)	Includes 100,000 shares of common stock.
(6)	Includes 100,000 shares of common stock.
(7)	Mr. Christian’s address is 710 N Post Oak Road Suite 400, Houston, Texas 77024.
(8)	Based on Schedule 13D filed with the Securities and Exchange Commission on May 4, 2016 by Raging Capital Master Fund, LTD. (“Raging Group”) includes 782,498 shares held by Raging Capital Master Fund, Ltd. William C. Martin is the Managing Member of Raging Capital Management, LLC the General Partner of Raging Capital Master Fund, Ltd. William C. Martin retains 100% equity ownership in Raging Capital Management, LLC. Also includes 1,386 shares held by William C. Martin SEP IRA.
(9)	Includes 782,498 shares held by Raging Capital Master Fund Ltd. Raging Capital Management, LLC is the General Partner of Raging Capital Master Fund Ltd. William C. Martin is the Chairman, Chief Investment Officer and Managing Member of Raging Capital Management, LLC.
(10)	RCM Indium, LLC, a Delaware limited liability company, whose members include Raging Capital Fund (QP), LP and Raging Capital Management, LLC, whose sole member is William C. Martin. However, RCM Indium, LLC does not have any ownership rights to any common Stock owned by Mr. Martin.
(11)	Ramsey Financial Fund One, LLC’s managing member is Leo B. Womack who has sole voting and investment control over the shares.

Item 5.

Directors, Executive Officers and Corporate Governance

Our Directors and Executive Officers

The following table and text set forth the names of our Executive Officers and Directors as of the date of this report, all of whom were appointed on the Closing Date of the Acquisition. Directors hold office for a period of one year from their election at the annual meeting of stockholders or until their successors are duly elected and qualified. Officers are elected by, and serve at the discretion of, the Board of Directors.

Name	Age	Position
Matthew C. Flemming	48	Chief Executive Officer and Chairman
Meggen E. Rhodes	39	Chief Financial Officer
John P. Boylan	50	Director
Steven E. Paulson	54	Director
Michael A. Gilbert II	43	Director

Mr. Flemming has served as our Chief Executive Officer and Chairman of the Board of Directors since the Closing Date of the acquisition of MG. Prior thereto, Mr. Flemming was the Chief Executive Officer of MG Cleaners since June, 2017. Previous to that, Mr. Flemming was a consultant for a financial restructuring firm and a financial advisor to a private closely held oilfield services company during 2016 and early 2017. From June 2011 to March 2016, Mr. Flemming was the Chief Executive Officer, Treasurer, Secretary, and Chairman of the Board of HII Technologies Inc. HII Technologies was a Houston, Texas based oilfield services company with operations in Texas, Oklahoma, Ohio and West Virginia focused on commercializing technologies and providing services in frac water management, safety services and portable power used by exploration and production companies in the United States. During his tenure at HII, the Company acquired three frac water management companies and started up two other operating subsidiaries driving monthly revenues from nil in August 2012 to $4.2 million by its peak in December 2014. In 2015, HII experienced significantly reduced customer activity and oil & gas pricing levels creating an industry down-turn pressuring its covenants with its debt with its senior lenders. On September 18, 2015, HII Technologies filed voluntary petitions for reorganization under Chapter 11 of Title 111 of the U.S. Code in the United States Bankruptcy Court for the Southern District of Texas Victorian Division. On April 15, 2016, Mr. Flemming resigned as an officer and director of HII and the bankruptcy court entered an order confirming HII Technologies’ Plan of Reorganization. This plan became effective on May 20, 2016.

Prior thereto, from 2009 to 2011, Mr. Flemming was Chief Financial Officer of Hemiwedge Industries Inc. a proprietary valve technology company with oilfield applications that was sold in 2011. From 2005 to 2009, Mr. Flemming was Chief Financial Officer of Shumate Industries, Inc., an oilfield manufacturing company and successor of Excalibur. Previous to that, from 2001 to 2005, Mr. Flemming was Chief Financial Officer of Excalibur Industries, Inc. an industrial and energy related manufacturer and fabrication company. From June 1999 to March 2001, he served as Chief Executive Officer of WorldByNet, Inc. a Houston, Texas based privately held technology company. From January 1994 to May 1999, Mr. Flemming served as Chief Executive Officer of FARO Pharmaceuticals, Inc., a privately held national specialty products company that he founded. Mr. Flemming received a Bachelor of Arts in Finance from the University of Houston.

Ms. Rhodes has served as our Chief Financial Officer since the Closing Date of the acquisition of MG. Since March 2016, Ms. Rhodes has been a Manager of Dispute Advisory and Forensic Services for a financial advisory firm based in Houston, Texas. From March 2014 through March 2016, Ms. Rhodes was the Assistant Controller and then the Controller of HII Technologies Inc., based in Houston, Texas, an oilfield service company with operations in Texas, Oklahoma, Ohio and West Virginia focused on commercializing technologies and providing services in frac water management, safety services and portable power used by exploration and production companies in the United States. At HII Technologies, Ms. Rhodes was responsible for performing all financial reporting functions, creating financial reporting systems to assist management in evaluating performance of the various operating divisions, interfacing with executive and field management, performing due diligence on potential acquisition targets, and acting as point person for all audits and reviews. From September 2013 to February 2014, Ms. Rhodes was a Senior Engagement Manager for Albeck Financial Services, an accounting services provider located in Houston, Texas. From November 2010 through September 2013, Ms. Rhodes was a Financial Reporting and Operations Accountant for Vitol, Inc., a privately held energy company. From January 2007 through October 2010, Ms. Rhodes was Audit Staff / Audit Senior at boutique audit firms whose client base was concentrated in the OTC Market space. In 2006, Ms. Rhodes earned a BBA with a major in Accounting from the University of Houston Downtown.

Mr. Boylan has served as a Director of the Company since the Closing Date of the acquisition of MG. Mr. Boylan has served as the Chairman, Chief Executive Officer and President of Houston American Energy Corp. (NYSE MKT: HUSA) since April 2015 and served as a director of that company since 2006. Since 2008, Mr. Boylan has owned and operated EJC Ventures, LP, a financial and management consulting firm providing executive and financial management, asset management, corporate finance, risk management, complex financial reporting, crisis management, turnaround services and pre- and post-bankruptcy management services to the oil and gas industry. Mr. Boylan has served as interim chief executive officer, interim chief financial officer and in other interim management roles with private and publicly traded oil and gas companies, including operators in pre- and post-bankruptcy. Mr. Boylan holds a BBA with a major in Accounting from the University of Texas and an MBA with majors in Finance, Economics and International Business from New York University. Mr. Boylan is a licensed CPA in the State of Texas.

Mr. Paulson has served as a Director of the Company since the Closing Date of the acquisition of MG. Mr. Paulson has been a director of TOR Minerals International Inc. (NASDAQ: TORM), (“TOR Minerals”) since 2008. TOR Minerals is a global producer of high performance, specialty mineral products focused on product innovation and technical support. Mr. Paulson has served as the President and Chief Executive Officer of Contech Control Services, an electrical and automation engineering/design services and construction firm since December 2014. Previously, Mr. Paulson served as President and Director of The Automation Group, or TAG, a national engineering firm focused in process automation, from 1996 until its sale to Emerson Electric in December 2007. Following the sale, he continued to serve as a consultant to Emerson and TAG until November 2012. Mr. Paulson received his Bachelors of Science in Electrical Engineering from Texas A&M University.

Mr. Gilbert has served as a Director of the Company since the Closing Date of the acquisition of MG. Mr. Gilbert is the co-founder and has been the Managing Partner of Sable Power and Gas LLC (“Sable”), an energy management services and advisory company since 2008. Prior to co-founding Sable, Mr. Gilbert was Senior Director of Gexa Energy, a retail electricity provider for residential and commercial customers from 2006 to 2008. From 2001 to 2006, Mr. Gilbert served several roles in energy trading and asset management at Citibank, Citigroup Energy and Reliant Energy. Mr. Gilbert’s experience includes energy management strategy, energy trading, risk management, data management, wholesale origination and structuring power and gas contracts for firm clients. Mr. Gilbert holds a Bachelor of Science degree from Texas A&M University.

Director Independence and Qualifications

The Board of Directors has determined that each of Messrs. Boylan, Paulson and Gilbert qualifies as an “independent director.” Because our common stock is not currently listed on a national securities exchange, we have used the definition of “independence” of The NASDAQ Stock Market to make this determination. NASDAQ Listing Rule 5605(a)(2) provides that an “independent director” is a person other than an officer or employee of the Company or any other individual having a relationship with the Company that, in the opinion of the Company’s Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The NASDAQ listing rules provide that a director cannot be independent if:

	·	the Director is, or at any time during the past three years was, an employee of the Company,

	·	the Director or a family member of the Director accepted any compensation from the Company in excess of $120,000 during any period of 12 consecutive months within the three years preceding the independence determination (subject to certain exclusions, including, among other things, compensation for board or board committee service),

	·	a family member of the Director is, or at any time during the past three years was, an Executive Officer of the Company,

	·	the director or a family member of the Director is a partner in, controlling stockholder of, or an Executive Officer of an entity to which the Company made, or from which the Company received, payments in the current or any of the past three fiscal years that exceed 5% of the recipient’s consolidated gross revenue for that year or $200,000, whichever is greater (subject to certain exclusions),

	·	the Director or a family member of the director is employed as an executive officer of an entity where, at any time during the past three years, any of the executive officers of the Company served on the compensation committee of such other entity, or,

	·	the Director or a family member of the director is a current partner of the Company’s outside auditor, or at any time during the past three years was a partner or employee of the Company’s outside auditor, and who worked on the Company’s audit.

The Board believes that the qualifications of the Directors, as set forth in their biographies which are listed above and briefly summarized in this section, gives them the qualifications and skills to serve as a Director of our Company. All of our directors have strong business backgrounds. The Board also believes that each of the Directors has other key attributes that are important to an effective Board: integrity and demonstrated high ethical standards; sound judgment; analytical skills; the ability to engage management and each other in a constructive and collaborative fashion and the commitment to devote significant time and energy to service on the Board and its Committees.

Involvement in Certain Legal Proceedings

Except as set forth below, none of our directors or executive officers has, during the past ten years:

·	been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offences),

·	been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities, futures, commodities or banking activities, or,

·	been found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated, or,

·	has had any bankruptcy petition filed by or against any business of which he was a general partner or executive officer, either at the time of the bankruptcy or within two years prior to that time.

On September 18, 2015, HII Technologies, Inc., and each of its wholly-owned subsidiaries, Apache Energy Services, LLC, Aqua Handling of Texas, LLC, Hamilton Investment Group, Inc. and Sage Power Solutions, Inc. (collectively, the “Debtors’) filed voluntary petitions for reorganization under Chapter 11 of Title 111 of the U.S. Code in the United States Bankruptcy Court for the Southern District of Texas Victorian Division. On April 15, 2016, the bankruptcy court entered an order confirming the Debtors’ Plan of Reorganization and the plan became effective on May 20, 2016. Mr. Flemming, who is currently an officer and member of our Board of Directors, was an officer and director each of the Debtors during these periods.

Family Relationships

There are no family relationships among the individuals comprising our Board of Directors, management and other key personnel.

Board Composition

Our certificate of incorporation, as amended, and bylaws provide that the authorized number of Directors may be changed only by resolution of the Board. We currently have four Directors with each Director serving a one-year term which will expire at our next annual meeting of stockholders. At each annual meeting of stockholders, the successors to the current Directors will be elected to serve until the next annual meeting following the election.

Director Independence

Our Board has reviewed the materiality of any relationship that each of our Directors has with us, either directly or indirectly. Based on this review, the Board has determined that Messrs. Boylan, Gilbert and Paulson are ‘‘independent directors’’ under the NASDAQ independence standards.

Board Committees

Our Board currently has three standing committees: Audit Committee, Nominating and Governance Committee, and a Compensation Committee, each of which is described below. All standing committees operate under charters that have been approved by the Board. Copies of the charters of the Audit Committee, Compensation Committee and the Nominating and Governance Committee can be found on our Internet site www.smg-indium.com .

Audit Committee. Our Audit Committee is composed of Mr. Boylan, Mr. Gilbert and Mr. Paulson. All members of our Audit Committee are independent as defined in the NASDAQ rules. In addition, the Board of Directors has determined that Mr. Boylan satisfies the SEC’s criteria for an “audit committee financial expert.” Our Audit Committee oversees our corporate accounting, financial reporting practices and the annual audit and quarterly reviews of the financial statements. For this purpose the Audit Committee has a charter (which is reviewed periodically) and performs several functions.

The Audit Committee’s primary functions are:

	·	assist the Board in monitoring the integrity of our financial statements,
	·	appoint and retain the independent registered public accounting firm to conduct the annual audit and quarterly reviews of our financial statements and review the firm’s independence,
	·	review the proposed scope and results of the audit and discuss required communications in connection with the audit,
	·	review and pre-approve the independent registered public accounting firm’s audit and non-audit services rendered,
	·	review accounting and financial controls with the independent registered public accounting firm and our financial and accounting staff,
	·	meet regularly with the independent registered public accounting firm without management present,
	·	recognize and prevent prohibited non-audit services,
	·	establish procedures for complaints received by us regarding accounting matters,
	·	review, pass on the fairness of, and approve “related-party transactions” as required by and in conformance with the rules and regulations of NASDAQ or the SEC,
	·	establish procedures for the identification of management of potential conflicts of interest, and review and approve any transactions where such potential conflicts have been identified, and,
	·	prepare the report of the audit committee that SEC rules require to be included in our annual meeting proxy statement.

Compensation Committee. Our Compensation Committee is composed of Mr. Boylan, Mr. Gilbert and Mr. Paulson. The Compensation Committee reviews its charter periodically. Our Compensation Committee’s primary functions are:

	·	review and recommend the compensation arrangements for management, including the compensation for our Chief Executive Officer,
	·	establish and review general compensation policies with the objective to attract and retain superior talent, to reward individual performance and to achieve our financial goals,
	·	approve and oversee reimbursement policies for Directors, Executive Officers and key employees,
	·	administer our stock incentive plan,
	·	review and discuss the compensation discussion and analysis prepared by management to be included in our annual report, proxy statement or any other applicable filings as required by the SEC, and,
	·	prepare the report of the compensation committee that SEC rules require to be included in our annual meeting proxy statement.

Decisions regarding executive compensation are ultimately determined by the Board upon recommendations of the Compensation Committee, which reviews a number of factors in its decisions, including market information about the compensation of executive officers at similar-sized companies within our industry and geographic region, and recommendations from our Chief Executive Officer. The Compensation Committee may consult external compensation consultants to assist with the recommendation of executive compensation. The Compensation Committee did not utilize the services of an external compensation consultant in 2016.

Non-executive director compensation is determined by the entire Board after review and approval by the Compensation Committee.

Nominating and Governance Committee. Our Nominating and Governance Committee is composed of Mr. Boylan, Mr. Gilbert and Mr. Paulson. The Nominating and Governance Committee has a charter, which is reviewed periodically.

Our Nominating and Governance Committee’s primary functions are:

	·	identify the appropriate size, functioning and needs of and nominate members of the Board,
	·	develop and recommend to the Board of Directors a set of corporate governance principles applicable to our company and review at least annually our code of conduct and ethics,

	·	review and maintain oversight of matters relating to the independence of our board and committee member, in light of the independence standards of the Sarbanes-Oxley Act of 2002 and the rules of the NASDAQ Stock Market, and,
	·	Oversee the evaluation of the Board and management.

The Nominating and Governance Committee recommends to the Board candidates for nomination to the Board. When considering individuals to recommend for nomination as Directors, our Nominating and Governance Committee seeks persons who possess the following characteristics: integrity, education, commitment to the Board, business judgment, relevant business experience, diversity, reputation, and high-performance standards. While the Board values a diversity of viewpoints and backgrounds, it does not have a formal policy regarding the consideration of diversity in identifying director nominees. The Nominating and Governance Committee may engage the services of third party search firms to assist in identifying and assessing the qualifications of Director candidates.

The Nominating and Governance Committee will consider recommendations for Director candidates from stockholders, provided that the stockholder submits the Director nominee and reasonable supporting material concerning the nominee by the due date for a stockholder proposal to be included in the Company’s Proxy Statement for the applicable annual meeting as set forth in Section 2.14 of the Company’s Bylaws and the rules of the SEC then in effect.

The Nominating and Governance Committee will consider properly and timely submitted Director candidates recommended by stockholders of the Company. Stockholders who wish to suggest qualified candidates for election to the Board should write to 710 N. Post Oak Road, Suite 400, Houston, Texas,77024 Attn: Matthew Flemming. These recommendations should include detailed biographical information concerning the nominee, his or her qualifications to be a member of the Board and a description of any relationship the nominee has to other stockholders of the Company. A written statement from the candidate consenting to be named as a candidate and, if nominated and elected, to serve as a Director should accompany any such recommendation.

Board Leadership Structure and Role in Risk Oversight

Our Board evaluates its leadership structure and role in risk oversight on an ongoing basis. Currently, Matthew Flemming serves as Chairman of the Board, President and Chief Executive Officer. Our Board determines what leadership structure it deems appropriate based on factors such as the experience of the applicable individuals, the current business environment of the Company and other relevant factors. After considering these factors, our Board has determined that the role of Chairman of the Board, Chief Executive Officer and President, is an appropriate Board leadership structure for our company at this time.

The Board is also responsible for oversight of our risk management practices, while management is responsible for the day-to-day risk management processes. This division of responsibilities is the most effective approach for addressing the risks facing the Company, and the Company’s Board leadership structure supports this approach. Through our President, and other members of management, the Board receives periodic reports regarding the risks facing the Company. In addition, the Audit Committee assists the Board in its oversight role by receiving periodic reports regarding our risk and control environment.

Corporate Code of Conduct and Ethics

We have adopted a corporate Code of Conduct and Ethics which is reviewed annually. The text of our Code of Conduct and Ethics, which applies to our officers and each member of our Board, is posted in the “Corporate Governance” section of our website, www.smg-indium.com . We intend to satisfy the disclosure requirement under Item 10 of Form 8-K regarding any amendments to, or waiver from, a provision of our Code of Conduct and Ethics by posting such information on our website, www.smg-indium.com . A copy of our Code of Conduct and Ethics is also available in print; free of charge, upon written request to 710 N. Post Oak Road, Suite 400 Houston, Texas, 77024 Attn: Matthew Flemming.

Executive Compensation

None of our corporate officers are under a formal compensation plan at the time of this filing. During the years ended 2016 and 2015, Stephen Christian, the President of our wholly-owned subsidiary, received member distributions from MG Cleaners LLC in the amounts of $400,318 and $168,095, respectively. Compensation paid to Mr. Christian during the years ended 2016 and 2015 was not paid under a formal compensation plan.

Certain Relationships and Related Transactions and Director Independence

The following is a description of the transactions we have engaged in since January 1, 2016, with our Directors and Officers and beneficial owners of more than five percent of our voting securities and their affiliates:

In March 2015, the Company’s Chief Executive Officer and Chief Operating Officer resigned and Ailon Grushkin, our Chairman of the Board and President, was named Chief Executive Officer. In March 2015, we also entered into the Consulting Agreement with Nano (2015 Nano Agreement). Mr. Grushkin is the only member of Nano. Pursuant to the terms of the 2015 Nano Agreement, Nano provided us with services normally provided by a Chief Executive Officer, as determined and directed by us, and provided us with office facilities. We agreed to pay Nano $90,000 during the year ended December 31, 2016 for such services. The term of the 2015 Nano Agreement continued until December 31, 2015. In January 2016, we entered into an agreement with Nano (the 2016 Nano Agreement) to perform the services indicated above during 2016 for an annual fee of $70,000. We have agreed to pay Nano $35,000 in 2017 under the 2016 Nano Agreement, as amended in March 2017.

In January 2016, we entered into a consulting agreement with Brack Advisors LLC (Brack), a company owned by Richard A Biele, one of our Directors (Brack Agreement) that provided for the payment of $50,000 in 2016 to assist us in identifying, evaluating and negotiating strategic transactions including, but not limited to, the acquisition of a new line of business and or a reverse merger. We have agreed to pay Brack $25,000 in 2017 under the Brack agreement, as amended in March 2017.

Simultaneously with the completion of the acquisition of MG Cleaners LLC, EJC Ventures LP entered into a purchase agreement to acquire 125,000 shares of our common stock at a price of $0.20 per share pursuant to the Company’s offering of its securities. Mr. John P. Boylan, one of our directors, is the control person of EJC Ventures LP.

The Board of Directors has adopted a Related Party Transaction Policy for the review of related person transactions. Under these policies and procedures, the audit committee reviews related person transactions in which we are or will be a participant to determine if they are fair and beneficial to the Company. Financial transactions, arrangements, relationships or any series of similar transactions, arrangements or relationships in which a related person has or will have a material interest and that exceeds the lesser of: (i) $120,000, and (ii) one percent of the average of the Company’s total assets at year end for the last two completed fiscal years, in the aggregate per year are subject to the audit committee’s review. Any member of the Audit Committee who is a related person with respect to a transaction under review may not participate in the deliberation or vote requesting approval or ratification of the transaction. Transactions that are subject to the policy include any transaction, arrangement or relationship (including indebtedness or guarantees of indebtedness) in which the Company is a participant with a related person. The related person may have a direct or indirect material interest in the transaction. It is Company policy that the audit committee shall approve any related party transaction before the commencement of the transaction. However, if the transaction is not identified before commencement, it must still be presented to the audit committee for their review and ratification. For more information regarding related party transactions, see the section labeled “Certain Relationships and Related Transactions” below.

Code of Ethics and Conduct

Our Board of Directors has adopted a Code of Conduct and a Code of Business Conduct and Ethics that embody our commitment to conduct business with the highest ethical standards. The Code of Conduct provides principles and standards by which directors, officers, and employees will conduct themselves. In addition to the Code of Conduct, our Directors, Executive Officers, and senior financial officers are also subject to the Code of Business Conduct and Ethics and are expected to adhere to the principles and procedures set forth.

A copy of our Code of Ethics may be found on our website at www.smg-indium.com .

Director Independence

Our Board of Directors has determined that Messrs. Boylan, Paulson and Gilbert are “independent” as defined under the standards set forth in Rule 5605 of the NASDAQ Stock Market Rules. In making this determination, the Board of Directors considered all transactions set forth under “Certain Relationships and Related Transactions.”

Legal Proceedings

To the best of our knowledge, none of our Directors or Executive Officers has been convicted in a criminal proceeding, excluding traffic violations or similar misdemeanors, or has been a party to any judicial or administrative proceeding during the past ten years that resulted in a judgment, decree, or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws, except for matters that were dismissed without sanction or settlement. Except as set forth in our discussion below in “Certain Relationships and Related Transactions,” none of our Directors, Director nominees, or Executive Officers has been involved in any transactions with us or any of our Directors, Executive Officers, affiliates, or associates which are required to be disclosed pursuant to the rules and regulations of the Commission.

Market Price and Dividend Information

Our common stock is quoted on the OTC Pink Market operated by OTC Market Group, Inc. under the symbol “SMGI”. The following table sets forth the high and low sales prices for our common stock as reported.

Quarterly Price Ranges

	Common Stock*
Quarter Ended	High		Low
March 31, 2017	$	0.35	$	0.25
June 30, 2017	$	0.26	$	0.16
March 31, 2016	$	0.20	$	0.18
June 30, 2016	$	0.25	$	0.23
September 30, 2016	$	0.25	$	0.25
December 31, 2016	$	0.33	$	0.14

March 31, 2015	$	0.35	$	0.31
June 30, 2015	$	0.33	$	0.30
September 30, 2015	$	0.32	$	0.29
December 31, 2015	$	0.40	$	0.17

As of September 18, 2017, the closing sales price of our common stock on the OTC Pink Market was $0.55. As of September 19, 2017, there were approximately 164 stockholders of record of our common stock.

* As published on Bloomberg L.P., adjusted to reflect a special cash distribution paid in December 2015 of $1.75 per share of common stock.

Dividend Policy

We paid $1.75 per common share in a return of capital cash distribution to our stockholders in December 2015 for an aggregate amount of $3.052 million. There were no such distributions in 2016. Any future determination to pay dividends will be at the discretion of our Board and will depend on our financial condition, results of operations, capital requirements and other factors that our Board deems relevant. In addition, the terms of any future debt or credit facility may preclude us from paying dividends. At this time, we do not anticipate paying any future dividends. The Company’s Board however, may consider paying dividends in the future once it has evaluated potential strategic options for the business. Our Crestmark Bank credit facility, which closed in May 2017, could restrict the payment of future dividends.

Issuer Purchases of Equity Securities

None .

Recent Sales of Unregistered Securities

Simultaneously with the completion of the Acquisition of MG Cleaners, we entered into securities purchase agreements for the sale of 1,500,000 shares of our common stock for $300,000 in cash to accredited investors in a private offering exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”) pursuant to Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation D promulgated thereunder. Additionally, we issued 350,000 shares of our common stock to certain of our officers and directors that resigned in connection with the Acquisition pursuant to our 2008 Long-Term Compensation Plan.

Description of Securities

General

Our authorized capital stock consists of 25,000,000 shares of common stock, par value $0.001, and 1,000,000 authorized shares of preferred stock, par value $0.001.

As of September 19, 2017, we had shares of common stock issued and outstanding held by 164 stockholders, and no shares of preferred stock issued and outstanding. Further, there were 370,000 outstanding options to purchase shares of our common stock as of September 19, 2017.

Common Stock

Holders of common stock are entitled to one vote for each share held of record on all matters submitted to a vote of the stockholders, and do not have cumulative voting rights. Holders of common stock are entitled to receive ratably such dividends, if any, as may be declared from time to time by our board of directors out of funds legally available for dividend payments. All outstanding shares of common stock are fully paid and non-assessable. The holders of common stock have no preferences or rights of conversion, exchange, pre-emption or other subscription rights. There are no redemption or sinking fund provisions applicable to the common stock. In the event of any liquidation, dissolution or winding-up of our affairs, holders of common stock will be entitled to share ratably in our assets that are remaining after payment or provision for payment of all of our debts and obligations.

Delaware Law and Certain Charter and Bylaw Provisions

The provisions of (1) Delaware law, (2) our certificate of incorporation, as amended, and (3) our bylaws could discourage or make it more difficult to accomplish a proxy contest or other change in our management or the acquisition of control by a holder of a substantial amount of our voting stock. It is possible that these provisions could make it more difficult to accomplish, or could deter, transactions that stockholders may otherwise consider to be in their best interests or our best interests. These provisions are intended to enhance the likelihood of continuity and stability in the composition of our Board of Directors and in the policies formulated by the Board of Directors and to discourage certain types of transactions that may involve an actual or threatened change of control of us. These provisions are designed to reduce our vulnerability to an unsolicited acquisition proposal. The provisions also are intended to discourage certain tactics that may be used in proxy fights. Such provisions also may have the effect of preventing changes in our management.

Delaware Statutory Business Combinations Provision. We are subject to the anti-takeover provisions of Section 203 of the Delaware General Corporations Law. In general, Section 203 prohibits a publicly-held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is, or the transaction in which the person became an interested stockholder was, approved in a prescribed manner or another prescribed exception applies. For purposes of Section 203, a “business combination” is defined broadly to include a merger, asset sale or other transaction resulting in a financial benefit to the interested stockholder, and, subject to certain exceptions, an “interested stockholder” is a person who, together with his or her affiliates and associates, owns (or within three years prior, did own) 15.0% or more of the corporation’s voting stock.

Advance Notice Provisions for Stockholder Proposals. For an annual or special meeting, a stockholder’s notice generally must be delivered not less than 10 days nor more than 60 days prior to the meeting.

Special Meetings of Stockholders . Special meetings of the stockholders may be called by our Board of Directors pursuant to a resolution adopted by a majority of the total number of directors, or by such persons or persons as may be authorized by the certificate of incorporation, as amended, or the by-laws.

Super-Majority Stockholder Vote required for Certain Actions. The Delaware General Corporation Law provides generally that the affirmative vote of a majority of the shares entitled to vote on any matter is required to amend a corporation’s certificate of incorporation and bylaws, unless the corporation’s certificate of incorporation, as amended, and bylaws, as the case may be, requires a greater percentage.

Transfer Agent and Registrar

Continental Stock Transfer and Trust Company is our transfer agent and registrar for the common stock.

Quotation of Securities

Our common stock trades on the OTC Pink Market under the symbol “SMGI”.

Indemnification of Directors and Officers

We currently do not maintain Directors’ and Officers’ liability insurance. Our amended and restated certificate of incorporation and amended and restated bylaws include provisions limiting the liability of directors and officers and indemnifying them under certain circumstances. We intend to enter into indemnification agreements with our directors to provide our directors and certain of their affiliated parties with additional indemnification and related rights. See “Indemnification of Directors and Officers” for further information.

Financial Statements and Supplementary Data

See item 9.01 and the exhibit index below and the corresponding exhibits which are incorporated herein by reference.

Changes In And Disagreements With Accountants On Accounting And Financial Disclosure

Effective as of the Closing Date, SMG Indium Resources Ltd. (the “Registrant”) dismissed Cohn Reznick LLP (“Cohn”) as its independent registered public accounting firm. The decision was approved by the Registrant ’s Board of Directors effective September 19, 2017.

The reports of Cohn on the Registrant’s financial statements for the fiscal years ended December 31, 2016 and 2015 did not contain an adverse opinion or disclaimer of opinion and were not modified as to uncertainty, audit scope, or accounting principles. During the Registrant’s fiscal years ended December 31 2016 and 2015, and the subsequent period through the date of this report, there were (i) no disagreements with Cohn on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Cohn would have caused Cohn to make reference to the subject matter of the disagreements in connection with its report, and (ii) no “reportable events” as that term is defined in Item 304(a)(1)(v) of Regulation S-K.

The Registrant provided Cohn with a copy of the disclosures made in this Current Report on Form 8-K and requested that Cohn furnish it with a letter addressed to the Securities and Exchange Commission stating whether or not it agrees with the Registrant’s statements herein and, if not, stating the respects in which it does not agree. A copy of the letter furnished by Cohn is attached as Exhibit 16.1 hereto.

Effective as of the Closing Date, the Registrant engaged Malone Bailey, LLP (“Malone”) as the Registrant’s new independent registered public accounting firm. The appointment of Malone was approved by the Registrant’s Board of Directors effective September 19, 2017. During the fiscal years ended December 31, 2016 and 2015, and the subsequent interim period through September 19, 2017, neither the Registrant nor anyone acting on its behalf consulted with Malone regarding either (1) the application of accounting principles to any specific completed or proposed transaction, or the type of audit opinion that might be rendered on the Registrant’s financial statements, nor did Malone provide written or oral advice to the Registrant that Malone concluded was an important factor considered by the Registrant in reaching a decision as to the accounting, auditing or financial reporting issue; or (2) any matter that was either the subject of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K and the instructions thereto) or a reportable event (as defined in Item 304(a)(1)(v) of Regulation S-K).

Financial Statements And Exhibits

See Item 9.01 and the exhibit index below and the corresponding exhibits, which are incorporated herein by reference.

ITEM 3.02

UNREGISTERED SALE OF EQUITY SECURITIES

Reference is made to the disclosures set forth under the heading “Recent Sales of Unregistered Securities” in Item 2.01 of this Current Report which is incorporated herein by reference in response to this Item 3.02.

The shares of our Common Stock issued to the former MG Members in connection with the Acquisition were offered and sold to the MG Members in a private transaction in reliance upon exemptions from registration pursuant to Section 4(2) of the Securities Act and the rules and regulations promulgated thereunder. Our reliance on Section 4(a)(2) of the Securities Act was based upon the following factors: (a) the issuance of the securities was an isolated private transaction by us which did not involve a public offering; (b) there were only several offerees; (c) there were no subsequent or contemporaneous public offerings of the securities by us; and (d) the negotiations for the sale of the stock took place directly between the offerees and us.

The 350,000 restricted shares of our common stock that were issued to certain of our officers and directors that resigned in connection with the Acquisition, were issued pursuant to our 2008 Long-Term Compensation Plan.

ITEM 4.01

CHANGES IN REGISTRANT’S CERTIFYING ACCOUNTANT

Reference is made to the disclosure set forth under the heading “Changes in and Disagreements with Accountants on Accounting and Financial Disclosure” under Item 2.01 of this report, which disclosure is incorporated herein by reference.

ITEM 5.01

CHANGES IN CONTROL OF REGISTRANT

As a result of the Acquisition, the Company experienced a change in control with the former MG Members acquiring control of the Company. Additionally, as a result of the Acquisition, the Company ceased being a shell company. Reference is made to the disclosures set forth under the heading “Acquisition of MG Cleaners, LLC” under Item 1.01 and the disclosures set forth in Item 2.01 of this report, which disclosure is incorporated herein by reference.

ITEM 5.02

DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANAGEMENTS OF CERTAIN OFFICERS

Reference is made to the disclosure set forth under Item 2.01 of this report, which disclosure is incorporated herein by reference.

In accordance with the Acquisition Agreement and the transactions contemplated thereby, effective as of the Closing Date, the following directors and officers were appointed:

Name		Position
Matthew C. Flemming		Chief Executive Officer and Chairman
Meggen E. Rhodes		Chief Financial Officer
John P. Boylan		Director
Steven E. Paulson		Director
Michael A. Gilbert II		Director

In addition, Ailon Grushkin, Richard Biele, Fred Arena and Mary Paetzold resigned their respective positions as officers and/or directors of the Company effective upon the consummation of the Acquisition.

ITEM 5.06

CHANGE IN SHELL COMPANY STATUS

As a result of the Acquisition, we ceased to be a shell company as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended. Please refer to Item 2.01 above for a detailed description of the Acquisition and our business following the consummation of the Acquisition, which disclosures are incorporated herein by reference.

ITEM 8.01

OTHER MATTERS

Subject to compliance with applicable federal securities laws and state corporate laws, as soon as practicable following the Acquisition, the Company intends to change its name to “SMG Oilfield Services Inc.” and procure a new trading symbol which bears a closer resemblance to our current business focus. We will also change our address to 710 N. Post Oak Road, Suite 400, Houston, Texas 77024 and our telephone number to 713.821.3153.

ITEM 9.01

FINANCIAL STATEMENTS AND EXHIBITS

(a)

Financial Statements of Business Acquired . In accordance with Item 9.01(a), (i) MG Cleaners LLC’s audited financial statements for the years ended December 31, 2016 and 2015 are filed in this Current Report on Form 8-K as Exhibit 99.1 and (ii) MG Cleaners LLC’s unaudited financial statements for the six-month interim period ended June 30, 2017 are filed in this Current Report on Form 8-K as Exhibit 99.2

	(b)	Pro forma financial information

		In accordance with Item 9.01(b), our unaudited pro forma consolidated financial statements are filed in this Current Report on Form 8-K as Exhibit 99.3.

(c)

Shell Company Transactions . Please see items attached to Items 9.01(a) and 9.01(b) above.

(d)

Exhibits . The exhibits listed in the following Exhibit Index are filed as part of this Current Report on Form 8-K.

2.1	Exchange Agreement dated September 19, 2017 by and among SMG Indium Resources Ltd., MG Cleaners, LLC and the members of MG Cleaners, LLC.
10.8	Loan and Security Agreement entered into by and between MG Cleaners, LLC and Crestmark Bank dated May 11, 2017
10.9	Promissory Note issued to Crestmark Bank dated May 11, 2017
10.10	Agreement For The Purchase and Sale of Future Receipts entered into by and between MG Cleaners, LLC and Capital Stack LLC dated April 7, 2017
10.11	Future Receivables Sales Agreement entered into by and between MG Cleaners, LLC and Libertas Funding LLC dated August 10, 2017
10.12	Corporate Guaranty entered into by and between the Company and Crestmark Bank dated September 19, 2017
10.13	Security Agreement entered into by and between the Company and Crestmark Bank dated September 19, 2017
16.1 *	Letter from Cohn Reznick LLP
21	Subsidiaries of the Registrant
99.1 *	MG Cleaners LLC audited financial statements
99.2 *	MG Cleaners LLC unaudited financial statements
99.3 *	Unaudited pro forma consolidated financial statements
101.1NS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definitions Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

*Previously filed on Form 8-K dated September 19, 2017

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Current Report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: October 27, 2017

SMG Indium Resources LTD.

	By:	/s/ Matthew Flemming
	Name:	Matthew Flemming
	Title:	Chief Executive Officer and President

Exhibit 2.1

AGREEMENT AND PLAN OF SHARE EXCHANGE

by and among

MG Cleaners LLC,

a Texas limited liability company

and

the Members of

MG Cleaners LLC listed herein,

on the one hand ;

and

SMG Indium Resources Ltd.,

A Delaware corporation

September 19, 2017

AGREEMENT AND PLAN OF SHARE EXCHANGE

This Agreement and Plan of Share Exchange, dated as of September 19, 2017 (this “ Agreement ”), is made and entered into by and among MG Cleaners LLC, a Texas limited liability company (“ MG ”), and the members of MG listed on Schedule I attached hereto (each, an “ MG Member ”, and collectively, the “ MG Members ”), on the one hand; and SMG Indium Resources Ltd., a Delaware corporation (“ SMGI ”).

RECITALS

WHEREAS, the board of directors of SMGI and all of the members of MG have adopted resolutions approving and adopting the share exchange described in this Agreement (the “ Exchange ”) upon the terms and conditions set forth herein;

WHEREAS, each MG Member owns the number of membership interests of MG set forth opposite such MG Member’s name in Column I on Schedule I attached hereto (collectively, the “ MG Interests ”);

WHEREAS, the MG Members own 100% of the issued and outstanding membership interests of MG and the MG Members desire to exchange their respective MG Interests for the SMGI Shares (defined below) and the Cash Consideration (defined below), pursuant to the terms and conditions of this Agreement;

WHEREAS, SMGI will enter into this Agreement for the purpose of evidencing its consent to the consummation of the Exchange and for the purpose of making certain representations, warranties, covenants and agreements;

NOW, THEREFORE, the parties hereto, intending to be legally bound, agree as follows:

ARTICLE 1

THE PURCHASE AND EXCHANGE

1.1 Exchange of Shares . Upon the terms and subject to the conditions hereof, at the Closing the MG Members will sell, convey, assign, transfer and deliver to SMGI membership interest certificates representing the MG Interests, and SMGI will: (i) issue to each MG Member, in exchange for such MG Member’s pro rata portion of the MG Interests, one or more stock certificates representing the number of shares of SMGI common stock, par value $.001 per share ( “ Common Stock ”), set forth opposite such MG Member’s name in Column II on Schedule I attached hereto (collectively, the “ SMGI Shares ”), and (ii) pay cash consideration in the amount of $300,000 ($250,000 to be paid at the Closing and $50,000 to be paid upon SMGI raising a minimum of $500,000 in a private offering) to the MG Members (“ Cash Consideration ”) in the amounts set forth opposite such MG Member’s name in Column III on Schedule I attached hereto. The aggregate number of SMGI Shares to be issued to the MG Members will equal 4,578,276 shares of Common Stock.

1.2 Closing . The closing of the Exchange (the “ Closing ”) shall take place on the date when all of the closing conditions set forth in Article 6 of this Agreement are either satisfied or waived, or on such other date as may be mutually agreed upon by the parties. Such date is referred to herein as the “ Closing Date ”.

ARTICLE 2

REPRESENTATIONS AND WARRANTIES OF MG

MG hereby represents and warrants to SMGI as follows:

2.1 Organization . MG is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Texas, is qualified to conduct business and is in good standing under the laws of each jurisdiction in which the nature of its business requires such qualification, and has the requisite power to carry on its business as now conducted.

2.2 Capitalization of the Company . As of immediately prior to the Closing, the outstanding membership interests of MG shall consist solely of the MG Interests being sold to SMGI set forth as the “Total” in Column II on Schedule I attached hereto. The MG Interests are validly issued, fully paid and non-assessable. As of the Closing, there are no outstanding or authorized options, warrants, rights, convertible securities or debt, or any other securities of MG, or any agreements or commitments to which MG or any of the MG Members is a party or which are binding upon MG or any of the MG Members providing for the issuance or redemption of any of the MG Interests.

2.3 Certain Corporate Matters . MG is duly qualified to do business as a limited liability company and is in good standing in each jurisdiction in which the ownership of its properties, the employment of its personnel or the conduct of its business requires it to be so qualified, except where the failure to be so qualified would not have a material adverse effect on MG's financial condition, results of operations or business. MG has full corporate power and authority and all authorizations, licenses and permits necessary to carry on the business in which it is engaged and to own and use the properties owned and used by it.

2.4 Authority Relative to this Agreement . MG has the requisite power and authority to enter into this Agreement and to carry out its obligations hereunder. The execution, delivery and performance of this Agreement by MG and the consummation by MG of the transactions contemplated hereby have been duly authorized by the managing member of MG and no other actions on the part of MG are necessary to authorize this Agreement or the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by MG and constitutes a valid and binding agreement of MG, enforceable against MG in accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency or other similar laws affecting the enforcement of creditors' rights generally or by general principles of equity.

2.5 Consents and Approvals; No Violations . Except for applicable requirements of federal securities laws and state securities laws, no filing with, and no permit, authorization, consent or approval of, any third party, public body or authority is necessary for the consummation by MG of the transactions contemplated by this Agreement. Neither the execution and delivery of this Agreement by MG nor the consummation by MG of the transactions contemplated hereby, nor compliance by MG with any of the provisions hereof, will (i) conflict with or result in any breach of any provisions of the charter or bylaws of MG, (ii) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, license, contract, agreement or other instrument or obligation to which MG is a party or by which it or any of its properties or assets may be bound or (iii) violate any order, writ, injunction, decree, statute, rule or regulation applicable to MG, or any of its properties or assets, except in the case of clauses (ii) and (iii) for violations, breaches or defaults which are not individually or in the aggregate material to MG.

2.6 Financial Statements .

(a) MG has provided SMGI with a copy of the audited balance sheets of MG as at December 31, 2016 and 2015, and the related statements of operations, stockholders’ equity and cash flows for the two fiscal years then ended, together with the unqualified report thereon of Malone & Bailey (collectively, “ MG’s Audited Financials ”).

(b) Included in MG’s Audited Financials are the unaudited balance sheet of MG as at June 30, 2017, and the related statements of operations, stockholders’ equity and cash flows for the three months then ended (“ MG’s Interim Financials ”).

(c) MG’s Audited Financials and MG’s Interim Financials (collectively “ MG’s Financial Statements ”) (i) are in accordance with the books and records of MG, (ii) are correct and complete in all material respects, (iii) fairly present the financial position and results of operations of MG as of the dates indicated, and (iv) are prepared in accordance with U.S. Generally Accepted Accounting Principles (“ GAAP ”) (except that (x) unaudited financial statements may not be in accordance with GAAP because of the absence of footnotes normally contained therein, and (y) the interim unaudited condensed financial statements included herein include all adjustments, all of which are of a normal recurring nature, necessary for a fair presentation of the results of operations for the interim periods presented.

(d) MG’s Financial Statements constitute all of the financial statements of MG required to be included in the Form 8-K due to be filed with the SEC by SMGI within four business days of the Closing Date.

2.7 Tax Matters .

(a) MG has filed on a timely basis all reports, returns, declarations, statements or other information required to be supplied to a taxing authority in connection with Taxes that it was required to file (collectively, “ Tax Returns ”), and all Tax Returns were complete and adequate in all material respects. “ Taxes ” means all taxes or levies or other similar assessments or liabilities in the nature of a tax, including without limitation income, gross receipts, ad valorem, premium, value-added, excise, real property, personal property, sales, use, transfer, withholding, employment, unemployment insurance, social security, business license, business organization, environmental, workers compensation, payroll, profits, license, lease, service, service use, severance, stamp, occupation, windfall profits, customs, duties, franchise and other taxes imposed by the United States of America or any state, local or foreign government, or any agency thereof, or other political subdivision of the United States or any such government, and any interest, fines, penalties, assessments or additions to tax resulting from, attributable to or incurred in connection with any tax or any contest or dispute thereof.

(b) MG has paid on a timely basis, or adequately reserved against in MG’s Financial Statements, all material Taxes due, or claimed by any taxing authority to be due, from or with respect to them.

(c) To the best knowledge of MG, (i) no examination or audit of any Tax Return of MG by any governmental entity is currently in progress or, to the knowledge of MG, threatened or contemplated, (ii) MG has not been informed by any jurisdiction that the jurisdiction believes that MG was required to file any Tax Return that was not filed, and (iii) no material Tax issue has been raised, and no material adjustment has been proposed or is pending, by any governmental entity or taxing authority in connection with any of MG’s Tax Returns.

(d) No waiver or extension of any statute of limitations as to any material Tax matter has been given by or requested of MG.

For the purposes of this Section 2.7 , a Tax is due (and must therefore either be paid or adequately reserved against in MG’s Financial Statements) only on the last date payment of such Tax can be made without interest or penalties, whether such payment is due in respect of estimated Taxes, withholding Taxes, required Tax credits or any other Tax.

2.8 Books and Records . The books and records of MG delivered to SMGI prior to the Closing fully and fairly reflect the transactions to which MG is a party or by which its properties are bound.

2.9 Questionable Payments . Neither MG, nor any employee, agent, representative or any other person acting on behalf of MG has, (i) directly or indirectly, made any bribes, kickbacks, illegal payments or unlawful contributions in connection with foreign or domestic political activity using MG’s funds, (ii) or made any payments from MG's funds to foreign or domestic governmental officials or employees, or to any foreign or domestic political parties or campaigns (iii) failed to disclose fully any contribution made by MG (or anyone acting on MG’s behalf of which MG was aware) which is in violation of the law or (d) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended.

2.10 Intellectual Property . To MG’s knowledge, MG is not infringing, and has never infringed, upon the intellectual property or proprietary rights of any other person, corporation or other entity. There are no claims pending or, to MG’s knowledge, any claims threatened alleging that MG is currently infringing upon, using in an unauthorized manner, or violating any trademarks, trade names, service marks, patents, copyrights or other proprietary rights of any person, corporation or other entity, and MG is unaware of any facts which would form a reasonable basis for any such claim. MG is not, nor will it be as a result of the execution and delivery of this Agreement or the performance of its obligations under this Agreement, in breach of any license, sublicense or other agreement or contract relating to intellectual property.

2.11 Litigation . MG is not subject to any judgment or order of any court or quasi-judicial or administrative agency of any jurisdiction, domestic or foreign, nor is there any charge, complaint, lawsuit or governmental investigation pending against MG. MG is not a plaintiff in any action, domestic or foreign, judicial or administrative. There are no existing actions, suits, proceedings against or investigations of MG, and MG knows of no basis for such actions, suits, proceedings or investigations. There are no unsatisfied judgments, orders, decrees or stipulations affecting MG or to which MG is a party.

2.12 Legal Compliance . To the best knowledge of MG, after due investigation, no claim has been filed against MG alleging a violation of any applicable laws or regulations of foreign, federal, state and local governments and all agencies thereof. MG holds all of the material permits, licenses, certificates or other authorizations of foreign, federal, state or local governmental agencies required for the conduct of its business as presently conducted.

2.13 Disclosure . The representations and warranties and statements of fact made by MG in this Agreement are, as applicable, accurate, correct and complete and do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements and information contained herein not false or misleading.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES

OF THE MG MEMBERS

The MG Members hereby represent and warrant to SMGI as follows:

3.1 Ownership of the MG Interests . Each MG Member owns, beneficially and of record, good and marketable title to the MG Interests set forth opposite such MG Member’s name in Column I on Schedule I attached hereto, free and clear of all security interests, liens, adverse claims, encumbrances, equities, proxies, options or stockholders' agreements. Each MG Member represents that such person has no right or claims whatsoever to any MG Interests, other than membership interests listed opposite such MG Member’s name in Column I on Schedule I. At the Closing, the MG Members will convey to SMGI good and marketable title to the MG Interests, free and clear of any security interests, liens, adverse claims, encumbrances, equities, proxies, options, stockholders' agreements or restrictions.

3.2 Authority Relative to this Agreement . This Agreement has been duly and validly executed and delivered by each MG Member and constitutes a valid and binding agreement of each MG Member, enforceable against each MG Member in accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency or other similar laws affecting the enforcement of creditors' rights generally or by general principles of equity.

3.3 Restricted Securities . Each MG Member acknowledges that the SMGI Shares will not be registered pursuant to the Securities Act of 1933, as amended (the “ Securities Act” ) or any applicable state securities laws, that the SMGI Shares will be characterized as "restricted securities" under federal securities laws, and that under such laws and applicable regulations the SMGI Shares cannot be sold or otherwise disposed of without registration under the Securities Act or an exemption therefrom. In this regard, each MG Member is familiar with Rule 144 promulgated under the Securities Act, as currently in effect, and understands the resale limitations imposed thereby and by the Securities Act.

3.4 Legend . Each MG Member acknowledges that the certificate(s) representing such MG Member’s pro rata portion of the SMGI Shares shall be conspicuously set forth on the face or back thereof a legend in substantially the following form:

“THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR PURSUANT TO AN EXEMPTION FROM REGISTRATION OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.”

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF

SMGI

SMGI hereby represents and warrants to MG and the MG Members as follows:

4.1 Organization . SMGI is a Delaware corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, and has the requisite corporate power to carry on its business as now conducted.

4.2 Capitalization . SMGI's authorized capital stock consists of (i) 25,000,000 shares of Common Stock par value $.001, of which 1,744,569 shares are issued and outstanding, and (ii) 1,000,000 shares of preferred stock, par value $.001 (“Preferred Stock” and, together with the Common Stock, “Capital Stock”), none of which are issued and outstanding. At the Closing, SMGI shall have no more than 1,744,569 issued and outstanding shares of Common Stock prior to the issuance of the SMGI Shares pursuant to the terms of this Agreement, other than an aggregate of 350,000 shares of Common Stock that will be issued to certain officers and directors of SMGI at the Closing pursuant to the Company’s 2008 Long-Term Incentive Compensation Plan (the “ SMGI Compensation Plan ”). All issued and outstanding shares of SMGI Capital Stock are duly authorized, validly issued, fully paid, non-assessable and free of preemptive rights. When issued, the SMGI Shares will be duly authorized, validly issued, fully paid, non-assessable and free of preemptive rights. Except for (i) options to purchase an aggregate of 300,000 shares of SMGI Common Stock at an exercise price equal to $0.24 per share that are currently outstanding and (ii) the issuance of 350,000 shares of Common Stock to certain officers and directors of SMGI at the Closing pursuant to the Compensation Plan, there are no other outstanding or authorized options, rights, warrants, calls, convertible securities, rights to subscribe, conversion rights or other agreements or commitments to which SMGI is a party or which are binding upon SMGI providing for the issuance by SMGI or transfer by SMGI of additional shares of SMGI's Capital Stock and SMGI has not reserved any shares of its Capital Stock for issuance, nor are there any outstanding stock option rights, phantom equity or similar rights, contracts, arrangements or commitments to issue Capital Stock of SMGI. To SMGI’s knowledge, there are no voting trusts or any other agreements or understandings with respect to the voting of SMGI's Capital Stock. To SMGI’s knowledge, there are no obligations of SMGI to repurchase, redeem or otherwise re-acquire any shares of its Capital Stock as of the Closing. SMGI does not have any outstanding obligations to register any of its shares of Capital Stock with the United States Securities and Exchange Commission (the “ SEC ”).

4.3 Certain Corporate Matters . SMGI has full corporate power and authority and all authorizations, licenses and permits necessary to carry on the business in which it is engaged and to own and use the properties owned and used by it. SMGI has delivered to MG true, accurate and complete copies of its certificate of incorporation and bylaws, which reflect all restatements of and amendments made thereto at any time prior to the date of this Agreement. The records of meetings of the stockholders and board of directors of SMGI are complete and correct in all material respects. Other than the 350,000 shares of Common Stock issued to certain officers and directors of SMGI simultaneously with the closing hereof, the stock records and stockholder list of SMGI that SMGI has previously furnished to MG are complete and correct in all material respects and accurately reflect the record ownership and the beneficial ownership of all the outstanding shares of SMGI's capital stock and any other outstanding securities issued by SMGI. SMGI is not in default under or in violation of any provision of its certificate of incorporation or bylaws in any material respect. SMGI is not in any material default or in violation of any restriction, lien, encumbrance, indenture, contract, lease, sublease, loan agreement, note or other obligation or liability by which it is bound or to which any of its assets is subject.

4.4 Authority Relative to this Agreement . SMGI has the requisite power and authority to enter into this Agreement and carry out its respective obligations hereunder. The execution, delivery and performance of this Agreement by SMGI and the consummation of the transactions contemplated hereby have been duly authorized by the board of directors of SMGI and no other actions on the part of SMGI are necessary to authorize this Agreement or the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by SMGI and constitutes a valid and binding obligation of SMGI, enforceable in accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency or other similar laws affecting the enforcement of creditors' rights generally or by general principles of equity.

4.5 Consents and Approvals; No Violations . Except for applicable requirements of federal securities laws and state securities or blue-sky laws, no filing with, and no permit, authorization, consent or approval of, any third party, public body or authority is necessary for the consummation by SMGI of the transactions contemplated by this Agreement. Neither the execution and delivery of this Agreement by SMGI nor the consummation by SMGI of the transactions contemplated hereby, nor compliance by SMGI with any of the provisions hereof, will (i) conflict with or result in any breach of any provisions of the certificate of incorporation or bylaws of SMGI, (ii) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, license, contract, agreement or other instrument or obligation to which SMGI is a party or by which it or any of its properties or assets may be bound or (iii) violate any order, writ, injunction, decree, statute, rule or regulation applicable to SMGI, or any of their respective properties or assets, except in the case of clauses (ii) and (iii) for violations, breaches or defaults which are not in the aggregate material to SMGI taken as a whole.

4.6 SEC Documents . SMGI hereby makes reference to the following documents filed with the SEC, as posted on the SEC’s website, www.sec.gov : (collectively, the “ SEC Documents ”): (i) Annual Reports on Form 10-K for the year ended December 31, 2016; and (ii) Quarterly Reports on Form 10-Q for the periods ended March 31, 2016, June 30, 2016, September 30, 2016, March 31, 2017 and June 30, 2017. To SMGI’s knowledge the SEC Documents constitute all of the annual and quarterly reports that SMGI was required to file with the SEC pursuant to the Securities Exchange Act of 1934, as amended (“ Exchange Act ”) and the rules and regulations promulgated thereunder by the SEC for the year ended December 31, 2016 and the six months ended June 30, 2017, respectively. To SMGI’s knowledge, as of the filing dates, the SEC Documents complied in all material respects with the requirements of the Securities Act and/or the Exchange Act, as the case may require, and the rules and regulations promulgated thereunder and none of the SEC Documents contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

4.7 Real Property . SMGI does not own or lease any real property.

4.8 Books and Records . The books and records of SMGI delivered to MG prior to the Closing fully and fairly reflect the transactions to which SMGI is a party or by which its properties are bound.

4.9 Questionable Payments . To SMGI’s knowledge, neither SMGI, nor any employee, agent or representative of SMGI has, directly or indirectly, made any bribes, kickbacks, illegal payments or illegal political contributions using Company funds or made any payments from SMGI's funds to governmental officials for improper purposes or made any illegal payments from SMGI's funds to obtain or retain business.

4.10 Intellectual Property . SMGI does not own or use any trademarks, trade names, service marks, patents, copyrights or any applications with respect thereto. SMGI has no knowledge of any claim that, or inquiry as to whether, any product, activity or operation of SMGI infringes upon or involves, or has resulted in the infringement of, any trademarks, trade-names, service marks, patents, copyrights or other proprietary rights of any other person, corporation or other entity; and no such proceedings have been instituted, are pending or are threatened against SMGI.

4.11 Insurance . Except as set forth on Schedule 4.11 attached hereto, SMGI does not have any insurance policies in effect.

4.12 Contracts . Except as set forth on Schedule 4.12 attached hereto, SMGI does not have any material contracts, leases, arrangements or commitments (whether oral or written). SMGI is not a party to or bound by or affected by any contract, lease, arrangement or commitment (whether oral or written) relating to: (i) the employment of any person; (ii) collective bargaining with, or any representation of any employees by, any labor union or association; (iii) the acquisition of services, supplies, equipment or other personal property; (iv) the purchase or sale of real property; (v) distribution, agency or construction; (vi) lease of real or personal property as lessor or lessee or sublessor or sublessee; (vii) lending or advancing of funds; (viii) borrowing of funds or receipt of credit; (ix) incurring any obligation or liability; or (x) the sale of personal property.

4.13 Litigation . SMGI is not subject to any judgment or order of any court or quasi judicial or administrative agency of any jurisdiction, domestic or foreign, nor is there any charge, complaint, lawsuit or governmental investigation pending against SMGI. SMGI is not a plaintiff in any action, domestic or foreign, judicial or administrative. There are no existing actions, suits, proceedings against or investigations of SMGI, and SMGI knows of no basis for such actions, suits, proceedings or investigations. There are no unsatisfied judgments, orders, decrees or stipulations affecting SMGI or to which SMGI is a party.

4.14 Employees . SMGI does not owe any compensation of any kind, deferred or otherwise, to any current or previous employees. Except as set forth on Schedule 4.14 hereto, SMGI does not have a written or oral employment agreement with any officer or director of SMGI. SMGI is not a party to or bound by any collective bargaining agreement. There are no loans or other obligations payable or owing by SMGI to any stockholder, officer, director or employee of SMGI, nor are there any loans or debts payable or owing by any of such persons to SMGI or any guarantees by SMGI of any loan or obligation of any nature to which any such person is a party.

4.15 Legal Compliance . To the best knowledge of SMGI, after due investigation, no claim has been filed against SMGI alleging a violation of any applicable laws or regulations of foreign, federal, state and local governments and all agencies thereof. SMGI holds all of the material permits, licenses, certificates or other authorizations of foreign, federal, state or local governmental agencies required for its business as presently conducted.

4.16 Subsidiaries and Investments . SMGI does not own any capital stock or have any interest of any kind whatsoever in any corporation, partnership, or other form of business organization.

4.17 Broker's Fees . Neither SMGI, nor anyone on its behalf, has any liability to any broker, finder, investment banker or agent, or has agreed to pay any brokerage fees, finder’s fees or commissions, or to reimburse any expenses of any broker, finder, investment banker or agent in connection with this Agreement.

4.18 Listing and Maintenance Requirements . SMGI’s Common Stock is currently quoted on the Pink Open Market. SMGI has not, since the date its Common Stock began trading on the Pink Open Market, received any notice from OTC Markets or FINRA or any trading market on which SMGI’s Common Stock is or has been listed or quoted to the effect that SMGI is not in compliance with the quoting, listing or maintenance requirements of the Pink Open Market or such other trading market. SMGI is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such quoting, listing and maintenance requirements.

4.19 Application of Takeover Protections . SMGI and its board of directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under SMGI's certificate of incorporation or the laws of its state of incorporation that is or could become applicable to MG or the MG Members as a result of the Exchange or the exercise of any rights by MG or the MG Members pursuant to this Agreement.

4.20 No SEC or FINRA Inquiries . To SMGI’s knowledge, neither SMGI nor any of its past or present officers or directors is, or has ever been, the subject of any formal or informal inquiry or investigation by the SEC or FINRA.

4.20 Depository Trust Company Notifications . SMGI has not received any notification from the Depository Trust Company (“ DTC ”) indicating that DTC intends to either: (i) limit any services available for SMGI’s Common Stock on deposit at DTC, or (ii) place a complete restriction on all DTC services for SMGI’s Common Stock on deposit at DTC.

4.21 Disclosure . The representations and warranties and statements of fact made by SMGI in this Agreement are, as applicable, accurate, correct and complete and do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements and information contained herein not false or misleading.

ARTICLE 5

COVENANTS AND AGREEMENTS OF THE PARTIES

EFFECTIVE PRIOR TO CLOSING

5.1 Corporate Examinations and Investigations . Prior to the Closing, each party shall be entitled, through its employees and representatives, to make such investigations and examinations of the books, records and financial condition of MG and SMGI as each party may request. In order that each party may have the full opportunity to do so, MG and SMGI shall furnish each party and its representatives during such period with all such information concerning the affairs of MG or SMGI as each party or its representatives may reasonably request and cause MG or SMGI and their respective officers, employees, consultants, agents, accountants and attorneys to cooperate fully with each party's representatives in connection with such review and examination and to make full disclosure of all information and documents requested by each party or its representatives. Any such investigations and examinations shall be conducted at reasonable times and under reasonable circumstances, it being agreed that any examination of original documents will be at each party's premises, with copies thereof to be provided to each party or its representatives upon request.

5.2 Cooperation; Consents . Prior to the Closing, each party shall cooperate with the other parties to the end that the parties shall (i) in a timely manner make all necessary filings with, and conduct negotiations with, all authorities and other persons the consent or approval of which, or the license or permit from which is required for the consummation of the Exchange and (ii) provide to the other party such information as the other party may reasonably request in order to enable it to prepare such filings and to conduct such negotiations.

5.3 Conduct of Business . Subject to the provisions hereof, from the date hereof through the Closing, each party hereto shall (i) conduct its business in the ordinary course and in such a manner so that the representations and warranties contained herein shall continue to be true and correct in all material respects as of the Closing as if made at and as of the Closing and (ii) not enter into any material transactions or incur any material liability not required or specifically contemplated hereby, without first obtaining the written consent of MG and the MG Members on the one hand and SMGI on the other hand. Without the prior written consent of MG, the MG Members or SMGI, except as required or specifically contemplated hereby, each party shall not undertake or fail to undertake any action if such action or failure would render any of said warranties and representations untrue in any material respect as of the Closing.

5.4 Financing . MG shall use its best efforts to raise a minimum of $250,000 in cash in a private placement immediately following the Closing.

5.5 Litigation . From the date hereof through the Closing, each party hereto shall promptly notify the representative of the other parties of any lawsuits, claims, proceedings or investigations which after the date hereof are threatened or commenced against such party or any of its affiliates or any officer, director, manager, employee, consultant, agent, member or shareholder thereof, in their capacities as such, which, if decided adversely, could reasonably be expected to have a material adverse effect upon the condition (financial or otherwise), assets, liabilities, business, operations or prospects of such party or any of its subsidiaries.

5.6 Notice of Default . From the date hereof through the Closing, each party hereto shall give to the representative of the other party or parties prompt written notice of the occurrence or existence of any event, condition or circumstance occurring which would constitute a violation or breach of this Agreement by such party or which would render inaccurate in any material respect any of each such party's representations or warranties herein.

ARTICLE 6

CONDITIONS TO CLOSING

6.1 Conditions to Obligations of MG and the MG Members . The obligations of MG and the MG Members under this Agreement shall be subject to each of the following conditions:

(a) Closing Deliveries . At the Closing, SMGI shall have delivered or caused to be delivered to MG the following:

(i) resolutions duly adopted by the board of directors of SMGI authorizing and approving the Exchange and the execution, delivery and performance of this Agreement;

(ii) written resignations of each of Ailon Z. Grushkin and Mary E. Paetzold as officers of SMGI to be effective immediately prior to, and conditioned upon, the Closing;

(iii) resolutions duly adopted by the board of directors of SMGI electing the following individuals to the positions with SMGI listed opposite their names below to be effective and conditioned upon the Closing:

	Matthew Flemming	Chief Executive Officer and President
	Meggen Rhodes	Chief Financial Officer and Secretary

(iii) resolutions duly adopted by the board of directors of SMGI (a) increasing the number of directors from three to five, and (b) duly appointing the following persons to serve as members of SMGI’s board of directors to be effective and conditioned upon the Closing:

	Matthew Flemming (Chairman);
	John P. Boylan;
	Steve Paulson; and
	Michael A. Gilbert II.

(iv) written resignations of each of Ailon Z. Grushkin, Fred Arena and Richard A. Biele as directors of SMGI immediately prior to, and conditioned upon, the Closing and after the appointment of the directors listed in 6.1(a)(iii) above;

(v) the SMGI Shares and the Cash Consideration, all in accordance with Schedule I hereto;

(vi) all corporate records, agreements, seals and any other information reasonably requested by MG’s representatives with respect to SMGI; and

(vii) such other documents as MG or the MG Members may reasonably request in connection with the transactions contemplated hereby.

(b) Representations and Warranties to be True . The representations and warranties of SMGI herein contained shall be true in all material respects at the Closing with the same effect as though made at such time. SMGI shall have performed in all material respects all obligations and complied in all material respects with all covenants and conditions required by this Agreement to be performed or complied with by them at or prior to the Closing.

(d) Pink Open Market Trading . SMGI’s Common Stock shall remain quoted and eligible for trading on the Pink Open Market.

6.2 Conditions to Obligations of SMGI . The obligations of SMGI under this Agreement shall be subject to each of the following conditions:

(a) Closing Deliveries . On the Closing Date, MG or the MG Members shall have delivered to SMGI the following:

(i) certificates representing the MG Interests, duly endorsed in blank or each accompanied by a stock power effecting the transfer thereof to SMGI;

(ii) this Agreement duly executed by MG and the MG Members;

(iii) fully executed purchase agreements entered into between MG and investors reflecting an aggregate minimum investment of $250,000 in the private placement described in Section 5.4 hereto; and

(iv) such other documents as SMGI may reasonably request in connection with the transactions contemplated hereby.

(b) Representations and Warranties to be True . The representations and warranties of MG and the MG Members herein contained shall be true in all material respects at the Closing with the same effect as though made at such time. MG and the MG Members shall have performed in all material respects all obligations and complied in all material respects with all covenants and conditions required by this Agreement to be performed or complied with by them at or prior to the Closing.

ARTICLE 7

TERMINATION

7.1 Events of Termination . This Agreement may, by notice given in the manner hereinafter provided, be terminated and abandoned at any time prior to completion of the Closing, as follows :

(a) by MG if (i) there has been a material Breach by SMGI and, in the case of a covenant or agreement, such Breach shall not have been cured within ten (10) days after receipt by SMGI of notice specifying particularly such Breach, or (ii) if MG identifies hereafter any fact, circumstance or event that could be reasonably determined to have a material adverse effect on SMGI and such fact, circumstance or event is not cured by SMGI within ten (10) days after receipt by SMGI of notice specifying particularly such fact, event or circumstance.

(b) by SMGI (i) if there has been a material Breach by MG and, in the case of a covenant or agreement, such Breach shall not have been cured within ten (10) days after receipt by MG of notice specifying particularly such Breach, or (ii) if SMGI identifies hereafter any fact, circumstance or event that could be reasonably determined to have a material adverse effect on MG (or SMGI following the completion of the transactions contemplated hereby), and such fact, circumstance or event is not cured by MG within ten (10) days after receipt by MG of notice specifying particularly such fact, event or circumstance; or

This Agreement may not be terminated after completion of the Closing, except by mutual agreement of MG and SMGI.

For the purposes of this Article 7, there shall be deemed to be a “ Breach ” of a representation, warranty, covenant, obligation, or other provision if there is or has been (i) any inaccuracy (subject to applicable knowledge and materiality qualifiers, if any) in, breach of, any failure to comply with, or any failure to perform, such representation, warranty, covenant, obligation, or other provision, or (ii) any claim (by any person) or other circumstance that is inconsistent with such representation, warranty, covenant, obligation, or other provision; and the term “ Breach ” shall be deemed to refer to any such inaccuracy, breach, failure, claim, or circumstance.

ARTICLE 8

GENERAL PROVISIONS

8.1 Notices . All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if delivered personally, sent by overnight courier or mailed by registered or certified mail (postage prepaid and return receipt requested) to the party to whom the same is so delivered, sent or mailed at the addresses set forth on the signature page hereof (or at such other address for a party as shall be specified by like notice).

8.2 Interpretation . The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. References to Sections and Articles refer to sections and articles of this Agreement unless otherwise stated.

8.3 Severability . If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated and the parties shall negotiate in good faith to modify this Agreement to preserve each party's anticipated benefits under this Agreement.

8.4 Miscellaneous . This Agreement (together with all schedules, documents and instruments referred to herein): (i) constitutes the entire agreement and supersedes all other prior agreements and undertakings, both written and oral, among the parties with respect to the subject matter hereof; (ii) except as expressly set forth herein, is not intended to confer upon any other person any rights or remedies hereunder and (iii) shall not be assigned by operation of law or otherwise, except as may be mutually agreed upon by the parties hereto.

8.5 Separate Counsel . Each party hereby expressly acknowledges that it has been advised to seek its own separate legal counsel for advice with respect to this Agreement.

9.6 Governing Law; Venue . This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of New York. Any and all actions brought under this Agreement shall be brought in the state courts of New York and each party hereby waives any right to object to the convenience of such venue.

9.7 Counterparts and Facsimile Signatures . This Agreement may be executed in two or more counterparts, which together shall constitute a single agreement. This Agreement and any documents relating to it may be executed and transmitted to any other party by facsimile or email as a .pdf copy, which facsimile or email shall be deemed to be, and utilized in all respects as, an original, wet-inked document.

9.8 Amendment . This Agreement may be amended, modified or supplemented only by an instrument in writing executed by SMGI, MG and the holders of at least 50.1% of the MG Interests.

9.9 Parties In Interest: No Third Party Beneficiaries . Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective heirs, legal representatives, successors and assigns of the parties hereto. This Agreement shall not be deemed to confer upon any person not a party hereto any rights or remedies hereunder.

9.10 Waiver . No waiver by any party of any default or breach by another party of any representation, warranty, covenant or condition contained in this Agreement shall be deemed to be a waiver of any subsequent default or breach by such party of the same or any other representation, warranty, covenant or condition. No act, delay, omission or course of dealing on the part of any party in exercising any right, power or remedy under this Agreement or at law or in equity shall operate as a waiver thereof or otherwise prejudice any of such party's rights, powers and remedies. All remedies, whether at law or in equity, shall be cumulative and the election of any one or more shall not constitute a waiver of the right to pursue other available remedies.

9.11 Expenses . At or prior to the Closing, the parties hereto shall pay all of their own expenses relating to the transactions contemplated by this Agreement, including, without limitation, the fees and expenses of their respective counsel and financial advisers.

9.12 Recitals Incorporated . The recitals of this Agreement are incorporated herein and made a part hereof.

[SIGNATURE PAGES FOLLOW]

IN WITNESS WHEREOF , the parties have executed this Agreement as of the date first written above.

MG CLEANERS LLC,

A Texas limited liability company

By:	/s/ Stephen Christian
Name:	Stephen Christian
Title:	Managing Member

Address:

[SIGNATURE PAGES OF MG MEMBERS AND SMGI FOLLOW]

[SIGNATURE PAGE OF MG MEMBERS]

MEMBER:	STEPHEN CHRISTIAN
Signature:	/s/ Stephen Christian
Print Name:	Stephen Christian

MEMBER:	FLEMMING FAMILY TRUST
Signature:	/s/ Matthew C. Flemming
Print Name:	Matthew C. Flemming, Trustee

MEMBER:	MEGGEN RHODES
Signature:	/s/ Meggen Rhodes
Print Name:	Meggen Rhodes

MEMBER:	EJC VENTURES LLC
Signature:	/s/ John Boylan
Print Name:	John Boylan, Managing Member

MEMBER:	STEVEN PAULSON
Signature:	/s/ Steven Paulson
Print Name:	Steven Paulson

MEMBER:	MICHAEL A. GILBERT II
Signature:	/s/ Michael A. Gilbert II
Print Name:	Michael A. Gilbert II

MEMBER:	FRANK MARSHIK
Signature:	/s/ Frank Marshik
Print Name:	Frank Marshik

MEMBER:	GREG BROWN
Signature:	/s/ Greg Brown
Print Name:	Greg Brown

MEMBER:	IC CAPITAL FUND
Signature:	/s/ Marc Indeglia
Print Name:	Marc Indeglia, President

MEMBER:	BALENCIC CAPITAL GROUP
Signature:	/s/ Jordan P. Balencic
Print Name:	Jordan P. Balencic, CEO

MEMBER:	RAMSEY FINANCIAL FUND ONE LLC
Signature:	/s/ Leo B. Womack
Print Name:	Leo B. Womack, Managing Member

MEMBER:	ESSENTIAL STRATEGIC PARTNERS GROUP, INC.
Signature:	/s/ Jody R. Samuels
Print Name:	Jody R. Samuels, President

MEMBER:	AWARE CAPITAL CONSULTANTS INC.
Signature:	/s/ David Lefkowitz
Print Name:	David Lefkowitz, President

[SIGNATURE PAGE OF SMGI]

SMG INDIUM RESOURCES, LTD., a Delaware corporation

By:	/s/ Ailon Z. Grushkin
Name:	Ailon Z. Grushkin
Title:	Chief Executive Officer and Chairman

SCHEDULE I

	Column I		Column II		Column III
			Number of		Cash
	Number of		Shares of		Consideration
Member Name	MG Interests		SMGI		Allocation

Stephen Christian		1,408,276		1,408,276	$	300,000
Flemming Family Trust		600,000		600,000		-0-
Ramsey Financial Fund One LLC		760,000		760,000		-0-
Meggen Rhodes		100,000		100,000		-0-
John Boylan		100,000		100,000		-0-
Steven Paulson		100,000		100,000		-0-
Michael Gilbert		100,000		100,000		-0-
Frank Marshik		262,500		262,500		-0-
Greg Brown		85,000		85,000		-0-
IC Capital Fund		262,500		262,500		-0-
Balencic Creative Group LLC		200,000		200,000		-0-
Essential Strategic Partners Group Inc.		300,000		300,000		-0-
Aware Capital Consultants Inc.		300,000		300,000		-0-
Total		4,578,276		4,578,276	$	300,000

SCHEDULE 4.12

SMG Indium Resources, Ltd. engages services from the following providers: Continental Stock Transfer and Trust Company (transfer agent) and Cohn Reznick LLP (accounting services).

Exhibit 10.8

LOAN AND SECURITY AGREEMENT

(“Agreement”)

This Agreement dated May 11, 2017, is an agreement between CRESTMARK BANK (“Crestmark”), and M G CLEANERS, LLC , a Texas limited liability company (“Borrower”). In this Agreement, Crestmark and Borrower are collectively the “Parties”. Any person or entity who guarantees the obligations of Borrower (each a “Guarantor”) is required to sign this Agreement. The Parties have the addresses shown on the schedule (“Schedule”) which is attached to this Agreement. These are the addresses of the Parties for all purposes and may be changed by one party giving notice to the other party in writing of the new address.

1. PURPOSE . The purpose of this Agreement, including the Schedule, is to set forth the terms and conditions of the loans from Crestmark to Borrower (“Loans”) and the obligations of Borrower. The Schedule is part of this Agreement. Any and all promissory notes, including for term loans and/or capital expenditures (individually and collectively “Note”) to be signed by Borrower, any guaranty(s), and any other documents now or hereafter signed by any of the Parties in connection with this Agreement, the Loans or any document issued by Crestmark or the bank holding the lockbox (“Lockbox Bank”), including subordination or intercreditor agreements, are also all part of this Agreement. All of the documents together are referred to collectively as the “Loan Documents”.

2. LOANS; LOAN ADVANCES .

A. Any disbursement of money or advance of credit by Crestmark, including but not limited to amounts advanced for the payment of interest, fees, expenses and amounts necessary to protect, maintain and preserve Crestmark’s Collateral under the Loan Documents (“Protective Disbursements”), is referred to collectively as an “Advance”. Whether Crestmark makes an Advance is in Crestmark’s sole discretion. If an Advance is made, it will be made in accordance with the advance formula set forth in the Schedule (“Advance Formula”); but not at any time to exceed the maximum amount set forth in the Schedule (“Maximum Amount”). Crestmark may choose to make Protective Disbursements in excess of the Maximum Amount or Advance Formula in its sole discretion. Each time Crestmark makes an Advance, including a Protective Disbursement, the Advance will be debited against an account in Borrower’s name on Crestmark’s books (“Loan Account”), and each payment will be credited against the Loan Account in the manner described in this Agreement.

B. The total amount Borrower owes to Crestmark will be the aggregate of the Advances made by Crestmark, the expenses and fees set forth in the Schedule and any and all costs incurred by Crestmark (including reasonable attorney’s fees), and interest at the rate set forth in the Note on all amounts and all other obligations of Borrower under the Loan Documents (collectively, the “Obligations” and/or “Indebtedness”).

C. Borrower must repay all Advances with respect to the Loans with interest, which is due monthly as specified in the Note, along with all other fees and expenses of Crestmark set forth herein or in the Schedule. Crestmark may in its sole discretion collect any Obligations due Crestmark by (i) directly applying any funds in the Lockbox Account, as defined in paragraph 5 below, to the Obligations (ii) directly applying funds from any Reserve Account, as defined in paragraph 3 below, to the Obligations, (iii) collecting the Obligations directly from Borrower; or (iv) otherwise collecting the Obligations. Borrower understands that all the Obligations are repayable at any time in full or in part upon demand by Crestmark. Crestmark may make demand for partial payments and such demand will not preclude Crestmark from demanding payment in full at any time.

D. Borrower must comply with its representations, promises, covenants and reporting requirements set forth in this Agreement, in the Schedule and in the other Loan Documents. Borrower’s failure to do any of the foregoing is a default (“Default”). The demand nature of the Obligations is not modified by reference to a Default in this Agreement or the other Loan Documents and any reference to a Default is for the purpose of permitting Crestmark to exercise its remedies for Default, including charging interest at the Extra Rate as defined and provided in the Note.

E. The aggregate amount of all Advances, plus the expenses and fees set forth in the Schedule, any and all costs incurred by Crestmark (including reasonable attorney’s fees), and interest at the rate set forth in the Note on all amounts advanced (“Loan Amount”), may not, at any time, exceed the Maximum Amount or the Advance Formula, and Borrower understands that if at any time it should owe more to Crestmark than the lesser of the Maximum Amount or the Advance Formula it must repay that amount immediately, whether or not demand to repay the whole of the Obligations has been made. Protective Disbursements must be immediately repaid whether or not the lesser of the Maximum Amount or the Advance Formula has been exceeded.

3. RESERVES . If Crestmark believes in its sole discretion that the prospect for repayment of the Obligations is impaired or that its Collateral margin is insufficient, Crestmark may establish cash reserves and credit balances (collectively “Reserves”) to protect its interests and the repayment of the Obligations. Reserves may be established by reducing the Advance Formula to achieve the target reserve level, withholding monies due Borrower from any payments Crestmark receives, from a cash payment from Borrower, or any other method Crestmark chooses. Crestmark shall hold these Reserves in a “Reserve Account”. Any money in a Reserve Account, whether or not it is a cash reserve, will not earn interest for Borrower, and Crestmark may apply the funds in the Reserve Account to reduce the Obligations at any time Crestmark elects.

4. FEES AND EXPENSES . In connection with the Loans there are several types of fees that may be charged and Borrower may be required to maintain a minimum loan balance. Such fees and requirements are set forth in the Schedule. In addition, all expenses of every kind incurred by Crestmark in connection with the Loans, any Advance, collection of the Obligations, inspection, and examination are to be paid by Borrower.

5. LOCKBOX . Borrower must immediately notify all persons who are obligated on accounts (“Account Debtors”) to direct all Account Debtors and any other person or party that is liable to Borrower (collectively a “Debtor”) to remit all payments due Borrower to the lock box address or pursuant to the wire transfer or ACH instructions set forth in the Schedule (“Lockbox Account”). The remit to address on all documents related to the accounts, including invoices, purchase orders, or contracts (“Documents”) must be the Lockbox Account. At Crestmark’s request, all Documents must be marked by Borrower to show assignment to Crestmark, and Borrower must notify each Account Debtor by mail that the Account has been assigned to Crestmark and that all payments on the Account, whether made by mail or electronically or otherwise must be made payable to Borrower or Crestmark, at Crestmark’s sole discretion, to the Lockbox Account or other address provided by Crestmark in writing. The language used in such notices shall be approved by Crestmark in writing. Crestmark may at any time and from time to time, and at its sole discretion, notify any Debtor or third party payee to make payments payable directly to Crestmark or to notify Debtor of the assignment to Crestmark. All expenses for notification of each Account Debtor will be paid by Borrower.

If notwithstanding the notice to Debtors, Borrower receives any funds from a Debtor, including any cash, checks, drafts or wire transfers from the collection, enforcement, sale or other disposition of the Collateral (defined below), whether derived in the ordinary course of business or not, or if Borrower receives any proceeds of insurance, tax refunds or any and all other funds of any kind, Borrower shall hold such funds in trust for Crestmark, shall not mix such funds received with any other funds, and shall immediately deposit such funds in the Lockbox Account in the form received. That means if the funds are received by mail, the Debtor checks will be sent to the Lockbox Account uncashed, and if the funds are received electronically, the funds will be transferred immediately to the Lockbox Account electronically. Crestmark will have sole possession and control over the Lockbox Account. The Lockbox Bank will process all deposits and Borrower has no right to the Lockbox Account, it belongs to Crestmark. Crestmark is the owner of all deposits in the Lockbox Account, and has no duty as to collection or protection of funds as long as it is not grossly negligent or commits actual fraud. All expenses plus any applicable administration and servicing fees of the Lockbox Account will be paid by Borrower.

6. LOAN ACCOUNT . All of the Obligations which are owed by Borrower will be shown in the Loan Account and Borrower will receive a monthly statement either by mail, electronically or via access to the Crestmark online system at Crestmark’s sole discretion. The statement is binding on Borrower, unless Borrower provides a written objection to Crestmark that is actually received by Crestmark within fifteen (15) business days of the time the statement is provided or made available to Borrower.

7. PAYMENTS . Should a check or other credit instrument not be collected after Borrower has been given credit for such payment, then the credit will be reversed and a fee charged at Crestmark’s then standard rate. Crestmark, at its sole discretion, may establish Reserves as set forth above or not apply a payment that it reasonably believes may be returned unpaid for any reason or disgorged due to a preference claim or garnishment, and in such event interest (as defined in the Note) and Maintenance Fees (as defined in the Schedule) will still be payable. In the event that any payment received by Crestmark is sought to be recovered by or on behalf of the payer (including a trustee in bankruptcy or assignee for the benefit of creditors), then Borrower agrees to immediately reimburse Crestmark on demand for any amount so recovered and all of Crestmark’s expenses in connection with any such proceeding, including reasonable attorney’s fees. This provision shall survive termination of this Agreement. Any payments received by Crestmark shall be applied to the Obligations in whatever order Crestmark determines in its reasonable discretion.

8. SECURITY INTEREST .

A. Borrower grants to Crestmark a security interest in all of its assets, now existing or hereafter arising, wherever located including all Accounts, Goods, Inventory, Equipment, Chattel Paper, Instruments, Investment Property, specifically identified Commercial Tort Claims, Documents, Deposit Accounts, Letter of Credit Rights, General Intangibles, Contract Rights, customer lists, furniture and fixtures, books and records and supporting obligations for any of the foregoing, and all proceeds of the foregoing (“Collateral”), to secure repayment of the Obligations (“Security Interest”). The Collateral also includes all monies on deposit with Crestmark, or on deposit in the Lockbox Account. All capitalized terms used in this Section 8A , which are not otherwise defined, shall have the meanings assigned to them in the Uniform Commercial Code as adopted in the state of Michigan (“UCC”). Without limiting the foregoing, “Accounts” will also mean and include any and all other forms of obligations now owed or hereafter arising or acquired by the Borrower evidencing any obligation for payment for goods of any kind, nature, or description, sold or leased, or services rendered, and all proceeds of any of the foregoing.

B. Borrower gives Crestmark all of the rights of a secured party under the UCC. Borrower grants Crestmark the authority to file all appropriate documentation for Crestmark to perfect its Security Interest in the Collateral, including a UCC-1 financing statement listing the Collateral as “All assets of the Debtor, now existing and hereafter arising, wherever located,” or similar terms, as well as UCC-3 amendments as may be required from time to time. All expenses of Crestmark relating to searching, filing or protecting the Security Interest are part of the Obligations.

C. The Security Interest gives Crestmark rights with respect to the Collateral and the Security Interest and this Agreement imposes duties upon Borrower which relate to the Collateral. Some of the rights and duties are: (i) the right of Crestmark at any time to notify any persons who may hold any part of the Collateral, such as Account Debtors and other debtors, of Crestmark’s Security Interest. Borrower understands that Crestmark may verify Accounts with the Account Debtors; (ii) Borrower must cooperate with Crestmark in obtaining control of any Collateral in the possession of third persons, particularly Collateral consisting of Deposit Accounts, Investment Property, Letter of Credit Rights or other Collateral which is evidenced by electronic entries; (iii) except for the right of Borrower to sell its Inventory in the ordinary course of business, Borrower shall not sell or transfer any of the Collateral or grant any other security interest in the Collateral, except as Crestmark may specifically agree to in writing. Borrower remains liable to perform all of its obligations with respect to the Collateral such as the recognition of any warranties in Inventory sold and Crestmark is under no responsibility to perform any of the obligations of Borrower; and (iv) Borrower must notify Crestmark immediately if it knows that any Account Debtor disputes an Account, whether or not such disputes are deemed valid by Borrower.

9. POWER OF ATTORNEY . Borrower irrevocably appoints Crestmark, or any person(s) designated by Crestmark, as its attorney-in-fact, which appointment is coupled with an interest and shall remain in full force and effect until all Obligations of Borrower to Crestmark have been fully satisfied and discharged, with full power, at Borrower’s sole expense, to exercise at any time in Crestmark’s reasonable discretion all or any of the following powers:

A. Receive, take, endorse, assign, deliver, accept and deposit, in the name of Crestmark or Borrower, any and all cash, checks, commercial paper, drafts, remittances and other instruments and documents relating to the Collateral or the proceeds thereof.

B. Change Borrower’s address on all invoices and statements of Account mailed or to be mailed to Borrower’s customers and to substitute thereon the address designated by Crestmark, to place legends on all invoices and statements of Account mailed or to be mailed to Borrower’s customers, and to receive and open all mail addressed to Borrower, or to Borrower’s trade name at Crestmark’s address, or any other designated address.

C. Upon and after the occurrence of a Default, to change the address for delivery of Borrower’s mail to Crestmark’s or an address designated by Crestmark. Borrower specifically authorizes Crestmark to sign any forms on behalf of Borrower to affect this change with the United States Postal Service or any third party and requests such change to be accepted.

D. Upon and after the occurrence of a Default, to take or bring, in the name of Crestmark or Borrower, all steps, actions, suits or proceedings deemed by Crestmark necessary or desirable to effect collection of or other realization upon any Collateral.

E. Execute on behalf of Borrower any UCC-l and/or UCC-3 Financing Statement(s) and/or any notices or other documents necessary or desirable to carry out the purpose and intent of this Agreement, and to do any and all things reasonably necessary and proper to carry out the purpose and intent of this Agreement.

F. To transfer any lockboxes belonging to Borrower to Crestmark at Crestmark’s sole discretion.

G. To initiate ACH transfers from Borrower’s depository accounts.

H. To endorse and take any action with respect to bills of lading covering any Inventory.

I. Upon and after a Default, or at any time in the event that Borrower fails to do so within a reasonable time, execute, file and serve, in its own name or in the name of Borrower, mechanics lien or similar notices, or claims under any payment or performance bond for the benefit of Borrower.

J. Upon and after a Default, or at any time in the event that Borrower fails to do so within a reasonable time, pay any sums necessary to discharge any lien or encumbrance on the Collateral, which sums shall be included as Obligations hereunder, and which sums shall accrue interest at the Extra Rate until paid in full.

10. REPRESENTATIONS . Borrower makes the following representations and warranties to Crestmark and such representations and warranties must be true at all times until the Obligations are paid in full. If Borrower learns that a representation and warranty once made is no longer true, it has the duty to immediately notify Crestmark in writing:

A. Borrower is in good standing under the laws of the state of its organization and is authorized to conduct business in any state that it conducts business. Borrower has the power and authority to enter into this Agreement, and the persons signing this Agreement, and all persons who sign any documents with Crestmark, have the appropriate authority. Borrower’s organization identification number, state of organization, and addresses where it conducts business is as shown on the Schedule.

B. Borrower’s entry into the Loan Documents does not violate any agreement which Borrower has or which binds Borrower.

C. The Loan Documents are fully enforceable against Borrower and the Collateral.

D. There are no litigation or criminal charges pending or threatened against Borrower or Guarantor and neither Borrower nor Guarantor are in default of any order or judgment of any court or any governmental agency of any kind. There are no unsatisfied liens or judgments pending against Borrower in any jurisdiction except as shown on the Schedule.

E. The financial information furnished by Borrower to Crestmark has been prepared in accordance with generally accepted accounting principles, all financial statements are true and correct, and any projections of the business operations of Borrower that have been given or will be given to Crestmark in the future will be based upon Borrower’s reasonable assumptions and estimates.

F. Borrower is the owner of all of the Collateral and there are no other liens or claims against the Collateral, except the Security Interest of Crestmark or as shown on the Schedule.

G. All of the Collateral is personal property and none of the Collateral will be permanently affixed to real estate.

H. Borrower has filed and will file all federal, state, local and foreign tax returns that it is required to file and has paid and will pay all taxes and all other governmental charges as they become due.

I. Borrower is able to pay its debts as they become due and has sufficient capital to carry on its business. Borrower’s Obligations under this Agreement and the Loan Documents, including the obligation to repay the Loans and the grant of the Security Interest, do not render Borrower insolvent.

J. Borrower only uses the fictitious names, d/b/a’s, tradenames and tradestyles set forth on the Schedule (collectively the “Tradenames”), and Borrower certifies that all sales and any and all business done in the name of the Tradenames are the sales and business of Borrower. Any and all checks, remittances or other payments received in the name of any of the Tradenames are Borrower’s sole and exclusive property, and are subject to Crestmark’s Security Interest hereunder. Any and all authority given to Crestmark by Borrower in this Agreement or elsewhere to endorse Borrower’s name on any checks, negotiable instruments or other remittances extends with equal and full force and effect to any checks, negotiable instruments, and other remittances received in the name of any Tradename.

K. All Accounts assigned to Crestmark by Borrower are and will at all times be bona fide accounts arising from the sale of inventory or providing services, and are not subject to discounts, deductions, allowances, contra items, offset or counterclaim and are free and clear of all encumbrances of any kind whatsoever, except as disclosed to Crestmark in writing and approved by Crestmark in writing.

L. Borrower’s assignment of any Accounts to Crestmark pursuant to this Agreement will not at any time violate any federal, state and/or local law, rule or regulation, court or other governmental order or decree or terms of any contract relating to such Accounts.

M. Borrower possesses all necessary trademarks, trade names, copyrights, patents, patent rights and licenses to conduct its business as now operated, without any known conflict with any trademarks, trade names, copyrights, patents and license rights of any other person or entity.

N. Borrower’s legal name as of the date hereof as it appears in its official filing with its state of organization is as set forth in the opening paragraph of this Agreement. Borrower has not organized another entity or Tradename using Borrower’s name or Tradename as set forth herein in any other jurisdiction.

O. As to all of Borrower’s Inventory and Equipment:

i. The Inventory and Equipment are currently located only at the locations identified on the Schedule, or such other locations as consented to by Crestmark in writing;

ii. All Inventory is now and at all times hereafter shall be of good and merchantable quality, free from defects, except as disclosed to Crestmark in writing;

iii. The Inventory and Equipment are and shall remain free from all liens, claims, encumbrances, and security interests (except as held by Crestmark, and except as identified on the Schedule).

iv. The Inventory is not now stored with a bailee, warehouseman or similar party unless such party has entered into a waiver letter in a form satisfactory to Crestmark.

11. BORROWER’S PROMISES . Borrower makes the following promises to Crestmark and these promises are effective until the Obligations are fully paid:

A. To pay all Obligations when due and perform all terms, conditions and obligations of the Loan Documents.

B. To permit Crestmark, or its representatives, access to the Collateral on Borrower’s premises and to Borrower’s computer systems, books of account and financial records. Borrower will pay the cost of Field Examinations as specified in the Schedule.

C. To notify Crestmark promptly of any litigation, administrative or tax proceeding or other action threatened or instituted against Borrower or Guarantor or its property, or of any other material matter which may adversely affect Borrower’s financial condition.

D. To pay when due all taxes, assessments and governmental charges, provided that Borrower has the right to contest the same as long as it has a cash reserve with Crestmark in an amount as determined by Crestmark in its sole discretion.

E. To comply with the Financial Covenants described in the Schedule (if applicable).

F. To maintain insurance on its business activities in such amount and in such form as Crestmark may from time to time require, and with respect to such insurance if so designated, Crestmark shall be named as “Lender Loss Payee” under the policy and receive evidence of the insurance. All insurance which protects Crestmark shall have at least a 30-day notice to Crestmark prior to any cancellation. With respect to the insurance, Borrower appoints Crestmark as its attorney-in-fact to negotiate any and all claims under all insurance policies and Crestmark also has the power to negotiate any payments on the insurance policies.

G. To comply with all laws, ordinances and regulations or other requirements of any governmental authority or agency applicable to Borrower’s business.

H. To maintain and preserve all Collateral in good repair, working order and condition, and with respect to Accounts, pursue collections thereof.

I. To provide Crestmark with evidence of ownership of any Collateral upon the request of Crestmark.

J. To maintain a Loan Amount balance which shall not exceed the sum of Eligible Collateral times the corresponding rate in the Advance Formula.

12. NEGATIVE COVENANTS . Borrower agrees until the Obligations are paid in full, it will not:

A. Change its state of organization or its name, or move its executive office or at any time adopt any assumed name without giving Crestmark at least 30 days prior written notice.

B. Declare or pay any dividend or make any other distribution with regard to its equity or purchase or retire any of its equity without Crestmark’s prior written consent, provided if it is taxed as an S Corporation or other “pass through” entity, Borrower may prior to a Default distribute profits to its equity holders in an amount necessary to enable such holders to pay personal, state and federal taxes directly attributable to the profits earned by Borrower for such year.

C. Obtain any loan or guaranty or assume any obligation or liability, whether as borrower, guarantor, surety, indemnitor or otherwise that would result in or create a Default, without Crestmark’s prior written consent.

D. Enter into any transaction with its equity holders or any affiliates of Borrower except on terms at least as favorable as would be usual and customary in similar transactions if the person with whom the transaction is entered into was not related to Borrower.

E. Release, redeem, purchase, or acquire any of its equity interests without the prior written consent of Crestmark.

F. Default in the payment of any debt to any other person.

G. Suffer or permit any judgment, decree or order not fully covered by insurance to be entered against Borrower or a Guarantor, or permit or suffer any warrant or attachment to be filed against Borrower, any Guarantor, or against any property or asset of Borrower or Guarantor.

H. Transfer the ownership of any interest in Borrower without the prior written consent of Crestmark which shall not be unreasonably withheld.

I. Sell any of the Collateral outside the normal course of its business without the prior written consent of Crestmark.

J. Purchase the stock or assets of any other entity without the prior written consent of Crestmark.

13. FINANCIAL REPORTS . Borrower promises that until the Obligations are fully paid and this Agreement is terminated, it will keep its books and records in a manner satisfactory to Crestmark and Crestmark will have the right at any time to verify any of the Collateral, documentation or books and records of Borrower in whatever manner and as often as Crestmark deems necessary. Borrower will permit Crestmark, or its representatives, access to the Collateral and Borrower’s premises and to Borrower’s computer systems, books of account and financial records. Borrower will furnish to Crestmark the financial reports identified on the Schedule, certified to by the president or chief financial officer of Borrower and Borrower’s certified public accountant, if applicable. All financial reports will be prepared in accordance with generally acceptable accounting principles and will be true and accurate.

14. CRESTMARK’S REMEDIES . Crestmark has all the remedies available at law or in equity (including those under the UCC) in the event of a Default or if Borrower fails to pay the Obligations on demand, including but not limited to the following: to charge the Extra Rate; to notify Account Debtors to make the payments directly to Crestmark; to settle or compromise any disputed Account, sue on any Account and make any agreement to deal with the Accounts as if it were the owner; to offset any of Borrower’s or Guarantor’s funds under the control of Crestmark against the Obligations; and to require Borrower to gather up the Collateral and make it available to Crestmark for Crestmark to conduct public or private UCC foreclosure sales. Borrower grants to Crestmark a license or other right to use, without charge, Borrower’s labels, patents, copyrights, trademarks, rights of use of any name, trade secrets, tradenames and advertising materials, or any property of a similar nature, as it pertains to the Collateral, in completing production of, advertising for sale and selling any Collateral, and Borrower’s rights under all licenses and franchise agreements shall inure to Crestmark’s benefit. If Crestmark should proceed against the Collateral and sell any of the Collateral on credit, Borrower will be credited on the Obligations only with the amount actually received by Crestmark and Borrower waives any and all provisions as to notice or a particular method of sale of any of the Collateral. Borrower will pay all expenses in connection with the assembly or sale of the Collateral. Crestmark does not have to incur its own expenses in realizing upon the Collateral, but all the expenses are for the account of Borrower. Borrower recognizes that at no time is Crestmark its agent in dealing with the Collateral, but Crestmark acts only in its own interest.

15. CUMULATIVE RIGHTS . Crestmark’s rights and remedies under this Agreement and all other agreements shall be cumulative. Crestmark shall have all other rights and remedies not inconsistent herewith as provided under the UCC, by law, or in equity. No exercise by Crestmark of one right or remedy shall be deemed an election, and no waiver by Crestmark of any Default on Borrower’s part shall be deemed a continuing waiver. No delay by Crestmark shall constitute a waiver, election or acquiescence by it.

16. LENDER ACTIONS . To the extent applicable law may impose duties on Crestmark to exercise remedies in a commercially reasonable manner, Borrower agrees that it is not commercially unreasonable for Crestmark: to fail to exercise remedies against any Collateral or any particular Account Debtor; to proceed against Account Debtors either directly or through collection agencies; to advertise disposition of Collateral through publications or media of general circulation; to hire professional auctioneers to dispose of Collateral; to dispose of Collateral in wholesale or retail markets; to disclaim warranties with respect to Collateral; or to obtain services of attorneys or other professionals. The foregoing is not an exhaustive list and nothing contained in the foregoing shall be construed to grant any rights to Borrower or to impose any duties on Crestmark that would not have been granted or imposed by this Agreement or by applicable law in the absence of this Section 16 . Borrower agrees that under no circumstances is Crestmark the agent or representative of Borrower.

17. APPLICATION OF PROCEEDS . Once collection efforts are commenced by Crestmark, any proceeds of sale or disposition of Collateral may be applied by Crestmark first to expenses authorized by this Agreement, including Crestmark’s reasonable attorney’s fees, which Borrower must pay, and the balance to payment of the Obligations in such manner as Crestmark may elect. Borrower and Guarantor remain liable for any deficiency.

18. NOTICES . Any notice is effective by either party if sent in writing or facsimile with confirmation of receipt or by certified mail or personal delivery or expedited mail services to the addresses shown on the Schedule.

19. MISCELLANEOUS PROVISIONS .

A. This Agreement is binding upon and is for the benefit of Borrower and Crestmark, and their respective successors and assigns. However, under no circumstances may Borrower assign this Agreement or its rights and duties hereunder. Crestmark may assign this Agreement and its rights under the Loan Documents and Borrower will make payments to any such assignee if so directed.

B. Crestmark has the right at any time to assign, transfer, negotiate or sell participations in this Agreement or the Obligations or the rights of Crestmark hereunder. In connection with any assignment, Borrower consents to disclosure of any and all books, records, files, Loan Documents and all other documents in the possession or under the control of Crestmark.

C. No delay or failure of Crestmark in exercising any right or remedy will affect such right or remedy. No delay or failure of Crestmark to demand strict adherence to the terms of this Agreement will be deemed to waive Crestmark’s rights to demand such adherence at any time in the future.

D. The term “including” means “including, without limitation”, and the term “includes” means “includes, without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall.” The definitions of terms in this Agreement shall apply equally to the singular and plural forms of the terms defined.

E. This Agreement and the other Loan Documents will be interpreted and determined under the laws of the state of Michigan without any regard to any conflict of laws provisions.

F. Borrower, at Crestmark’s request, will make, execute and acknowledge any and all further instruments or agreements necessary to carry out the intent of this Agreement and the other Loan Documents.

G. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if all signatures were upon the same instrument. Delivery of an executed counterpart of the signature page to this Agreement by facsimile or electronic mail shall be effective as delivery of a manually executed counterpart of this Agreement, and any party delivering such an executed counterpart of the signature page to this Agreement by facsimile or electronic mail to any other party shall thereafter also promptly deliver a manually executed counterpart of this Agreement to such other party, provided that the failure to deliver such manually executed counterpart shall not affect the validity, enforceability, or binding effect of this Agreement.

H. Neither Crestmark nor its affiliates, directors, officers, agents, attorneys or employees are liable to Borrower or Guarantor or affiliates for any action taken or omitted by it or any of them under the Loan Documents, except for such liability as may be imposed by law for gross negligence or actual fraud, and no claim shall be made by Borrower or Guarantor or any of Borrower’s affiliates, directors, officers, agents, or employees for any special or consequential damages or punitive damages arising out of, or related to, the Loan Documents or the transactions between the Parties.

I. This Agreement and the other Loan Documents represent the complete Agreement between the Parties with respect to the subject matter of this Agreement, and there are no promises, undertakings, representations or warranties by Crestmark relative to the subject matter of this Agreement not expressly set forth in this Agreement or the other Loan Documents, and this Agreement supersedes all prior negotiations, agreements and understandings, oral or written. This Agreement and the other Loan Documents may be amended only in writing.

J. If any provision of this Agreement is in conflict with any law or statute or is otherwise unenforceable, then the provision will be deemed null and void only to the extent of such provision and the provision will be deemed severable and the remainder of this Agreement shall be in full force and effect.

K. Any payment made to Crestmark by either Borrower or Guarantor which is subsequently invalidated, declared fraudulent or preferential or otherwise set aside under any bankruptcy, state, federal or equitable law, then to the extent of such invalidity such payment will be deemed not to have been made and the obligation will continue in full force and effect. This provision shall survive termination of this Agreement.

L. No Lien Termination Without Release. In recognition of among other things, Borrower’s indemnification obligations and Crestmark’s right to have its attorney’s fees and other expenses incurred in connection with this Agreement secured by the Collateral, notwithstanding payment in full of all Obligations by Borrower, Crestmark shall not be required to record any terminations or satisfactions of any of its liens on the Collateral unless and until Borrower and all guarantors of its Obligations have executed and delivered to Crestmark a general release in a form acceptable to Crestmark in its sole discretion. Borrower understands that this provision constitutes a waiver of its rights Borrower may have under §9-513 of the UCC.

M. Small Business Jobs Act Certification. Pursuant to Section 4107(d)(2) (the “Section”) of the Small Business Jobs Act of 2010, certification is required from any business receiving a loan using funds received by the institution under the Small Business Lending Act. As required by the Section, the Borrower hereby certifies to Crestmark that the principals of Borrower and its affiliates have not been convicted of, or pleaded nolo contendere to, a sex offense against a minor (as such terms are defined in section 111 of the Sex Offender Registration and Notification Act (42 U.S.C. 16911)).

The term “principals” is defined as follows: if a sole proprietorship, the proprietor; if a partnership, each managing partner and each partner who is a natural person and holds a twenty percent (20%) or more ownership interest in the partnership; and if a corporation, limited liability company, association or a development company, each director, each of the five (5) most highly compensated executives or officers of the entity, and each natural person who is a direct or indirect holder of twenty percent (20%) or more of the ownership stock or stock equivalent of the entity.

N. USA Patriot Act Notification. The following notification is provided to Borrower pursuant to Section 3265 of the USA Patriot Act of 2001, 31 U.S.C. Section 5318:

IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT. To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person or entity that opens an account, including any deposit account, treasury management account, loan or other extension of credit. We may ask for the name, address, date of birth, and other information that will allow us to identify all Borrowers, principals and owners. We may also ask to see your driver’s license or other identifying documents.

20. INDEMNIFICATION . Borrower hereby agrees to indemnify, defend and hold Crestmark and its executive committees, parent affiliates, subsidiaries, agents, directors, officers, participants, employees, agents and their successors and assigns (collectively “Indemnified Parties”) harmless against any and all liabilities of any kind, nature or description and damages whether they are direct, indirect or consequential, including attorney’s fees and other professionals and experts incurred or suffered directly or indirectly by Indemnified Parties or asserted against Indemnified Parties by anyone whosoever, including Borrower or Guarantor, which arise out of the Loan Documents or the relationship and transaction between the Parties. This provision shall survive the termination of this Agreement.

21. JOINT AND SEVERAL OBLIGATIONS . If more than one person or entity is named as Borrower in this Agreement, all Obligations, representations, warranties, covenants and indemnities of Borrower set forth herein and in the other Loan Documents shall be the joint and several obligations of such persons and/or entities.

22. JURISDICTION . BORROWER AND GUARANTOR AGREE THAT ANY ACTION TO ENFORCE BORROWER’S OR GUARANTOR’S OBLIGATIONS TO CRESTMARK SHALL BE PROSECUTED EITHER IN THE CIRCUIT COURT OF OAKLAND COUNTY MICHIGAN OR THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MICHIGAN (UNLESS CRESTMARK, IN ITS SOLE DISCRETION, ELECTS SOME OTHER JURISDICTION), AND BORROWER AND GUARANTOR SUBMIT TO THE JURISDICTION OF ANY SUCH COURT SELECTED BY CRESTMARK. BORROWER AND GUARANTOR WAIVE ANY AND ALL RIGHTS TO CONTEST THE JURISDICTION AND VENUE OF ANY ACTION BROUGHT IN THIS MATTER AND BORROWER AND GUARANTOR MAY BRING ANY ACTION AGAINST CRESTMARK ONLY IN THE CIRCUIT COURT FOR THE COUNTY OF OAKLAND OR THE FEDERAL COURT OR THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MICHIGAN.

23. WAIVER . ALL PARTIES, INCLUDING BORROWER AND GUARANTOR, EACH KNOWINGLY AND VOLUNTARILY WAIVE ANY CONSTITUTIONAL RIGHT TO A TRIAL BY JURY WITH RESPECT TO ANY CLAIM, DISPUTE OR CONFLICT BETWEEN THE PARTIES OR UNDER THE LOAN DOCUMENTS AND AGREE THAT ANY LITIGATION SHALL BE HEARD BY A COURT OF COMPETENT JURISDICTION SITTING WITHOUT A JURY. BORROWER AND GUARANTOR ACKNOWLEDGE THAT THEY HAVE HAD THE OPPORTUNITY TO REVIEW THE EFFECT OF THIS PROVISION WITH COUNSEL OF THEIR CHOICE.

24. RELEASE . BORROWER AND GUARANTOR RELEASE AND FOREVER DISCHARGE CRESTMARK, ITS AFFILIATES, OFFICERS, AGENTS, EMPLOYEES AND DIRECTORS FROM ANY AND ALL CLAIMS OF ANY KIND WHATSOEVER FROM THE BEGINNING OF TIME TO DATE OF THIS AGREEMENT.

The Parties have executed this Agreement as of the date and year first written above.

CRESTMARK :		BORROWER :

CRESTMARK BANK		M G CLEANERS, LLC
		a Texas limited liability company


By:	/s/ Christy Morgan	By:	/s/ Stephen Christian
	Christy Morgan, 1 ^st Vice President, Legal		Stephen Christian, President

	GUARANTOR :


	The undersigned Guarantor by signing this Agreement agrees it has been read and understands the Agreement and Guarantor agrees to all of its terms.


	/s/ Stephen Christian
	Stephen Christian, Individually

Exhibit 10.9

PROMISSORY NOTE

(Line of Credit)

Principal Amount $1,000,000.00

Baton Rouge, Louisiana

Dated: May 11, 2017

This Promissory Note (Line of Credit) (“Note”) is made by the Borrower who has signed this Note. The Borrower promises to pay to the order of CRESTMARK BANK (“Crestmark"), ON DEMAND, at its offices located at 726 Highlandia Drive, Baton Rouge, Louisiana 70810 or at such other place as Crestmark or the person that then holds this Note designates in writing, the principal amount set forth above or such lesser or greater amount as may then be due under the Agreement (as defined below), plus interest, fees and expenses as hereinafter provided. All payments that are made must be made in lawful money of the United States of America in immediately available funds. Borrower does not have any right to an offset, deduction, or counterclaim from the amount due.

This Note is referred to in and was delivered pursuant to the Loan and Security Agreement (“Agreement”) of even date between Borrower and Crestmark under which Advances, repayment and further Advances may be made from time to time, pursuant to the provisions of the Agreement. Reference is made to the Agreement for additional terms relating to this Note and the security given for this Note. Any capitalized terms used in this Note, if not defined in this Note, will have the meanings assigned to such terms in the Agreement.

The outstanding principal balance of this Note will bear interest based upon a year of 360 days with interest being charged for each day the principal amount is outstanding including the date of actual payment. The interest rate will be a rate which is equal to seven and one- half of one (7.5%) percentage points in excess of that rate shown in the Wall Street Journal as the prime rate (“Effective Rate”). Interest on this Note will change with each change in the prime rate so published. If at any time Crestmark either abandons the use of the Wall Street Journal prime rate or the Wall Street Journal prime rate is no longer published, then Crestmark will establish a similar replacement rate in its sole discretion. Notwithstanding the foregoing, at no time will the Effective Rate be less than eleven and one-half of one (11.5%) percent per annum.

Borrower must pay interest on the principal amount which is outstanding each month in arrears commencing on the first day of the month following the funding of the transaction, and continuing on the first day of each month thereafter until the Indebtedness is fully paid. If the Agreement so provides, interest will also be payable at the same rate on all other sums constituting Indebtedness. If any payment is due on a day which Crestmark is not open for business, then payments will be made on the next business day. Payments will be applied in the manner provided in the Agreement. If Borrower at any time pays less than the amount then due, Crestmark may accept such payment, but the failure to pay the entire amount due is a Default. The (i) failure of Borrower to comply with the provisions of the Agreement or (ii) failure to pay the Indebtedness following demand will permit Crestmark to charge the Extra Rate. The “Extra Rate” shall mean the Effective Rate plus eight (8%) percent per annum.

Should Borrower make any payment by mail, the payment must be actually received by Crestmark before the payment is credited but payment is still subject to the Clearance Days as defined in the Schedule to the Agreement. Borrower assumes all risk resulting from non-delivery or delay, in delivery of any payment no matter how the payment is delivered.

If Borrower elects to prepay this Note and/or terminate the Agreement, Borrower may do so, but only upon payment of all the Indebtedness, including the Exit Fee set forth in the Schedule.

It is the intent of the parties that the rate of interest and other charges to Borrower under this Note shall be lawful; therefore, if for any reason the interest or other charges payable hereunder are found by a court of competent jurisdiction, in a final determination, to exceed the limit Crestmark may lawfully charge Borrower, then the obligation to pay interest or other charges shall automatically be reduced to such limit and, if any amount in excess of such limit shall have been paid, then such amount shall be credited to the outstanding principal balance of this Note, or if no such amount is outstanding, refunded to Borrower.

Borrower waives any obligation of Crestmark to present this Note for payment or to give any notice of nonpayment or notice of protest and any other notices of any kind. The liability of the Borrower is absolute and unconditional, without regard to the liability of any other party.

If this Note is signed by two or more parties, the obligations and undertakings under this Note shall be that of all and any two or more jointly and also each severally.

	BORROWER


	M G CLEANERS, LLC
	a Texas limited liability company


	By :	/s/ Stephen Christian
	Stephen Christian, President

Exhibit 10.10

Agreement for the Purchase and Sale of Future Receipts

Seller’s Legal Name:

MG CLEANERS , LLC / CHRISTIAN CHEMICAL COMPANY, LLC

D /B/A:

MG CLEANERS

Form of Business Entity: ¨ Corporation; ¨ Limited Liability Company; ¨ Partnership; ¨ Limited Partnership; ¨ Limited

Liability Partnership; ¨ Sole Proprietorship; þ Other:

LLC

Street Address:

442 E SABINE STREET

City:

CARTHAGE

State:

;

Zip:

75633

Mailing Address:

City:

State:

;

Zip:

Primary Contact Name:

STEPHEN CHRISTIAN

Title:

PRESIDENT

Time in Business:

Federal Tax ID Number:

203175973

Purchase Price: $

100,000.00

Purchased Amount: $

143,000.00

Average Monthly Sales: $

150,983.00

Specified Percentage:

% Origination Fee: $

1,756.50

(to be deducted from the Purchase Price)

Initial Daily Amount: $

972.79

(Average Monthly Sales x Specified Percentage / Average Business Days in a Calendar Month)

Account for the Deposit of All Future Receipts: Bank:

Account No:

Effective, April, 07, 2017 Seller, identified above, hereby sells, assigns and transfers to Capital Stack, LLC, located at 11 Broadway, Suite 814, New York, NY 10004 (“Buyer”), without recourse, the Specified Percentage of the proceeds of each future sale made by Seller (collectively “Future Receipts”) until Seller has received the Purchased Amount. “Future Receipts” Includes all payments made by cash, check, ACH or other electronic transfer, credit card, debit card, bank card, charge card (each such card shall be referred to herein as a “Payment Card”) or other form of monetary payment in the ordinary course of Seller’s business. As payment for the Purchased Amount, Buyer will deliver to Seller the Purchase Price, shown above, minus any Origination Fee shown above, Seller acknowledges that it has no right to repurchase the Purchased Amount from Buyer.

Both parties agree that the obligation of Buyer under this Agreement will not be effective unless and until Buyer has completed its review of the Seller and has accepted this Agreement by delivering the Purchase Price, minus any Origination Fee. Prior to accepting this Agreement, Buyer may conduct a processing trial to confirm its access to the Account and the ability to withdraw the Initial Daily Amount. If the processing trial is not completed to the satisfaction of Buyer, Buyer will refund to Seller all funds that were obtained by Buyer during the processing trial.

Agreement of Seller: By signing below Seller agrees to the terms and conditions contained in this Agreement, including those terms and conditions on the following pages, and further agrees that this transaction is for business purposes and not for personal, family, or household purposes.

Seller:

MG CLEANERS, LLC / CHRISTIAN CHEMICAL COMPANY, LLC

Agreed to by:	/s/ STEPHEN CHRISTIAN	(Signature), its	President	(Title)

Buyer:	CAPITAL STACK, LLC

Agreed to by:

(Signature), its

Senior Underwriter

(Title)

Initials:

Capital Stack, LLC

Agreement of Each Owner: Each Owner signing below agrees to the terms of the Credit Report Authorization below.


STEPHEN CHRISTIAN	(Print Name);	/s/ STEPHEN CHRISTIAN	(Signature);

	(Print Name);		(Signature);

Delivery of Purchased Amount: Seller must deposit all Future Receipts into the single business banking account specified above, which may not be used for any personal, family or household purposes (the “Account”) and must Instruct Seller’s credit card processor, which must be approved by Buyer (the “Processor”) to deposit all Payment Card receipts of Seller into the Account. Seller agrees not to change the Account or arid an additional Account without the express written consent of Buyer. Seller authorizes Buyer to debit the Daily Amount from the Account each business day by either ACH or electronic check. Seller will provide Buyer with all required access codes and agrees not to change them without prior written consent from Buyer. Seller will provide an appropriate ACH authorization to Buyer. Seller understands that it is responsible for either ensuring that the Daily Amount is available in the Account each business day or advising Buyer prior to each daily withdrawal of a shortage of funds, Otherwise, Seller will be responsible for any fees incurred by Buyer resulting from a rejected electronic check or ACH debit attempt, as set forth on Appendix A. Buyer is not responsible for any overdrafts or rejected transactions that may result from Buyer’s debiting any amount authorized under the terms of this Agreement. Seller understands that the foregoing ACH authorization is a fundamental condition to induce Buyer to accept the Agreement. Consequently, such authorization is intended to be irrevocable.

Seller May Request Changes to the Daily Amount: The Initial Daily Amount is intended to represent the Specified Percentage of Seller’s daily Future Receipts. For as long as no Event of Default has occurred, once each calendar month, Seller may request that Buyer adjust the Daily Amount to more closely reflect the Seller’s actual Future Receipts times the Specified Percentage. Seller agrees to provide Buyer any information requested by Buyer to assist in this reconciliation. No more often than once a month, Buyer may adjust the Daily Amount on a going-forward basis to more closely reflect the Seller’s actual Future Receipts times the Specified Percentage, Buyer will give Seller notice five business days prior to any such adjustment, After each adjustment made pursuant to this paragraph, the new dollar amount shall be deemed the Daily Amount until any subsequent adjustment.

Daily Amount Upon Default. Upon the occurrence of an Event of Default, the Daily Amount shall equal 100% of all Future Receipts.

Sale of Future Receipts (THIS IS NOT A LOAN): Seller is selling a portion of a future revenue stream to Buyer at a discount, not borrowing money from Buyer. There is no interest rate or payment schedule and no time period during which the Purchased Amount must be collected by Buyer. If Future Receipts are remitted more slowly than Buyer may have anticipated or projected because Seller’s business has slowed down, or if the full Purchased Amount is never remitted because Seller’s business went bankrupt or otherwise ceased operations in the ordinary course of business, and Seller has not breached this Agreement. Seller would not owe anything to Buyer and would not be in breach of or default under this Agreement. Buyer is buying the Purchased Amount of Future Receipts knowing the risks that Seller’s business may slow down or fail, and Buyer assumes these risks based on Seller’s representations, warranties and covenants in this Agreement that are designed to give Buyer a reasonable and fair opportunity to receive the benefit of its bargain, By this Agreement, Seller transfers to Buyer full and complete ownership of the Purchased Amount of Future Receipts and Seller retains no legal or equitable interest therein. Seller agrees that it will treat Purchase Price and Purchased Amount in a manner consistent with a sale in its accounting records and tax returns. Seller agrees that Buyer is entitled to audit Seller’s accounting records upon reasonable Notice in order to verify compliance. Seller waives any rights of privacy, confidentiality or taxpayer privilege in any such litigation or arbitration in which Seller asserts that this transaction is anything other than a sale of future receipts,

Initials:

Capital Stack, LLC

Power of Attorney. Seller irrevocably appoints Buyer as its agent and attorney-in-fact with full authority to take any action or execute any instrument or document to settle all obligations due to Buyer from Seller, or in the case of a violation by Seller of this Agreement or the occurrence of an Event of Default under Section 15 hereof by Seller, including without limitation (i) to obtain and adjust insurance; (ii) to collect monies due or to become due under or in respect of any of the Future Receipts; (iii) to receive, endorse and collect any checks, notes, drafts, instruments, documents or chattel paper in connection with clause (i) or clause (ii) above; (iv) to sign Seller’s name on any invoice, bill of lading, or assignment directing customers or account debtors to direct payables to Buyer; (v) to file any claims or take any action or institute any proceeding which Buyer may deem necessary for the collection of any of the remaining Purchased Amount of the Future Receipts, or otherwise to enforce its rights with respect to delivery of the Purchased Amount; and/or (vi) to contact any Processor of Seller and to direct such Processor(s) to deliver directly to Buyer all or any portion of the amounts received by such Processor(s) and to provide any information regarding Seller requested by Buyer. Each Processor may rely on the previous sentence as written authorization of Seller to provide any information requested by Buyer. Each Processor is hereby irrevocably authorized and directed by Seller to follow any instruction of Buyer without inquiry as to Buyer’s right or authority to give such instructions. Seller acknowledges the terms of the preceding sentence and agrees not to (a) Interfere with Buyer’s instructions or a Processor’s compliance with this Agreement or (b) request any modification thereto without Buyer’s prior written consent.

Fees and Charges: Other than the Origination Fee, if any, set forth above. Buyer is NOT CHARGING ANY ORIGINATION OR BROKER FEES to Seller. If Seller is charged another such fee, it is not being charged by Buyer. A list of all fees and charges applicable under this Agreement is contained in Appendix A.

Credit Report and Other Authorizations: Seller and each of the Owners signing above authorize Buyer, its agents and representatives and any credit reporting agency engaged by Buyer, to (i) investigate any references given or any other statements or data obtained from or about Seller or any of its Owners for the purpose of this Agreement, (ii) obtain consumer and business credit reports on the Seller and any of its Owners, and (iii) to contact personal and business references provided by the Seller in the Application, at any time now or for so long as Seller and/or Owners continue to have any obligation Owed to Buyer as a consequence of this Agreement or for Buyer’s ability to determine Seller’s eligibility to enter into any future agreement with Buyer.

Authorization to Contact Current and Prior Banks: Seller hereby authorizes Buyer to contact any current or prior bank of the Seller in order to obtain whatever information it may require regarding Seller’s transactions with any such bank. Such information may include but is not limited to, information necessary to verify the amount of Future Receipts previously processed on behalf of Seller and any fees that may have been charged by the bank. In addition, Seller authorizes Buyer to contact any current or prior bank of the Seller for collections and in order to confirm that Seller is exclusively using the Account identified above, or any other account approved by Buyer, for the deposit of all business receipts,

Financial Information. Seller authorizes Buyer and its agents to investigate its financial responsibility and history, and will provide to Buyer any authorizations, bank or financial statements, tax returns, etc., as Buyer deems necessary in its sole discretion prior to or at any time after execution of this Agreement. A photocopy of this authorization will be deemed acceptable as an authorization for release of financial and credit information. Buyer is authorized to update such information and financial and credit profiles from time to time as it deems appropriate. Seller waives, to the maximum extent permitted by law, any claim for damages against Buyer or any of its affiliates relating to any investigation undertaken by or on behalf of Buyer as permitted by this Agreement or disclosure of information as permitted by this Agreement

10.

Transactional History. Seller authorizes all of its banks and brokers and Payment Card processors to provide Buyer with Seller’s banking, brokerage and/or processing history to determine qualification or continuation in this program, or for collections upon an Event of Default.

11.

Publicity. Seller hereby authorizes Buyer to use its name in listings of clients and in advertising and marketing materials.

12.

Application of Amounts Received by Buyer. Buyer reserves the right to apply amounts received by it under this Agreement to any fees or other charges due to Buyer from Seller prior to applying such amounts to reduce the amount of any outstanding Purchased Amount.

13.

Representations, Warranties and Covenants of Seller:

13.1.

Good Faith, Best Efforts and Due Diligence. Seller will conduct its business in good faith and will use its best efforts to continue its business at least at its current level, to ensure that Buyer obtains the Purchased Amount.

13.2.

Stacking Prohibited. Seller shall not enter into any Seller cash advance or any loan agreement that relates to or involves its Future Receipts with any party other than Buyer for the duration of this Agreement. Buyer may share information regarding this Agreement with any third party in order to determine whether Seller is in compliance with this provision.

Initials:

Capital Stack, LLC

13.3.

Financial Condition and Financial Information. Any bank statements and financial statements of Seller that have been furnished to Buyer, and future statements that will be furnished to Buyer, fairly represent the financial condition of Seller at such dates , and Seller will notify Buyer immediately if there are material adverse changes, financial or otherwise, in the condition or operation of Seller or any change in the ownership of Seller. Buyer may request statements at any time during the performance of this Agreement and the Seller shall provide them to Buyer within five business days. Furthermore, Seller represents that all documents, forms and recorded interviews provided to or with Buyer are true, accurate and complete in all respects, and accurately reflect Seller’s financial condition and results of operations, Seller further agrees to authorize the release of any past or future tax returns to Seller.

13.4.

Governmental Approvals. Seller is in compliance and shall comply with all laws and has valid permits, authorizations and licenses to own, operate and lease its properties and to conduct the business in which it is presently engaged and/or will engage in hereafter.

13.5.

Authority to Enter into This Agreement. Seller and the person(s) signing this Agreement on behalf of Seller, have full power and authority to incur and perform the obligations under this Agreement, all of which have been duly authorized.

13.6.

Change of Name or Location or Sale or Closing of Business. Seller will not conduct Seller’s businesses under any name other than as disclosed to Buyer or change any of its places of business without prior written consent of Buyer. Seller will not sell, dispose, transfer or otherwise convey all or substantially all of its business or assets without (i) the express prior written consent of Buyer, and (ii) the written agreement of any purchaser or transferee assuming all of Seller’s obligations under this Agreement pursuant to documentation satisfactory to Buyer. Except as disclosed to Buyer in writing, Seller has no current plans to close its business either temporarily, whether for renovations, repairs or any other purpose, or permanently. Seller agrees that until Buyer has received all of the Purchased Amount Seller will not voluntarily close its business on a temporarily basis for renovations, repairs, or any other purposes. This provision, however, does not prohibit Seller from closing its business temporarily if such closing is required to conduct renovations or repairs that are required by local ordinance or other legal order, such as from a health or fire inspector, or if otherwise forced to do so by circumstances outside of the control of Seller. Prior to any such closure. Seller will provide Buyer ten business days notice to the extent practicable.

13.7.

No Pending or Contemplated Bankruptcy. As of the date Seller executes this Agreement, Seller is not insolvent and does not contemplate and has not filed any petition for bankruptcy protection under Title 11 of the United States Code and there has been no involuntary petition brought or pending against Seller. Seller represents that it has not consulted with a bankruptcy attorney within six months prior to the date of this Agreement. Seller further warrants that it does not anticipate filing a bankruptcy petition and it does not anticipate that an involuntary petition will be filed against it.

13.8.

Seller to Maintain Insurance. Seller will possess and maintain insurance in such amounts and against such risks as are necessary to protect its business and will provide proof of such Insurance to Buyer upon demand.

13.9.

Seller to Pay Taxes Promptly. Seller will promptly pay all necessary taxes, including but not limited to employment and sales and use taxes.

13.10.

No Violation of Prior Agreements. Seller’s execution and performance of this Agreement will not conflict with any other agreement, obligation, promise, court order, administrative order or decree, law or regulation to which Seller is subject, including any agreement the prohibits the sale or pledge of Seller’s future receipts.

13.11.

No Diversion of Receipts. Seller will not permit any event to occur that could cause a diversion of any of Seller’s Future Receipts from the Account to any other entity.

13.12.

Seller’s Knowledge and Representation. Seller represents warrants and agrees that it is a sophisticated business entity familiar with the kind of transaction covered by the Agreement; it was represented by counsel or had full opportunity to consult with counsel.

Initials:

Capital Stack, LLC

14.

Rights of Buyer:

14.1.

Financing Statements Financing Statements and Security Interest. Seller grants Buyer a security interest in all of Seller’s present and future accounts, chattel paper, deposit accounts, personal property, assets and fixtures, general intangibles, instruments, equipment, Inventory wherever located, and proceeds now or hereafter owned or acquired by Seller. Seller authorizes Buyer to file one or more UCC-1 forms consistent with the Uniform Commercial Code (“UCC”) in order to give notice of this security interest and that the Purchased Amount of Future Receipts is the sole property of Buyer. The UCC filing may state that such sale is intended to be a sale and not an assignment for security and may state that the Seller is prohibited from obtaining any financing that impairs the value of the Future Receipts or Buyer’s right to collect same. Seller authorizes Buyer to debit the Account for all costs incurred by Buyer associated with the filing, amendment or termination of any UCC filings.

14.2.

Right of Access. In order to ensure that Seller is complying with the terms of this Agreement, Buyer shall have the right to (i) enter, without notice, the premises of Seller’s business for the purpose of inspecting and checking Seller’s transaction processing terminals to ensure the terminals are properly programmed to submit and or batch Seller’s daily receipts to the Processor and to ensure that Seller has not violated any other provision of this Agreement, and (ii) Seller shall provide access to its employees and records and all other items as requested by Buyer, and (iii) have Seller provide information about its business operations, banking relationships, vendors, landlord and other information to allow Buyer to interview any relevant parties.

14.3.

Phone Recordings and Contact. Seller agrees that any call between Buyer and Seller, and their agents and employees may be recorded or monitored. Further, Seller agrees that (i) it has an established business relationship with Buyer, its employees and agents and that Seller may be contacted from time-to-time regarding this or other business transactions; (ii) that such communications and contacts are not unsolicited or inconvenient; and (iii) that any such contact may be made at any phone number, emails address, or facsimile number given to Buyer by the Seller, its agents or employees, including cellular telephones.

15.

Events of Default. The occurrence of any of the following events shall constitute an “Event of Default”; (a) Seller interferes with Buyer’s right to collect the Daily Amount; (b) Seller violates any term or covenant in this Agreement; (c) Seller uses multiple depository accounts without the prior written consent of Buyer; (d) Seller changes its depositing account or its payment card processor without the prior written consent of Buyer; (e) Seller defaults under any of the terms, covenants and conditions of any other agreement with Buyer and/or Buyer’s Affiliate ACH Capital, LLC; or (f) Seller tails to provide timely notice to Buyer such that in any given calendar month there are four or more ACH transactions attempted by Buyer are rejected by Seller’s bank.

16.

Remedies. If any Event of Default occurs. Buyer may proceed to protect and enforce its rights including, but not limited to, the following:

16.1.

The Specified Percentage shall equal 100%. The full uncollected Purchased Amount plus all fees and charges (including legal fees) due under this Agreement will become due and payable in full immediately.

16.2.

Buyer may enforce the provisions of the Personal Guaranty of Performance against each Owner,

16.3.

Buyer may proceed to protect and enforce its rights and remedies by arbitration or lawsuit. In any such arbitration or lawsuit, under which Buyer shall recover Judgment against Seller, Seller shall be liable for all of Buyer’s costs of the lawsuit, including but not limited to all reasonable attorneys’ fees and court costs. However, the rights of Buyer under this provision shall be limited as provided in the arbitration provision set forth below.

16.4.

This Agreement shall be deemed Seller’s Assignment of Seller’s Lease of Seller’s business premises to Buyer, Upon an Event of Default, Buyer may exercise its rights under this Assignment of Lease without prior notice to Seller.

Initials:

Capital Stack, LLC

16.5.

Buyer may debit Seller’s depository accounts wherever situated by means of ACH debit or facsimile signature on a Computer-generated check drawn on Seller’s bank account or otherwise for all sums due to Buyer.

16.6.

Seller shall pay to Buyer all reasonable costs associated with the Event of Default and the enforcement of Buyer’s remedies, including but not limited to court costs and attorneys’ fees.

16.7.

Buyer may exercise and enforce its rights as a secured party under the UCC.

16.8.

All rights, powers and remedies of Buyer in connection with this Agreement may be exercised at any time by Buyer after the occurrence of an Event of Default, are cumulative and not exclusive, and shall he in addition to any other rights, powers or remedies provided by law or equity.

17.

Modifications; Agreements. No modification, amendment, waiver or consent of any provision of this Agreement shall be effective unless the same shall be in writing and Signed by Buyer.

18.

Assignment. Buyer may assign, transfer or sell its rights to receive the Purchased Amount or delegate its duties hereunder, either in whole or in part, with or without prior written notice to Seller.

19.

Notices.

19.1.

Notices from Buyer to Seller, Buyer may send any notices, disclosures, terms and conditions, other documents, and any future changes to Seller by regular mail or by e-mail, at Buyer’s option and Seller consents to such electronic delivery. Notices sent by e-mail are effective when sent. Notices sent by regular mail become effective upon mailing to seller’s address set forth in this Agreement.

19.2.

Notices from Seller to Buyer. Seller may send any notices to Buyer by e-mail only upon the prior written consent of Buyer, which consent may be withheld or revoked at any time in Buyer’s sole discretion. Otherwise, any notices or other communications from Seller to Buyer must be delivered by certified mail, return receipt requested, to Buyer’s address set forth in this Agreement. Notices sent to Buyer shall become effective only upon receipt by Buyer.

20.

Binding Effect; Governing Law, Venue and Jurisdiction. This Agreement shall be binding upon and inure to the benefit of Seller, Buyer and their respective successors and assigns, except that Seller shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of Buyer which consent may be withheld in Buyer’s sole discretion. This Agreement shall be governed by and construed in accordance with the laws of the state of New York, without regards to any applicable principals of conflicts of law. Any suit, action or proceeding arising hereunder, or the interpretation, performance or breach of this Agreement, shall, if Buyer so elects, be instituted in any court sitting in New York, (the “Acceptable Forums”), Seller agrees that the Acceptable Forums are convenient to it, and submits to the jurisdiction of the Acceptable Forums and waives any and all objections to jurisdiction or venue. Should such proceeding be initiated in any other forum. Seller waives any right to oppose any motion or application made by Buyer to transfer such proceeding to an Acceptable Forum.

21.

Survival of Representation, etc. All representations, warranties and covenants herein shall survive the execution and delivery of this Agreement and shall continue in full force until all obligations under this Agreement shall have been satisfied in full.

22.

Interpretation. All Parties hereto have reviewed this Agreement with an attorney of their own choosing and have relied only on their own attorney’s guidance and advice. No construction determinations shall be made against either Party hereto as drafter.

23.

Entire Agreement and Severability. This Agreement embodies the entire agreement between Seller and Buyer and supersedes all prior agreements and understandings relating to the subject matter hereof. In case any of the provisions in this Agreement is found to be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of any other provision contained herein shall not in any way be affected or impaired.

24.

Facsimile Acceptance. Facsimile signatures hereon, or other electronic means reflecting the party’s signature hereto, shall be deemed acceptable for all purposes.

Initials:

Capital Stack, LLC

25.

Confidentiality: The terms and conditions of this Agreement are proprietary and confidential unless required by law. Seller shall not disclose this information to anyone other than its attorney, accountant or similar service provider and then only to the extent such person uses the information solely for purpose or advising Seller and first agrees in writing to be bound by the terms of this Section. A breach entitles Buyer to damages and legal fees as well as temporary restraining order and preliminary injunction without bond.

26.

Monitoring, Recording, and Solicitations.

26.1.

Authorization to Contact Seller by Phone. Seller authorizes Buyer, its affiliates, agents and independent contractors to contact Seller at any telephone number Seller provides to Buyer or from which Seller places a call to Buyer, or any telephone number where Buyer believes it may reach Seller, using any means of communication, including but not limited to calls or text messages to mobile, cellular, wireless or similar devices or calls or text messages using an automated telephone dialing system and/or artificial voices or prerecorded messages, even if Seller incurs charges for receiving such communications.

26.2.

Authorization to Contact Seller by Other Means. Seller also agree that Buyer, its affiliates, agents and independent contractors, may use any other medium not prohibited by law including, but not limited to, mail, e-mail and facsimile, to contact Seller. Seller expressly consents to conduct business by electronic means.

27.

JURY WAIVER . THE PARTIES WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY COURT IN ANY SUIT, ACTION OR PROCEEDING ON ANY MATTER ARISING IN CONNECTION WITH OR IN ANY WAY RELATED TO THE TRANSACTIONS OF WHICH THIS AGREEMENT IS A PART OR ITS ENFORCEMENT, EXCEPT WHERE SUCH WAIVER IS PROHIBITED BY LAW OR DEEMED BY A COURT OF LAW TO BE AGAINST PUBLIC POLICY. THE PARTIES ACKNOWLEDGE THAT EACH MAKES THIS WAIVER KNOWINGLY, WILLINGLY AND VOLUNTARILY AND WITHOUT DURESS, AND ONLY AFTER EXTENSIVE CONSIDERATION OF THE RAMIFICATIONS OF THIS WAIVER WITH THEIR ATTORNEYS.

28.

CLASS ACTION WAIVER . THE PARTIES WAIVE ANY RIGHT TO ASSERT ANY CLAIMS AGAINST THE OTHER PARTY AS A REPRESENTATIVE OR MEMBER IN ANY CLASS OR REPRESENTATIVE ACTION, EXCEPT WHERE SUCH WAIVER IS PROHIBITED BY LAW OR DEEMED BY A COURT OF LAW TO BE AGAINST PUBLIC POLICY, TO THE EXTENT EITHER PARTY IS PERMITTED BY LAW OR COURT OF LAW TO PROCEED WITH A CLASS OR REPRESENTATIVE ACTION AGAINST THE OTHER, THE PARTIES AGREE THAT: (I) THE PREVAILING PARTY SHALL NOT BE ENTITLED TO RECOVER ATTORNEYS’ FEES OR COSTS ASSOCIATED WITH PURSUING THE CLASS OR REPRESENTATIVE ACTION (NOT WITHSTANDING ANY OTHER PROVISION IN THIS AGREEMENT); AND (II) THE PARTY WHO INITIATES OR PARTICIPATES AS A MEMBER OF THE CLASS WILL NOT SUBMIT A CLAIM OR OTHERWISE PARTICIPATE IN ANY RECOVERY SECURED THROUGH THE CLASS OR REPRESENTATIVE ACTION.

29.

ARBITRATION . IF BUYER, SELLER OR ANY GUARANTOR REQUESTS, THE OTHER PARTIES AGREE TO ARBITRATE ALL DISPUTES AND CLAIMS ARISING OUT OF OR RELATING TO THIS AGREEMENT. IF BUYER, SELLER OR ANY GUARANTOR SEEKS TO HAVE A DISPUTE SETTLED BY ARBITRATION, THAT PARTY MUST FIRST SEND TO ALL OTHER PARTIES, BY CERTIFIED MAIL, A WRITTEN NOTICE OF INTENT TO ARBITRATE. IF BUYER, SELLER OR ANY GUARANTOR DO NOT REACH AN AGREEMENT TO RESOLVE THE CLAIM WITHIN 30 DAYS AFTER THE NOTICE IS RECEIVED, BUYER, SELLER OR ANY GUARANTOR MAY COMMENCE AN ARBITRATION PROCEEDING WITH THE AMERICAN ARBITRATION ASSOCIATION (“AAA”) OR NATIONAL ARBITRATION FORUM (“NAF”), BUYER WILL PROMPTLY REIMBURSE SELLER OR THE GUARANTOR ANY ARBITRATION FILING FEE, HOWEVER, IN THE EVENT THAT BOTH SELLER AND THE GUARANTOR MUST PAY FILING FEES, BUYER WILL ONLY REIMBURSE SELLER’S ARBITRATION FILING FEE AND, EXCEPT AS PROVIDED IN THE NEXT SENTENCE, BUYER WILL PAY ALL ADMINISTRATION AND ARBITRATOR FEES. IF THE ARBITRATOR FINDS THAT EITHER THE SUBSTANCE OF THE CLAIM RAISED BY SELLER OR THE GUARANTOR OR THE RELIEF SOUGHT BY SELLER OR THE GUARANTOR IS IMPROPER OR NOT WARRANTED, AS MEASURED BY THE STANDARDS SET FORTH IN FEDERAL RULE OF PROCEDURE 11(B), THEN BUYER WILL PAY THESE FEES ONLY IF REQUIRED BY THE AAA OR NAF RULES. SELLER AND THE GUARANTOR AGREE THAT, BY ENTERING INTO THIS AGREEMENT, THEY ARE WAIVING THE RIGHT TO TRIAL BY JURY. BUYER, SELLER OR ANY GUARANTOR MAY BRING CLAIMS AGAINST ANY OTHER PARTY ONLY IN THEIR INDIVIDUAL CAPACITY, AND NOT AS A PLAINTIFF OR CLASS MEMBER IN ANY PURPORTED CLASS OR REPRESENTATIVE PROCEEDING. FURTHER, BUYER, SELLER AND ANY GUARANTOR AGREE THAT THE ARBITRATOR MAY NOT CONSOLIDATE PROCEEDINGS FOR MORE THAN ONE PERSON’S CLAIMS, AND MAY NOT OTHERWISE PRESIDE OVER ANY FORM OF A REPRESENTATIVE OR CLASS PROCEEDING, AND THAT IF THIS SPECIFIC PROVISION IS FOUND UNENFORCEABLE, THEN THE ENTIRETY OF THIS ARBITRATION CLAUSE SHALL BE NULL AND VOID.

Initials:

Capital Stack, LLC

30.

RI GHT TO OPT OUT OF ARBITRATION . SELLER AND GUARANTOR(S) MAY OPT OUT OF THIS CLAUSE. TO OPT OUT OF THIS ARBITRATION CLAUSE, SELLER AND EACH GUARANTOR MUST SEND BUYER A NOTICE THAT THE SELLER AND EACH GUARANTOR DOES NOT WANT THIS CLAUSE TO APPLY TO THIS AGREEMENT, FOR ANY OPT OUT TO BE EFFECTIVE, SELLER AND EACH GUARANTOR MUST SEND AN OPT OUT NOTICE TO THE FOLLOWING ADDRESS BY REGISTERED MAIL, WITHIN 14 DAYS AFTER THE DATE OF THIS AGREEMENT: BUYER - ARBITRATION OPT OUT, CAPITAL STACK, LLC, 11 BROADWAY, SUITE 814, NEW YORK, NY 10004, ATTENTION: ANNA RUBIN- GENERAL COUNSEL.

31.

SERVICE OF PROCESS . IN ADDITION TO THE METHODS OF SERVICE ALLOWED BY THE NEW YORK STATE CIVIL PRACTICE LAW & RULES (“CPLR”), SELLER HEREBY CONSENTS TO SERVICE OF PROCESS UPON IT BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, SERVICE HEREUNDER SHALL BE COMPLETE UPON SELLER’S ACTUAL RECEIPT OF PROCESS OR UPON BUYER’S RECEIPT OF THE RETURN THEREOF BY THE UNITED STATES POSTAL SERVICE AS REFUSED OR UNDELIVERABLE. SELLER MUST PROMPTLY NOTIFY BUYER, IN WRITING, OF EACH AND EVERY CHANGE OF ADDRESS TO WHICH SERVICE OF PROCESS CAN BE MADE. SERVICE BY BUYER TO THE LAST KNOWN ADDRESS SHALL BE SUFFICIENT. SELLER WILL HAVE (30) CALENDAR DAYS AFTER SERVICE HEREUNDER IS COMPLETE IN WHICH TO RESPOND. FURTHERMORE, SELLER EXPRESSLY CONSENTS THAT ANY AND ALL NOTICE(S), DEMAND(S), REQUEST(S) OR OTHER COMMUNICATION(S) UNDER AND PURSUANT TO THIS AGREEMENT FOR THE PURCHASE AND SALE OF FUTURE RECEIVABLES SHALL BE DELIVERED IN ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT FOR THE PURCHASE AND SALE OF FUTURE RECEIVABLES.

AUTHORIZED SERVICING AGENT - ACH Capital, LLC

ACH Capital, LLC is the authorized servicing agent of Capital Stack, LLC for this Agreement providing administrative, bookkeeping, reporting and support services for Capital Stack, LLC and the Seller. ACH Capital, LLC is affiliated or owned by Capital Stack, LLC and is acting as on independent agent for services including but not limited to background checks, credit checks, general underwriting review, filling UCC -1 security interests, cash management, account reporting, remittance and receipts collection. ACH Capital, LLC is not a credit card processor, or in the business of processing credit cards. Seller and Guarantor hereby acknowledge that in no event will ACH Capital, LLC be liable for any claims made against Capital Stack, LLC or the Processor under any legal theory for lost profits, lost revenues, lost business opportunity, exemplary, punitive, special, Incidental, Indirect or consequential damages, each of which is waived by the Seller and Guarantor. As such, Seller hereby authorizes ACH Capital, LLC to initiate ACH Debits (withdrawals) from Seller’s bank account for the delivery of the Purchased Amount as it becomes due and payable under the terms of this Agreement. Furthermore, Seller represents and warrants that it is the owner of the Account or has the full authority to grant this authorization. If there are any questions in regard to an ACH Debit (withdrawal) from the Account, you may contact ACH Capital, LLC at 1-212-671-1781 between the hours of 9am and 7pm (EST) Monday through Friday.

Seller:

MG CLEANERS, LLC / CHRISTIAN CHEMICAL COMPANY LLC

Agreed to by:	/s/ STEPHEN CHRISTIAN	(Signature), its	President	(Title)

Guarantor:	STEPHEN CHRISTIAN	(Print Name) Signature:	/s/ STEPHEN CHRISTIAN

Guarantor:		(Print Name) Signature:

Initials:

Capital Stack, LLC

Appendix A – List of Fees and Charges

In addition to the Purchased Amount of Future Receipts, the Agreement provides that the following fees shall be applied:

Underwriting Fee - $ 295.00

Non-Sufficient Funds (NSF) Fee - $ 35.00 each (Up to FOUR TIMES ONLY before a default is declared)

Stopped Fee - $ 135.00

ACH Processing Fee - $ 12.50

UCC Filing Fee - $150.00

Default Fee - $5,000.00

Financing Fee:

$5,000 - $9,999 = $149

$10,000 - $19,999 = $299

$20,000 - $49,999 =$699

$50,000 - $100,000 =$1,299

$100,001 - $249,999 = $1,995

$250,000 - $399,999 = $3,995

$400,000 - $699,999 = $5,995

$700,000 - $1,000,000 = $9,995

Initials:

Capital Stack, LLC

Exhibit 10.11

Page: 1 Deal Application ID : 21988

382 Greenwich Avenue Suite 2 Second Floor Greenwich CT

FUTURE RECEIVABLES SALE AGREEMENT

This FUTURE RECEIVABLES SALE AGREEMENT (“Agreement”) dated 8/4/2017, is made by and between Libertas Funding LLC, a Delaware limited liability company (“Purchaser”), Merchant (Merchant Information below), and the Guarantor(s)/Owner(s), as identified in the Owner/Guarantor Information below.

MERCHANT INFORMATION
Merchant Legal Name: M G CLEANERS, LLC	DBA Name:
Entity Type: LLC	FEIN: 203175973
State of Incorp.: TX	Bank Name:
Address: 442 E Sabine Street , CARTHAGE, TX, 75633	Phone:

OWNER/GUARANTOR INFORMATION (referred to individually or collectively as the “Owner”)

Name of Owner/Guarantor(1) : Stephen Christian Cell Phone : Home Phone :

Home Address : % Ownership : 100

Social Security # : Driver's License # : State :

Amount Sold	$67,100.00	The dollar value of the Future Receivables
Discount Factor	1.220	The risk adjustment to the Amount Sold that determines the Futures Receivables Discount
Future Receivable Discount	$12,100.00	The difference in value between the Purchase Price and the Amount Sold
Purchase Price	$55,000.00	The dollar amount Purchaser is paying for the Amount Sold.
Due Diligence Price Adjustment 7.0%	$3,850.00	Additional discount given to Purchaser for due diligence.
Direct Payments to Third Parties	$0	Paid to Other Funders.
Total Amount Sent to Merchant	$51,150.00	Net of Discount and Direct Payments to 3rd Parties:
Specified Percentage	20%	Percentage of Future Receivables to be remitted to purchaser on a daily basis
Estimated Average Monthly Future Receivables	233,899.33	Future Receivables Expected Per Month based on detailed analysis of Merchant’s business and attestation from Merchant
Expected daily Remittance	$798.81	Estimated Average Monthly Receivables Multiplied by Specified Percentage Divided by Number Working Days in Month (21)
Early Remittance Discount	None	Discount Paid to Merchant for remitting Future Receivables Early
Remittance Choice	ACH	Remittance can occur via ACH, Credit Card Split or Lockbox

Note: The bold type terms in the tables above and below shall constitute defined terms with respect to this Agreement.

PLEASE NOTE THAT THE PURCHASER WILL NOT REMIT MORE THAN THE EXPECTED DAILY REMITTANCE PER DAY WITHOUT THE CONSENT OF THE MERCHANT.

As explained in more detail in the Terms and Conditions stated hereinafter, Merchant will be in default of this Agreement if Merchant does or causes to be done any of the following during the term of this Agreement (see below, including but not limited to paragraph 8 and 10 for a list of the all of the events of default):

Change or close Merchant’s bank account

Change (or add a) credit card processors

Block Purchaser ACH access to Merchant’s bank account

Sell Merchant’s business prior to full remittance of Future Receivables above

Disconnect Purchaser's bank monitoring software

Retain a third-party debt consolidator to negotiate a change to the terms and conditions of this Agreement

PURCHASE AMOUNT DISCOUNTS AND REFUNDS. The following terms are additional costs, fees or refunds that may be incurred in connection with this Agreement upon certain circumstances, as set forth below:

Returned Item Refund - $35.00 Applicable in a circumstance in which Merchant has not agreed with Purchaser to a change in the Remittance Amount and does not have sufficient collected receivable funds in its Account to remit to Purchaser the agreed Remittance Amount. Upon the fourth Returned Item Refund imposed under this section, Merchant shall be deemed in Breach under the Agreement.

Page: 2 Deal Application ID : 21988

Blocked Account Refund - $100.00 Applicable in a circumstance in which Merchant BLOCKS its Account from Purchasers debit ACH or changes its designated Account cutting off Purchaser from obtaining delivery of the agreed Remittance Amount. This action places Merchant in Breach under the Agreement.

Breach Refund: $2,500.00 In the event of a breach of this Agreement,this amount will be added to the total amount to be remitted by the Merchant, effectively providing a breach-based discount to the Purchaser.

TERMS AND CONDITIONS IN ADDITION TO THE ABOVE TERMS:

Sale. In consideration of the payment of the Purchase Price specified above, Purchaser purchases from Merchant, and Merchant sells to Purchaser, the Specified Percentage of Merchant's future accounts, contract rights and any other obligations arising from or relating to the payment of monies from Merchant’s customers and/or other third-party payers including payments made by cash, check, electronic transfer or other form of monetary payment to Merchant in the ordinary course of the Merchant’s business, or otherwise, for the payment of Merchant’s sale of goods or services (“ACH Receivables”). Such payment of monies shall include the use by Merchant's customers of any Payment Device (as defined herein) to purchase Merchant's products and/or services that are processed by Merchants' card processor anytime during which the Amount Sold is outstanding (“Credit Card Receivables”, ACH Receivables and Credit Card Receivables are hereafter collectively or independently referred to as “Future Receivables”). Payment Device includes credit cards, charge cards, debit cards, prepaid cards, benefit cards, or any other type of payment card as well as any virtual payment card or any electronic payment device. Merchant agrees to remit to Purchaser in accordance with the terms of this Agreement the Daily Percentage of the Future Receivables specified above until the Amount Sold has been forwarded to Purchaser. Purchaser purchases the Future Receivables free and clear of all claims, liens or encumbrances of any kind whatsoever. Merchant agrees that this Agreement applies to Merchant's entire right, title and interest in the Future Receivables up to the Amount Sold. The terms and conditions of this Agreement shall remain in full force and effect until the Amount Sold has been delivered to Purchaser subject to the terms of this Agreement. Merchant and Purchaser agree that this sale and purchase is final and Merchant has no right to repurchase or resell the Future Receivables or any portion thereof. Merchant, any individual signing this agreement and Purchaser (each individually referred to herein as “Party” and collectively referred to herein as “Parties”) agree that the Purchase Price paid to Merchant is the price paid to purchase Merchant's Future Receivables and that the transaction contemplated by this Agreement is a purchase and sale of the Future Receivables. The Parties hereby agree that the transaction contemplated by this Agreement is not a loan, a forbearance of money lent or any similar loan or lending transaction. Merchant understands, agrees and represents that this transaction is made for business or commercial purposes only.

Remittance of Amount Sold. The Merchant hereby agrees to deliver the Amount Sold to the Purchaser as (i) the Expected Daily Remittance (based on a Specified Percentage) of Future Receivables by debiting, via ACH transaction, Merchant’s bank account (a “Direct Debit”). Purchaser, in its sole discretion, shall choose whether to receive the Amount Sold from the Merchant either by Direct Split or Direct Debit, (ii) as a Specified Percentage of daily amount of Credit Card Receivables directly from Merchant’s card processor (“Credit Card Split”) or (iii) daily amount of Future Receivables directly through a Lockbox arrangement “Lockbox”); or Purchaser may, in its sole discretion, upon written notice to Merchant, change the method by which it will accept the remittance of the Amount Sold, and provide the Merchant with updated remittance instructions. The following details each remittance type:

If Purchaser chooses to receive the remittance of the Amount Sold via a Direct Debit as the Expected Daily Remittance (based on a Specified Percentage) then Merchant agrees as follows:

Bank Account. Merchant shall deposit all of Merchant’s Future Receivables into a bank account approved by Purchaser (the “Account”).

Automated Clearinghouse for Expected Daily Remittance. The Merchant hereby authorizes Purchaser and its agents to initiate Automated Clearinghouse (“ACH”) payments equal to the Expected Daily Remittance of all deposits made into the Account each business day until the Purchaser has received Future Receivables equal to the Amount Sold.

Merchant to Maintain the Account. Merchant understands that it is responsible for ensuring that the Expected Daily Amount to be debited by Purchaser remains in the Account and will be held responsible for any fees incurred by Purchaser resulting from a rejected ACH attempt or an Event of Default (as defined herein).

Overdraft or Rejected Transactions the Responsibility of Merchant. The Purchaser is not responsible for any overdrafts or rejected transactions that may result from Purchaser ACH debiting the Expected Daily Remittance Amount.

Agreed Changes to the Expected Daily Remittance Amount. Unless mutually agreed, in writing, and only based on a documented change in the Merchant’s Future Receivables, Purchaser will continue to pull the Expected Daily Remittance amount. However, if Merchant provides written evidence, in the form of a complete set of invoices (or its equivalent), or natural events that have changed or impaired the Merchant’s ability to generate Future Receivables, and only with ongoing electronic surveillance, the Purchaser will agree to adjust the amount of the Expected Daily Remittance. It is the Merchant’s responsibility to communicate this at least one week in advance of a requested change and to cooperate with the Purchaser in good faith.

ACH authorization. The Merchant shall provide all necessary ACH authorizations to the Purchaser as set forth in Appendix A to this Agreement.

Page: 3 Deal Application ID : 21988

If Purchaser chooses to accept the remittance of the Specified Percentage of the Amount Sold through Credit Card Split, Merchant will enter into an agreement with a card processor (“Processor”) acceptable to Purchaser, and authorize Processor to pay the Specified Percentage directly to Purchaser until Purchaser receives the total Amount Sold. Merchant acknowledges that Processor will be acting on behalf of Purchaser to collect the Specified Percentage. Merchant irrevocably grants Processor the right to hold the Specified Percentage and to pay Purchaser directly (at, before or after the time Processor credits or remits to Merchant the balance of the Amount Sold not sold by Merchant to Purchaser) until Purchaser receives the entire Amount Sold. Processor may provide Purchaser with all information Purchaser deems pertinent. Merchant agrees to hold Purchaser harmless for the Processor’s actions or omissions.

If Purchaser chooses to accept the remittance through a Lockbox, Purchaser is authorized by Merchant to receive remittance to a specified bank account (“Lockbox”) directly from the Merchant's Processor as well as Merchant’s invoiced customers (the “Merchant’s Counterparties”). This Authorization shall continue until the Purchaser has received an amount equal to the Purchased Amount, plus any additional remittance required. Merchant further authorizes the Merchant’s Counterparties to provide to the Purchaser and its agents all information necessary to Purchaser to determine the amount to be paid to the Merchant and initiate such ACH payments to the Specified Account. Upon receipt of each ACH transfer into the Lockbox, Purchase will retain the Specified Percentage as well as the required minimum balance for the Lockbox (the “Required Minimum Balance”). Purchaser will ACH transfer the difference between the received funds and the retained funds plus the minimum balance into the Account.

Electronic Surveillance of Account. Merchant will provide Purchaser with ongoing anonymous electronic surveillance on a daily basis for the entire period during which this Agreement is in effect. Any change to Merchant’s bank account, access code, or permissions from its bank must be remedied immediately. Merchant must provide Purchaser all required access codes and allow Purchaser to electronically monitor the Account (e.g., using the anonymous Yodlee link provided by the Purchaser to the Merchant). This access both ensures that the Merchant is depositing its Future Receivables into the Account and provides written evidence to enable the Purchaser to be able to make adjustments to the Expected Remittance Amount, if necessary. If the electronic access to Merchant’s Account is temporarily disabled for any reason, Merchant will, as soon as possible, work with the Purchaser to re-establish the link between the Account and the Purchaser. Any change to Merchants’ Account, access codes or permission from the bank to access the Account or receive ACH transactions from the Account must be remedied immediately. The failure by the Merchant to comply with this Section 3 shall constitute a breach/Event of Default of this Agreement.

Timing, Method of Payment, Processing Trial. Merchant and Purchaser agree that Purchaser shall pay the Purchase Price or any portion thereof to Merchant only at a time, and through a method, acceptable to Purchaser and at Purchaser's sole discretion. Merchant and Purchaser also agree that Purchaser, in its sole discretion, may refuse to pay the Purchase Price or any portion thereof to Merchant and cancel this Agreement at any time prior to the Purchase Price being paid. Prior to paying the Purchase Price, to the extent that the Purchaser chooses to receive its Amount Sold pursuant to a Direct Split, as described above, Purchaser may conduct a site inspection and shall conduct a processing trial (the “Processing Trial”) to determine whether the Daily Percentage will be correctly processed and/or reported by Merchant's card processor or bank to Purchaser. In the event Purchaser determines to conduct a Processing Trial, Merchant acknowledges and agrees that Purchaser will make its final decision, in its sole and absolute discretion, whether to purchase the Future Receivables after completion of the Processing Trial. If Purchaser conducts a Processing Trial and determines not to purchase the Future Receivables, any receivables remitted to Purchaser during the Processing Trial shall be returned to Merchant.

Waiver. There shall be effected no waiver by failure on the part of Purchaser to exercise, or delay in exercising, any right under this Agreement, nor shall any single or partial exercise by Purchaser of any right under this Agreement preclude any other future exercise of any right. The remedies provided hereunder are cumulative and not exclusive of any remedies provided by law or equity.

Authorization to File Notice of Sale and Security Interest. Merchant hereby authorizes Purchaser to file one or more financing statement pursuant to the Uniform Commercial Code (UCC) to evidence -and perfect the sale of the Future Receivables and any continuation statements or amendments thereto. The UCC financing statement shall state that the sale of the Future Receivables is intended to be a sale and not an assignment for security.

Power of Attorney. Merchant irrevocably appoints Purchaser as its agent and attorney-in-fact with full authority to take any action or execute any instrument or document to settle all obligations due to Purchaser from any third party, or any breach by Merchant set forth in Section 10 or any other section of this Agreement or the occurrence of an event of default as described and defined in this Agreement, including, without limitation (i) to obtain and adjust insurance; (ii) to collect monies due or to become due under or in respect of any of the Collateral; to receive, endorse and collect any checks, notes, drafts, instruments, documents or chattel paper in connection with clause (i) or (ii) above; (iv) to sign Merchant’s name on any invoice, bill of lading or assignment directing customers or account debtors to make payment directly to Purchaser; and (v) to file any claims or take any action or institute any proceeding which Purchaser may deem necessary for the collection of any of the unpaid Amount Sold, or otherwise to enforce its rights with respect to the payment of the Amount Sold.

Page: 4 Deal Application ID : 21988

Refunds and Purchaser's Risk. Purchaser does NOT CHARGE ANY ORIGINATION OR BROKER FEES. If Merchant is charged such a fee, it is not being charged by Purchaser or an agent of Purchaser. Additionally, because this is not a loan, Purchaser does not charge any interest, finance charges, points, late fees or similar fees (except as permitted by applicable law in connection with civil judgments). Purchaser is purchasing the Future Receivables at a discount. Because the transaction evidenced by this Agreement is not a loan, there are no specific scheduled payments and no repayment term. If Merchant's business slows down and Merchant's Future Receivables decrease or if Merchant closes its business or ceases to process Payment Devices and Merchant has not violated any of the representations, warranties and covenants provided in paragraph 10 below, there shall be no default or breach of this Agreement. Purchaser is purchasing the Future Receivables and Purchaser assumes the risk that Merchant's business may fail or be adversely affected by conditions outside the control of Merchant provided Merchant has not breached a representation, warranty or covenant set forth in paragraph 10 below. A returned item refund of $35.00 will be assessed if, for any reason, (a) a check, draft or similar instrument issued by the Merchant or an individual that signs this Agreement is not honored or cannot be processed; or (b) an electronic debit is returned unpaid or cannot be processed. Merchant and any individual that signs this Agreement authorize Purchaser to resubmit returned payments in its discretion. At Purchaser's option, Purchaser will assess this fee the first time a payment is not honored or paid, even if it is later honored or paid following resubmission. Any check, draft or similar instrument may be collected electronically if returned for insufficient or uncollected funds. Additionally, a blocked account refund of $100.00 will be assessed as described above as well as a breach refund of $2,500.00 in the event that the Merchant violates the terms of this agreement, which violation remains uncured for more than 5 days. These refund will be paid in order to reimburse the Purchaser for the costs that it incurs in connection with returned items, blocked accounts and breaches, respectively.

Right to Cancel. Merchant may cancel this transaction at any time prior to midnight of the fifth business day after Purchaser forwards the Purchase Price to Merchant. In order to cancel the transaction, Merchant must provide notice to the Purchaser and return the full Purchase Price to Purchaser within five days of receipt of the Purchase Price.

10.

Merchant's Representations, Warranties and Covenants. Merchant represents, warrants and covenants that as of the date and during the term of this Agreement: (i) the Future Receivables are not subject to any claims, charges, liens, restrictions, encumbrances or security interests of any nature whatsoever; (ii) Merchant will not sell the Future Receivables to another person or entity; (iii) Merchant will not conduct business under any name other than as disclosed herein, shall not change its business location without the prior written consent of Purchaser, and shall not temporarily close its business for renovations or other purposes; (iv) Merchant will not change or add credit card processors or change the Account without the prior written approval of Purchaser; (v) Merchant will not take any action to intentionally discourage the use of credit cards, debit cards or other payment cards; (vi) Merchant will not undertake any transaction involving the sale of Merchant, either by an issuance, sale or transfer of ownership interests in Merchant that results in a change in ownership or voting control of Merchant, or by a sale or transfer of substantially all of the assets of Merchant; (vii) Merchant will not voluntarily permit another person or company, including without limitation a franchisor company (if Merchant is a franchisee), to assume or take over the operation and/or control of the Merchant's business or business locations; (viii) Merchant is not currently contemplating the filing of a bankruptcy proceeding or closing Merchant's business and Merchant has not retained any attorney, other consultant or professional to provide any advice, assistance or planning with respect to the filing of a bankruptcy; (ix) all information provided by Merchant to Purchaser in this Agreement, application, interview with Purchaser or otherwise and all of Merchant's financial statements and other financial documents provided to Purchaser are true and correct and accurately reflect Merchant's financial condition and results of operations; (x) Merchant will possess and maintain insurance in such amounts and against such risks as are necessary to protect its business and shall show proof of such insurance upon demand; (xi) Merchant has all permits, licenses, approvals, consents and authorizations necessary to conduct its business and will promptly pay all necessary taxes, including but not limited to employment and sales and use taxes; (xii) Merchant and the person(s) signing this Agreement on behalf of Merchant have full power and authority to enter into and perform the obligations under this Agreement; (xiii) Merchant will provide Purchaser copies of all documents related to Merchant's card processing activity or financial and banking affairs within five (5) days of a request by Purchaser; (xiv) Merchant will permit Purchaser to conduct a site inspection of Merchant's business, including an inspection of Merchant's credit card terminals, at any reasonable time during the term of this Agreement without notice to Merchant; (xv) Merchant will not take any action to cause the Future Receivables to be settled or delivered to any bank account other than the bank account that the Future Receivables are being settled or delivered to as of the date of this Agreement and in accordance with the terms of this Agreement; (xvi) Merchant will not enter into any financing agreement wherein and whereby the repayment terms of the agreement require Merchant to make daily or weekly payments (NO “STACKING”); (xvii) Merchant will conduct its business consistent with past practice and shall not take any action that would have an adverse effect on the use, acceptance, or authorization of any Payment Device for the purchase of Merchants products or services; (xviii) Merchant has not, will not and is not contemplating retaining/paying in any way a third-party debt consolidator, nor has the Purchaser consulted with nor will the Purchaser consult with, a third-party debt consolidator in contemplation of negotiating a change to the terms and conditions of this Agreement. Merchant understands clearly that the breach of any of the foregoing shall constitute a breach/event of default under this Agreement; (xviv) Merchant will not block Purchaser from receiving/requesting ACH remittances from Merchant’s Account and will act in good faith to enable Purchaser to access at all times the Account for purposes of electronic surveillance; and (xvv) has disclosed any condition that has resulting in or would result in a material adverse change to Merchant’s business and knows of no condition and there is no condition which is likely to result in a material adverse change to its business. Merchant understands that the violation of any of these covenants at any time would constitute a breach of this Agreement. Additionally, if any of the representations above are not true as of the date hereof, this would also constitute a breach of this Agreement.

TO THE EXTENT THAT INFORMATION PROVIDED BY THE MERCHANT THAT IS FALSE OR MISLEADING, MERCHANT SHALL BE DEEMED TO BE IN BREACH OF THIS AGREEMENT AND PURCHASER SHALL BE ENTITLED TO ANY REMEDIES UNDER LAW. ANY MISREPRESENTATION MADE BY MERCHANT OR OWNER OR ANY REPRESENTATIVES OF MERCHANT OR OWNER IN CONNECTION WITH THIS AGREEMENT MAY CONSTITUTE A SEPARATE CAUSE OF ACTION FOR FRAUD OR INTENTIONAL MISREPRESENTATION.

Page: 5 Deal Application ID : 21988

11.

Specified Percentage. Purchaser agrees to accept the remittance of the Specified Percentage in one of the following ways: (i) directly from Merchant's card processor; (ii) by debiting the Merchant's bank account; or (iii) by debiting a deposit account established by Merchant that is approved by Purchaser. Purchaser may decide in its sole discretion which of the three methods it will accept for the remittance of the Specified Percentage and will notify Merchant prior to delivering the Purchase Price to Merchant.

If Purchaser agrees to accept the remittance of the Specified Percentage directly from the Merchant's card processor, Merchant agrees to enter into an agreement with a card processor acceptable to Purchaser (“Processor”) that authorizes Processor to pay the Specified Percentage directly to Purchaser rather than to Merchant until the Amount Sold has been forwarded by Processor to Purchaser. This authorization shall be irrevocable, absolute and unconditional. Merchant hereby irrevocably grants Processor the right to hold the Specified Percentage and to pay Purchaser directly (at, before or after the time Processor credits or remits to Merchant the balance of the Future Receivables not sold by Merchant to Purchaser) until the entire Amount Sold has been forwarded to Purchaser. Merchant authorizes Purchaser to act as Merchant's agent for purposes of accessing and retrieving transaction history information regarding Merchant from Processor and any additional card processors Merchant may utilize during the term of this Agreement. Merchant acknowledges and agrees that Processor may provide Purchaser with Merchant's Payment Device processing history, including without limitation Merchant's chargeback experience and any communications about Merchant received by Processor from a card processing system.

Merchant acknowledges that Purchaser does not have any power or authority to control the Processor's actions with respect to the authorization, clearing, settlement and other processing of transactions and that Purchaser is not responsible for the Processor's actions. Merchant agrees to hold Purchaser harmless for the Processor's actions or omissions.

If Purchaser agrees to accept the remittance of the Specified Percentage by debiting the Merchant's bank account, Merchant irrevocably authorizes Purchaser or its designated successor or assignee to withdraw the Specified Percentage by initiating a debit via the Automatic Clearing House (ACH) system to the Merchants' bank account (as listed in Merchant's application) or such other bank account that Merchant maintains (“Bank Account”). Merchant agrees to complete and execute a written ACH authorization (the “ACH Authorization) permitting Purchaser to debit the Bank Account pursuant to the terms of this Agreement. Any such ACH Authorization is incorporated into and made a part of this Agreement. In the event Purchaser withdraws an incorrect amount from Merchant's Bank Account, Merchant authorizes Purchaser to credit the Bank Account for the appropriate amount. Merchant and each Guarantor also authorize Purchaser to act as an agent for purposes of accessing and retrieving account activity and account balance information from any bank accounts of Merchant or Guarantor(s).

If Purchaser agrees to accept the remittance of the Specified Percentage by debiting a deposit account established by Merchant that is approved by Purchaser (“Approved Account”), Merchant agrees to complete all necessary forms to establish the Approved Account. Merchant acknowledges and agrees that any funds deposited into the Approved Account by Merchant's card processor will remain in the Approved Account until the Specified Percentage is withdrawn by Purchaser and then the remaining funds, minus any amount required to maintain the minimum balance for the Approved Account, will be forwarded to Merchant's Bank Account. If the Approved Account requires a minimum account balance, Purchaser may, in its sole discretion, fund the required minimum balance for the Approved Account out of the Purchase Price.

12.

Telephone Monitoring, Recording and Contacts. Purchaser may choose to monitor and/or record telephone calls with Merchant and its owners, employees or agents. These calls are monitored and/or recorded solely for evaluation by supervisors, training, monitoring for compliance purposes, collections, and quality control. By signing this Agreement, Merchant agrees that any call between Purchaser and Merchant or a representative of Merchant may be monitored and/or recorded for these purposes. Merchant further agrees that: (i) it has an established business relationship with Purchaser and may be contacted from time to time regarding transactions with Purchaser by telephone, text message or email; (ii) such contacts are not considered unsolicited or inconvenient; and (iii) any such contact may be made using any wireless, mobile cellular or other number Merchant or its representative gave Purchaser, using any e-mail address Merchant or its representative gave Purchaser, or using an automated dialing and announcing or similar device, unless prohibited by law. This authorization is binding upon Merchant upon signing this Agreement and shall not be deemed withdrawn or revoked should Purchaser determine not to purchase the Future Receivables from Merchant.

13.

Miscellaneous. This Agreement shall be binding upon Merchant as well as its successors, assigns, related companies and Affiliated Entity (as defined below) as well as any company or person (or group of persons working together) that purchases substantially all of the Merchant’s assets or a majority of its voting interests and/or control over the Merchant. This Agreement shall inure to the benefit of Purchaser, its successors and assigns. This Agreement constitutes the entire Agreement between the Parties, and no representations, agreements, or understandings of any kind, either written or oral, shall be binding upon the parties unless expressly contained herein. This Agreement is a complete and exhaustive statement of the terms of the parties' agreement, which may not be explained or supplemented by evidence of consistent or inconsistent additional terms or contradicted by evidence of any prior or contemporaneous agreement. The Parties may change any of the terms of this Agreement or amend this Agreement but any such changes or amendments shall not be effective unless they are in writing, agreed to by both Parties, and signed by Merchant and/or Guarantor(s) as applicable. If any of the provisions of this Agreement are determined to be invalid, illegal or unenforceable in any respect, the remaining provisions shall not be affected in any manner. All Parties hereby acknowledge having the full power and authority to enter into and perform the obligations under this Agreement. Merchant and Guarantor(s) agree to execute such further and additional documents, instruments, and writings as may be necessary, proper, required, desirable, or convenient for the purpose of fully effectuating the terms and provisions of this Agreement. The information submitted by Merchant as part of its application for this transaction is hereby incorporated into and made a part of this Agreement. The signatures to this Agreement may be evidenced by facsimile copies or other electronic means reflecting the Party's signature hereto, and any such copy or signature shall be sufficient as if it were an original signature. In lieu of a signature, Purchaser shall be deemed to have accepted the terms of this Agreement upon payment of the Purchase Price to Merchant. Paragraph 10 and paragraphs 12 through 18 shall survive any termination, satisfaction or cancellation of this Agreement.

Page: 6 Deal Application ID : 21988

14.

Governing Law This Agreement, all transactions it contemplates, the entire relationship between the Parties, and all Claims (as defined in paragraph 15 below), whether such Claims are based in tort, contract or arise under statute or in equity, including all Claims involving an Affiliated Entity of Purchaser, shall be governed by and enforced in accordance with: (i) the laws of the State of New York without regard to principles of conflicts of laws that would require the application of any other law; and (ii) federal law for the limited purpose of the Arbitration Agreement (paragraph 17 below). Affiliated Entity means and includes: (i) any entity or person that has owned or controlled Purchaser or any entity that has been owned or controlled by Purchaser; (ii) any predecessor or successor entities of Purchaser; (iii) any entity or person who at any time owns or holds an equity or security interest in the Future Receivables and the interest was granted by Purchaser; and (iv) all officers, directors, owners and employees of Purchaser, its parent company or any Affiliated Entity; and (v) any parent companies of any Affiliated Entity and their subsidiaries.

15.

Disputes Any claim, dispute or controversy between any of the Parties or between any of the Parties and an Affiliated Entity arising from or relating in any way to the relationship between the Parties, including any relationship with an Affiliated Entity, whether such claims are based in tort, contract, or arise under statute or in equity (referred to herein as “Claim” or “Claims”), shall be resolved only as provided in this Agreement. Claim includes but is not limited to: any disputes regarding or relating to this Agreement or the application provided in connection with this transaction; any solicitation or advertising materials; any activities relating to the maintenance or servicing of the transaction; any disputes arising from any collection activity related to a breach or alleged breach of this Agreement; any disputes concerning the processing or collection of Future Receivables; any disputes regarding information obtained by Purchaser from, or reported by Purchaser to, Merchant, credit bureaus or others; and any disputes resulting from or relating to, in any way, any previous relationship, agreement or contract between the Parties or Merchant and an Affiliated Entity including but not limited to an agreement under which Merchant sold Future Receivables to Purchaser or an Affiliated Entity. The Parties hereby agree that this provision amends and supersedes any provision in a previous agreement entered into between the Parties or between Merchant and an Affiliated Entity regardless of whether the previous agreement has been satisfied, terminated or is in default. Accordingly, any Claims between the Parties or made against or by an Affiliated Entity shall no longer be governed by the dispute resolution provisions contained in a previous agreement but shall be governed by paragraphs 14 through 19 of this Agreement; provided, however, that any changes this provision makes to previous agreements between the Parties or made against or by an Affiliated Entity shall not apply in any litigation, arbitration or other proceeding commenced before the date of this Agreement.

16.

Litigation. If a Claim is filed in court, the Claim must be filed in the State of New York and the Parties hereby agree that the exclusive venue for all Claims filed in court shall be in the State of New York. No court action may be brought in any other state or jurisdiction except as necessary to enforce a valid security interest or enforce a judgment entered in New York. The Parties hereby waive any claim against or objection to the in personam jurisdiction and venue in the courts of the State of New York.

NO CLAIM FILED IN COURT WILL BE HEARD BY A JURY AND ANY CLAIM WILL TAKE PLACE ON AN INDIVIDUAL BASIS; CLASS ACTIONS ARE NOT PERMITTED. NO COURT MAY ORDER, PERMIT OR CERTIFY A CLASS ACTION, REPRESENTATIVE ACTION, PRIVATE ATTORNEY-GENERAL LITIGATION OR CONSOLIDATED ACTION. NO COURT MAY ORDER OR PERMIT A JOINDER OF PARTIES, UNLESS BOTH MERCHANT AND PURCHASER CONSENT TO SUCH JOINDER IN WRITING.

17.

ARBITRATION Any Party may elect to resolve any Claim by neutral, binding arbitration. An election to arbitrate a Claim may be made by any Party instead of filing an action in court or in response to a claim, counterclaim or cross claim filed in court by any Party. If a Party requests arbitration, all Claims (including counterclaims and cross claims) any Party may have against any other Party or Affiliated Entity, whether such Claims are deemed to be compulsory or permissive in law, shall be submitted to binding arbitration pursuant to this paragraph 17 (referred to herein as the “Arbitration Agreement”). The failure to bring such a Claim is a waiver of, and bars, the bringing of such a Claim in any subsequent arbitration or court action. Any arbitration hearing that requires the attendance of the Parties shall take place in the federal judicial district in the State of New York. The Party initiating the arbitration proceeding may select from the following arbitration administrators, which will apply the appropriate rules for commercial disputes in effect at the time the Claim is filed with the arbitration organization (“Arbitration Rules”): the American Arbitration Association (“AAA”), JAMS or any other organization the Parties agree to in writing. If neither AAA nor JAMS is able or willing to serve as the arbitration administrator and the Parties are unable to agree on a replacement administrator or arbitrator(s), then a court of competent jurisdiction will appoint an administrator or arbitrator(s). For information on arbitration fees and costs, a copy of the Arbitration Rules, or to file a claim contact AAA at 335 Madison Avenue, Floor 10, New York, New York 10017-4605, www.adr.org (phone 1-800-778-7879) or JAMS at 620 Eighth Ave., Floor 34, New York, NY 10018, www.jamsadr.com (phone 1-800-352-5267). In the event of a conflict between the Arbitration Rules and this Arbitration Agreement, this Arbitration Agreement shall govern. Judgment upon any arbitration award may be entered in any court with jurisdiction and may be enforced by any court having jurisdiction over that judgment. If a Party elects arbitration and the other Party refuses to arbitrate, the Party electing arbitration may seek a court order enforcing this Arbitration Agreement. In that event, the court shall determine any issues regarding enforceability of this Arbitration Agreement, including the validity and effect of the class action waiver (set forth below), but all other issues shall be decided by the arbitrator. All statutes of limitation that otherwise would apply to an action brought in court will apply in arbitration.

NO CLAIM SUBMITTED TO ARBITRATION WILL BE HEARD BY A JURY AND ANY ARBITRATION UNDER THIS AGREEMENT WILL TAKE PLACE ON AN INDIVIDUAL BASIS; CLASS ARBITRATIONS AND CLASS ACTIONS ARE NOT PERMITTED. NO ARBITRATOR MAY ORDER, PERMIT OR CERTIFY A CLASS ACTION, REPRESENTATIVE ACTION, PRIVATE ATTORNEY-GENERAL LITIGATION OR CONSOLIDATED ARBITRATION. NO ARBITRATOR MAY ORDER OR PERMIT A JOINDER OF PARTIES, UNLESS BOTH MERCHANT AND PURCHASER CONSENT TO SUCH JOINDER IN WRITING.

Page: 7 Deal Application ID : 21988

18.

Remedies In the event Merchant breaches, any of the provisions of this Agreement, including but not limited to the representations, warranties and covenants made in paragraph 9, Purchaser shall be entitled to all remedies available under law. In any action for damages, Purchaser shall be entitled to damages equal to the Amount Sold less the amount received by Purchaser. Merchant and the individuals signing this Agreement hereby agree that Purchaser may electronically debit from any of Merchant's or the individual signatory's bank accounts via ACH or otherwise all or any portion of the Amount Sold or may instruct Merchant's processor to forward to Purchaser all or any portion of the Amount Sold outstanding if Merchant breaches this Agreement. In addition to any other remedies provided Purchaser under this Agreement, in the event that Merchant changes or permits the change of the Processor accepted by Purchaser, utilizes the services of an additional card processor or changes the Account, Purchaser shall have the right, without waiving any of its other rights or remedies and without notice to Merchant or Guarantor(s), to notify the new or additional card processor or the bank where the new Account is located, as the case may be, of the sale of the Amount Sold of Future Receivables hereunder and to direct such new or additional processor or bank to make payment to Purchaser of all or any portion of the amounts received or held by such card processor or bank for or on behalf of Merchant to pay any amounts Purchaser is entitled to receive under the terms of this Agreement. Merchant hereby grants to Purchaser an irrevocable power of attorney and hereby appoints Purchaser and its designees as Merchant's attorney-in- fact to take any and all actions necessary or appropriate to direct such new or additional card processor to make payment to Purchaser as contemplated by this paragraph.

The transaction(s) governed by this Agreement involves interstate commerce and the Parties agree that arbitration shall be governed by the Federal Arbitration Act (9 U.S.C. § 1 et. seq.) and the Arbitration Rules and not by any state law concerning arbitration. The arbitrator will be required to follow relevant law and applicable judicial precedent to arrive at a decision and shall be empowered to grant whatever relief would be available in court. The cost of any arbitration proceeding shall be divided as follows: (i) if a Party other than Purchaser or an Affiliated Entity initiates arbitration and the damages claimed are less than $25,000 or Purchaser or an Affiliated Entity initiate arbitration, Purchaser shall pay all arbitration fees and costs; (ii) if anyone other than Purchaser or an Affiliated Entity initiates arbitration and the damages claimed are $25,000 or more, the parties to the arbitration shall split the fees and costs for arbitration equally. Notwithstanding the foregoing, if a Party other than Purchaser believes the applicable cost of arbitration may be too burdensome, that Party may seek a waiver of costs under the applicable Arbitration Rules. If such a request is made but denied by the arbitration organization, Purchaser will consider a written request to either advance or pay all or part of the costs. If arbitration is elected, each Party shall be responsible for its own attorney, witness and consulting fees provided the prevailing Party may seek reimbursement of attorney fees and arbitration costs if they prevail as provided in paragraph 16 below. If any part of this Arbitration Agreement, other than waivers of class action rights, is deemed or found to be unenforceable for any reason, the rest shall remain enforceable. If the waiver of class action rights is deemed or found to be unenforceable for any reason in a case in which class action allegations have been made, the remainder of this Arbitration Agreement shall be unenforceable.

19.

Attorney's Fees and Costs. In the event Merchant defaults, Purchaser shall be entitled to recover from Merchant and Guarantors all costs of collection, including reasonable attorney's fees and third party collection costs, including all such costs and fees incurred in the event of a bankruptcy filing by Merchant or Guarantors.

20.

Reporting: By signing this Agreement you authorize Purchaser to obtain a credit report and any background report on the Merchant deemed necessary by Purchaser and any individual that signs this Agreement for purposes of deciding whether to approve the purchase of the Amount Sold or for any update, renewal, or for evaluating the qualification of Merchant for other products of Purchaser or Affiliated Entities and for any other lawful purpose. The report Purchaser obtains may include, but is not limited to, the business' or individuals' credit history or similar characteristics, employment and education verifications, social security verification, criminal and civil history, Department of Motor Vehicle records, any other public records, and any other information Purchaser deems relevant. The reports will be used by Purchaser to determine if it will proceed with the Purchase of the Future Receivables from Merchant and shall not be used for any other purposes.

21.

INDIVIDUAL LIABILITY OF GUARANTOR(S) FOR BREACH OF REPRESENTATIONS, WARRANTIES AND COVENANTS. By signing this Agreement on behalf of Merchant AND ON THEIR OWN BEHALF (each such signer a Guarantor), the Guarantors (defined as the Owners that have signed below) hereby assume and, jointly and severally, guarantee those obligations of the Merchant arising under this Agreement as set forth above and in Appendix B below. This guarantee is unlimited, absolute and without condition, and is binding upon each Guarantor, the Guarantor's heirs, legal representatives, successors and assigns. The Guarantors to this Agreement are hereby notified that a negative credit report reflecting on his/her credit record may be submitted to a credit reporting agency if the terms of this Agreement are breached and the resulting damages are not satisfied. Each Guarantor acknowledges receiving a copy of this Agreement and having read the terms of this Agreement, including, without limitation, the guarantee set forth in this paragraph, and the individual owner's and Guarantor's signatures below shall serve as confirmation that they understand all terms and conditions of this Agreement.

Page: 8 Deal Application ID : 21988

EACH PARTY ACKNOWLEDGES THAT THEY HAVE READ AND AGREE TO ALL THE FOREGOING TERMS AND CONDITIONS, INCLUDING THE CHOICE OF LAW AND ARBITRATION PROVISIONS SET FORTH ABOVE.

LIBERTAS FUNDING, LLC

by:	Randy Saluk, CEO	/s/ Randy Saluk
(Company Officer)		(Signature)
FOR THE MERCHANT (#1)

by:	Stephen Christian	/s/ Stephen Christian
(Print Name and Title)		(Signature)
FOR THE MERCHANT (#2)

by:
(Print Name and Title)		(Signature)
OWNER #1

by:	Stephen Christian	/s/ Stephen Christian
(Print Name and Title)		(Signature)
OWNER #2

by:
(Print Name and Title)		(Signature)

Page: 9 Deal Application ID : 21988

APPENDIX A

ACH Authorization Agreement

This Authorization Agreement for Direct Deposit (ACH Credit) and Direct Collections (ACH Debits) is part of (and incorporated by reference into) the Future Receivables Sale Agreement (the “Agreement”). Merchant should keep this important legal document for Merchant’s records. This authorization agreement (the ACH Authorization) is entered into pursuant to the Future Receivables Sale Agreement (the “Agreement”) dated 8/4/2017 between the undersigned Merchant and Libertas Funding LLC (the “Purchaser”). Terms used and not defined herein will have the meanings assigned to such terms in the Agreement.

The individual signing this ACH Authorization on behalf of Merchant certifies to Purchaser that he or she is a duly authorized check signer on the financial institution account identified below, that he or she is authorized to enter into this ACH Authorization on behalf of the Merchant, and that the Merchant will be bound by all the terms of this ACH Authorization.

This authorization shall remain in effect until the sooner of (a) such time that Purchaser has received the Purchased Amount under the Agreement, or (b) Purchaser permits Merchant to revoke this ACH Authorization, as evidenced in writing to Merchant.

The undersigned Merchant hereby authorizes Purchaser to initiate debit or credit entries from and to Merchants Account at the bank specified below. Merchant and Purchaser agree to be bound by the applicable rules set forth by the National Automated Clearinghouse Association.

Furthermore, if any such ACH transactions should be returned for insufficient funds, Merchant authorizes Purchaser to reattempt to collect such amounts by ACH, and in any such case, collect a fee as specified in the Agreement.

Merchant further agrees that a breach of this ACH Authorization will constitute a breach of the Agreement.

Any capitalized term(s) that are not otherwise defined shall retain the same meaning set forth in the Future Receivables Sale Agreement.

DISBURSEMENT OF RECEIVABLES SALE PROCEEDS. By signing below, Merchant authorizes Purchaser to disburse the Purchase Price, less the amount of any applicable setup fee, by initiating an ACH credit, wire transfer, or similar means to the checking account indicated below (or a substitute checking account Merchant later identifies and is acceptable to Purchaser) (hereinafter referred to as the “Designated Checking Account”) in the disbursal amount set forth in the accompanying Future Receivables Sale Agreement.

COLLECTION OF FUNDS ARISING FROM FUTURE RECEIPTS. By signing below, Merchant authorizes Purchaser to collect amounts Purchaser is entitled to receive under the Agreement by initiating ACH Debits of the Specified Percentage of Merchant’s daily receivables to the Designated Checking Account each business day until Purchaser receives the Amount Sold. At the time of execution of the Future Receivables Sale Agreement, the Parties agree that the Purchased Percentage equates to the Dollar Amount of Purchased Percentage set forth in the Agreement, and that the Dollar Amount of Purchased Percentage shall be debited each business day. However, Merchant acknowledges and agrees that the Dollar Amount of Purchased Percentage may change and fluctuate so that it directly correlates to the fluctuation of the amount of Future Receivables generated by Merchant. Purchaser will debit Merchants Account in the amount set forth in the Agreement, as may be modified from time to time by agreement of the Parties. Purchaser acknowledges that no prior notification will be provided in advance of debits or credits authorized under the Agreement.

Merchant authorizes Purchaser to increase the amount of any scheduled ACH debit entry or assess multiple ACH debits for the amount of any previously scheduled payment(s) that was not paid because Merchant’s financial institution was not open or was not able to process ACH transactions. If a transaction is rejected by Merchant’s financial institution for any reason other than termination of this authorization, including without limitation insufficient funds, Merchant understands that Purchaser may, at its discretion, attempt to process the transaction again as permitted under the NACHA Rules. Merchant also authorizes Purchaser to initiate ACH entries to correct any erroneous payment transaction. Merchant understands that Merchant is responsible for ensuring that funds arising from Future Receivables of Merchant remain in the Designed Checking Account each day until Purchaser debits the amount to which it is entitled under the Future Receivables Sale Agreement. Merchant agrees to notify Purchaser promptly if there are any changes to the account and routing numbers of the Designated Checking Account. Purchaser is not responsible for any overdrafts, rejected transactions, or other fees that may result from credits or debits initiated under this Authorization Agreement. This authorization is to remain in full force and effect until Purchaser has remitted the full amount of the Amount Sold under the Agreement. The origination of ACH transactions to the Designated Checking Account must comply with, and both Merchant and Purchaser agree to be bound by, the provisions of applicable law and the NACHA Rules. If Merchant’s financial institution rejects Purchaser’s debits for any reason, Merchant is still responsible for making timely remittances of the Purchased Percentage to Purchaser each business day, pursuant to the Agreement.

BUSINESS PURPOSE ACCOUNT. By signing below, Merchant attests that the Designated Checking Account was established for business purposes and not primarily for personal, family or household purposes. The individual signing below on behalf of Merchant certifies that he/she is an authorized signer on the Designated Checking Account. Merchant will not dispute any ACH transaction initiated pursuant to this Authorization Agreement, provided the transaction corresponds to the terms of this Authorization Agreement. Merchant requests the financial institution that holds the Designated Checking Account to honor all ACH entries initiated in accordance with this Authorization Agreement.

Page: 10 Deal Application ID : 21988

Payment Authorization. I authorize my bank to debit my account as identified above to the terms stated here. This authorization shall remain in effect until the Purchaser and bank receive written notification from me of intent to terminate at such time and in such manner as to afford the Purchaser and bank reasonable opportunity to act (minimum 30 days).

I understand that if the total amount owed to the Purchaser is increased, I authorize this plan to continue as long as the payment amount remains unchanged until the amount owed the Purchaser is paid off, or unless the plan is terminated earlier by me as above.

I understand any added amounts can be applied for with a new ACH Debit Authorization Form.

All other changes such as payment amount, frequency, bank account number change, will require a new ACH Debit Payment Authorization Form to be filled out and submitted to Merchant 15 days prior to any change being implemented.

I will be liable to pay an NSF fee of $25.00 (or the amount allowable by law), which may be automatically debited for each NSF.I represent and warrant that I am authorized to execute this payment authorization for the purpose of implementing this payment plan.

I indemnify and hold the Purchaser and the bank harmless from damage, loss or claim resulting from all authorized actions hereunder.

Payments will be scheduled daily in the amount of 798.81.

Recurring schedule of payment will start on the following day after the financing proceeds are disbursed to the business.

Payments will be deducted every day, excluding weekends until full payback amount, referred to as the Purchased Amount (67,100.00), is reached.

Routing Number Account:

Number Account Name:

Bank Name:

Type of Account:

¨	¨
Checking	Savings

Merchants Legal Name: M G CLEANERS, LLC

View-Only Access to Online Bank Login:

Password:

Date: 8/4/2017

FOR THE MERCHANT (#1)

by:	Stephen Christian		/s/ Stephen Christian
(Print Name and Title)			(Signature)
SSN #		Driver License #:

FOR THE MERCHANT (#2)

by:
(Print Name and Title)			(Signature)
SSN #		Driver License #:

Page: 11 Deal Application ID : 21988

APPENDIX B

SECURITY AGREEMENT AND GUARANTY

Merchants Legal Name: M G CLEANERS, LLC

Physical Address: 442 E Sabine Street CARTHAGE TX

Zip Code: 75633

Federal ID#: 203175973

Security Interest.

To secure Merchants delivery obligations to LIBERTAS FUNDING, LLC (the “Purchaser”) under the Future Receivables Sale Agreement (the “Agreement”) dated 8/4/2017, Merchant hereby grants to Purchaser a security interest in (a) all accounts, chattel paper, documents, equipment, general intangibles, instruments and inventory, as those terms are defined in Article 9 of the Uniform Commercial Code (the UCC), now or hereafter owned or acquired by Merchant; and (b) all proceeds, as that term is defined in Article 9 of the UCC, ((a) and (b) are collectively, the “Collateral”).

Cross-Collateral/Additional Collateral.

To secure Owners (see below) delivery obligations to Purchaser under this Security Agreement and Guaranty (the “Security Agreement”), Owner also hereby grants Purchaser as Additional Collateral a security interest in:

CHRISTIAN CHEMICAL COMPANY, LLC

Owner understands that Purchaser will have a security interest in the aforesaid Additional Collateral upon execution of this Security Agreement. Merchant and Owner each acknowledge and agree that any security interest granted to Purchaser under any other agreement between Merchant or Owner and Purchaser (the “Additional Collateral” or “Cross-Collateral”) will secure the obligations hereunder and under the Agreement.

Authority for the Purchaser to file Financing Statements; Owner Liable for Costs

Merchant and Owner each agrees to execute any documents or take any action in connection with this Security Agreement as Purchaser deems necessary to perfect or maintain Purchasers first priority security interest in the Collateral, the Additional Collateral and the Cross-Collateral, including the execution of any account control agreements. Merchant and Owner each hereby authorizes Purchaser to file any financing statements deemed necessary by Purchaser to perfect or maintain Purchasers security interest, which financing statement may contain notification that Merchant and Owner have granted a negative pledge to Purchaser with respect to the Collateral, the Additional Collateral and the Cross- Collateral, and that any subsequent lien or may be tortiously interfering with Purchasers rights. Merchant and Owner shall be liable for and Purchaser may charge and collect all costs and expenses, including but not limited to attorney’s fees, which may be incurred by Purchaser in protecting, preserving and enforcing Purchasers security interest and rights.

Negative Pledge. Merchant and Owner each agrees not to create, incur, assume or permit to exist, directly or indirectly, any lien on or with respect to any of the Collateral, the Additional Collateral or the Cross-Collateral, as applicable.

Consent to Enter Premises and Assign Lease. Purchaser shall have the right to cure Merchants default in the payment of rent on the following terms. In the event Merchant is served with papers in an action against Merchant for nonpayment of rent or for summary eviction, Purchaser may execute its rights and remedies under the Assignment of Lease. Merchant also agrees that Purchaser may enter into an agreement with Page: 11 Merchants landlord giving Purchaser the right: (a) to enter Merchants premises and to take possession of the fixtures and equipment therein for the purpose of protecting and preserving same; and (b) to assign Merchants lease to another qualified Merchant capable of operating a business comparable to Merchants at such premises.

Remedies. Upon any Event of Default, Purchaser may pursue any remedy available at law (including those available under the provisions of the UCC), or in equity to collect, enforce or satisfy any obligations then owing, whether by acceleration or otherwise.

Owner Guarantee of Performance Upon Breach of Merchant Agreement.

The Owner Guarantees the Performance of all of the representations, warranties, covenants (collectively, the “Representations”) made by Merchant in this Security Agreement and the Agreement, as each agreement may be renewed, amended, extended or otherwise modified (the “Guaranteed Obligations”). To the extent there is no violation of the Representations then the Owner(s) will not guaranty the payment of the Purchase Amount by the Merchant, or guaranty that the Merchant will generate Future Receivables sufficient to meet its obligations under the Merchant Agreement.

Remedies. The Purchaser may seek remedy via the Personal Guarantee of Performance:

at the time of any breach by Merchant of any representation, warranty or covenant made by Merchant in this Security Agreement and/or the Agreement, and

at the time Merchant admits its inability to pay its debts, or makes a general assignment for the benefit of creditors, or any proceeding shall be instituted by or against Merchant seeking to adjudicate it bankrupt or insolvent, or seeking reorganization, arrangement, adjustment or composition of it or its debts.

Page: 12 Deal Application ID : 21988

Owner Waivers. In the event that Merchant fails to make a payment or perform any obligation when due under the Agreement, Purchaser may enforce its rights under this Security Agreement without first seeking to obtain payment from Merchant, any other guarantor, or any Collateral, Additional Collateral or Cross- Collateral Purchaser may hold pursuant to this Security Agreement or any other guaranty. Purchaser does not have to notify Owner of any of the following events and Owner will not be released from its obligations under this Security Agreement if it is not notified of:

Merchants failure to pay timely any amount owed under the Merchant Agreement;

ii.

any adverse change in Merchants financial condition or business;

iii.

any sale or other disposition of any collateral securing the Guaranteed Obligations or any other guarantee of the Guaranteed Obligations;

iv.

Purchaser's acceptance of this Security Agreement; and

any renewal, extension or other modification of the Agreement or Merchants other obligations to Purchaser.

Purchaser Actions. Purchaser may take any of the following actions without releasing Owner from any of its obligations under this Agreement:

renew, extend or otherwise modify the Merchant Agreement or Merchants other obligations to Purchaser;

ii.

release Merchant from its obligations to Purchaser;

iii.

sell, release, Merchant from its obligations to Purchaser;

iv.

sell, release, impair, waive, or otherwise fail to realize upon any collateral securing the Guaranteed Obligations or any other guarantee of the Guaranteed Obligations; and

foreclose on any collateral securing the Guaranteed Obligations or any other guarantee of the Guaranteed Obligations in a manner that impairs or precludes the right of Owner to obtain reimbursement for payment under this Agreement.

No Reimbursement Until the Merchant Amount plus any accrued but unpaid interest and Merchants other obligations to Purchaser under the Agreement and this Security Agreement are paid in full, Owner shall not seek reimbursement from Merchant or any other guarantor for any amounts paid by it under this Agreement.

Waivers. Owner permanently waives and shall not seek to exercise any of the following rights that it may have against Merchant, any other guarantor, or any collateral provided by Merchant or any other guarantor, for any amounts paid by it, or acts performed by it, under this Agreement, including:

subrogation

ii.

reimbursement;

iii.

performance;

iv.

indemnification; or

contribution.

Other. In the event that Purchaser must return any amount paid by Merchant or any other guarantor of the Guaranteed Obligations because that person has become subject to a proceeding under the United States Bankruptcy Code or any similar law, Owners obligations under this Agreement shall include that amount.

Owner Acknowledgement. Owner acknowledges that: (i) He/She understands the seriousness of the provisions of this Agreement; (ii) He/She has had a full opportunity to consult with legal counsel of his/her choice; and (iii) He/She has consulted with counsel of his/her choice or has decided not to avail himself/herself of that opportunity.

Joint and Several Liability. The obligations hereunder of the persons or entities constituting Owner under this Agreement are joint and several.

THE TERMS, DEFINITIONS, CONDITIONS AND INFORMATION SET FORTH IN MERCHANT AGREEMENT ARE HEREBY INCORPORATED IN AND MADE A PART OF THIS SECURITY AGREEMENT. CAPITALIZED TERMS NOT DEFINED IN THIS SECURITY AGREEMENT AND GUARANTY SHALL HAVE THE MEANING SET FORTH IN THE MERCHANT AGREEMENT.

FOR THE MERCHANT (#1)

by:	Stephen Christian		/s/ Stephen Christian
(Print Name and Title)			(Signature)
SSN #		Driver License #:
FOR THE MERCHANT (#2)

by:
(Print Name and Title)			(Signature)
SSN #		Driver License #:
OWNER #1

Page: 13 Deal Application ID : 21988

by:	Stephen Christian
(Print Name and Title)
SSN #		Driver License #:
OWNER #2

by:
(Print Name and Title)
SSN #

Exhibit 10.12

CORPORATE GUARANTY

T his Corporate Guaranty ("Guaranty") is made on September 19, 2017, by SMG INDIUM RESOURCES LTD., a Delaware corporation ("Guarantor"), in favor Crestmark Bank ("Crestmark") to induce Cres tmark to continue credit and i ts loan to M G CLEANERS, LLC, a Texas limited liability company ("Borrower") and because Guarantor, whose eco nomic success is vitally linked to Borrower's suc cess, has determined that executing and delivering this Guaranty is in Guarantor's interest and to Guarantor's financial benefit.

1. Guaranty. Guarantor hereby absolutely, irrevocably and unconditionally guarantees to Crestmark: (a) the full , prompt and unconditional pa y ment when due of all exist ing and future obligations and indebtedne ss of the Borrower to Crestmark, including but not limited to the Indebtedness as defined in the Loan and Security Ag reement ("Agreement") between Crestmark and Borrower (as may be amended) and all principal , interest and fees under any and all related notes, as they m ay be amended or restated and whether on demand, at maturity, pursuant to mandatory or optional prepayments, by acceleration or otherwise; and (b) the punctual and faithful performance and observation by Borrower of all duties , agreements, covenants , representations and obligation s of Borrower contained in the Loan Documents (as defined in Section 3).

2. Absolute, Unconditional and Continuing Obligation. This Guaranty is an absolute, continuing, unconditional, unlimited and irrevocable guaranty . Guarantor will not be re l ieved from any obligations under this Guaranty until this Guaranty is terminated in accordance with Section 14. The obligations and liabilities of Guarantor will continue notwithstanding any defect in the genuineness, va li di ty or enforceability of t he Indebtedness or the Loan Documents, or any other circumstances which might otherwis e constitute a legal or equitable discharge or defen s e of the liabilitie s of a s urety or guarantor or which might otherwise limit recour se against Guarantor. This is a guarantee of payment and not of collection.

3. The Loan Documents. The Agreement, all related notes , and all other related documents now existing or hereafter arising and executed in connection with the Loan, including all amendment s and restatements thereto (collectively "Loan Documents"), are incorporated into and made a part of this Guaranty by reference.

4. Continuation of Liability. The liability and obligations of Guarantor will in no way be affected , impaired , diminished or released by any action or inaction whatsoever other than the indefeasible payment in full and in cash of the Indebtedness.

5. Unconditional Waiver of all Defenses. Guarantor unconditionally, absolutely and irrevocably waives each and every defen se, which under principles of guaranty or suretyship law would otherwise operate to impair or diminish the liability of Guarantor for the Indebtedness.

6. Immediate Recourse/Exercise of Rights by Crestmark. At any time when the Indebtedness, or any portion thereof, has not been pa i d when due (whether by acceleration or otherwise), Crestmark can require that Guarantor pay Crestmark the amounts owing on this Guaranty immediately. Crestmark is not required to collect first from Borrower, any collateral , any other guarantor , or any other person. No delay or stay in any acceleration of the [ndebtedness, as against the Borrower , due to the application of any bankr uptc y, insolvenc y or other law or proceeding will be effective under this Guaranty, and Guarantor agrees to immediately pay the amount of the Indebtednes s that would be due and payable but for such delay or stay. All right s, powers, and remedie s of Crestmark hereunder and under the Loan Documents are cumulative and not alternative and shall be in addition to all rights, powers, and reme dies given to Crestmark by l aw and by agreement.

7. Subordination/Subrogation. In the eve nt that Guarantor becomes obligated to pay any su m s to Borrower, or in the event that Borrower or any subsequent owner of any C ollateral is now or hereafter becomes indebted to Guarantor, the amount of such Indebtedness will at all times be subordinate as to lien, time of payment and alJ other respects, to the amounts owing to Crestmark by Borrower. Furthermore , until th e Indebtedness is indefeasibly paid in full and in cash, Guarantor her e by absolutely, irr evocably and unconditionall y waives all rights Guarantor may have, at law or in equity to seek or claim s ubro gation . Crestmark has no duty to enforce or protect any rights , which the undersigned may have against Borrower or any other person and Guarantor assumes full responsibility for enforcing and protecting these rights.

8. Representations and Warranties. Guarantor represent s, warra nts and covenants to Crestmark that: (a) it is a corporation duly organ i zed, in good standing, and that the execution and delivery of this Guaranty and the performance of the obligations under this Guaranty are within Guarantor's Corporate powers , have been duly authorized by all necessary actions , including by its board of directors, and do not contravene its articles or by-laws; (b) it is the sole member of Borrower; (c) Guara ntor has completely read and understands the Loan Documents and agrees to all those portion s which app l y to Guarantor; (d) G uarantor was provided an opportunity to r eview the Loa n Documents with its legal counsel; (e) any financial state m ents of Guaranto r furnished Crestma rk are true and correct and include all cont ingent liabi l ities of Guarantor; (f) since the date of any fin ancial statements furnished to Crestmark , no material adverse change has occurred in the financial condition of Guarantor; (g) the re are no pending or threatened legal proceedings or judgments against Guarantor, and no federal or state tax liens have been filed or threatened against Guarantor; and (h) Guarantor is not in default or claimed default under any agreement for borrowed money. Guarantor agrees to immediately give Crestma rk written notice of a n y material adverse change in its financial condition.

9. Expenses. Guarantor agrees to pay all expenses (including attorneys' fees) incurred by Crestmark in connection with the enforcement of Crestmark's rights under the Loan Documents, th is Guaranty, and the collection of the Indebtedness.

10. Transfer of Assets. Guarantor further agrees t hat until the Indebtedness is indefeasibly paid in full, and in cash , Guarantor w ill not, without Crestmark's prior written consent: (i) make any voluntary transfer of any of Guarantor's assets which would have the effect of materially diminishing Guarantor's present net worth or (ii) guaranty the debts or obligations of any other person or entity.

11. Reinstatement. This Guaranty w ill continue to be effective or will b e automatically reinstated, as the case may be, if at any time payment of all or part of the Indebtedness is rescinded or must otherwise b e restored or returned by Crestmark , including in connection with Borrower's bankruptcy or in solvency.

12. Joint and Several Liability. The term "Guarantor" sha ll mean each person executing this Guaranty, each individually and together collectively, and the obligations of Guarantor and any other guara ntor executing a guaranty , including in connection w ith the Loan, will be joint and several.

13. Assignability/Binding Effect. This Guaranty shall be assignable by Crestmark without notice to Guarantor and s hall inure to the benefit of Crestmark and to any subsequent successors and assigns.

14. Termination. Notwithstanding anything contained herein to the contrary, the liabili ty of Guarantor will be terminated only in the event that (i) Borrower or Guarantor has indefeasibly paid Cres tmark in cash and in full the Indebtedness and (ii) the Agreement is terminated.

15. Severability. If any provision of this Guaranty is in conflict with any statu te or rule of law or is otherwise unenforceable for any reason, then that provision will be deemed null and void to the ex t ent of the conflict or unenforceability and will be deemed severable, but it will not invalidate any other provision of this Guaranty .

16. Complete Agreement. This Guaranty is the final, complete and exclusive expression of th e agreement between Guarantor and Crestmark w ith respect to the subject matter of this Guaranty. This Guaranty cannot be modified or amended excep t in a writing signed by both Guarantor and Crestmark .

The Guarantor hereby executes th i s Guaranty as of the day and year first above written.

	GUARANTOR:

	SMG INDIUM RESOURCES, LTD.,
	a Delaware co rporation

	By:	/s/ Matthew C. Flemming
		Matthew C. Flemming, CEO and Chairman

Exhibit 10.13

SECURITY AGREEMENT

(Corporate)

This Security Agreement ("Agreement") is made September 19, 2017 , by and between CRESTMARK BANK, whose address is 726 Highlandia Drive, Baton Rouge, Louisiana ("Crestrnark") and SMG INDIUM RESOURCES LTD ., a Delaware corporation, whose address is 710 North Post Oak Drive, Suite 400, Houston, Texas 77024 ("Guarantor").

BACKGROUND :

BORROWER, M G CLEANERS, LLC , a Texas limited liability company ("Borrower") has obtained from Crestrnark a Line of Credit Loan in the original principal amount of One Million and no / 100 Dollars ($1,000,000.00) ("Loan") as detailed in the Loan and Security Agreement dated May 11, 2017 ("Loan Agreement") and any and all related notes, as they may be amended or restated, between Borrower and Crestrnark , including any and all amendments , modifications , or extensions thereof ("Loan Documents"); and

As a condition to continuing the Loan to Borrower , Crestrnark is requiring that Guarantor execute a Corporate Guaranty ("Guaranty") of the Loan and secure such Guaranty by granting a security interest to Crestmark in all , or certain, of Guarantor's assets ("Collateral " ), as further defined in Paragraph 2 below.

NOW, THEREFORE, for and in consideration hereof, the Guarantor agrees as follows:

1. GRANT OF SECURITY INTEREST: Guarantor hereby grants to Crestmark a continuing security interest in the "Collateral" defined in Paragraph 2 below to secw-e (i) the repayment of any Indebtedness (as defined in the Loan Agreement) arising under the Guaranty, as the same may be amended, modified, altered, extended or reaffirmed, from time to time; (ii) the repayment of the Indebtedness, including the Loan and all other loans and advances (including all renewals and extensions thereof) to Borrower or any guarantor; and (iii) all obligations of any and every kind and natur e heretofore, now or hereafter owing to Crestmark from Guarantor, however incurred or evidenced (collectively , "Liabilities") plus all interest, costs , expenses, and reasonable attorneys' fee s , which may be made or incurred by Crestmark in the disbursement, administration, and collection of said Liabilities, and in the protection , maintenance, and liquidation of the Collateral. This Agreement will continue in effect as long as any Liabilities of Guarantor or Borrower to Crestrnark are outstanding and unpaid.

2. COLLATERAL: The "Collateral" covered by this Agreement is aJJ of Guarantor's personal property, wherever located, which Guarantor now owns or shall hereafter acquire or create, immediately upon the acquisition or creation thereof , including without limitation all: (a) Accounts (including health-care insurance receivables); (b) Chattel Paper (whether tangible or electronic); (c) Inventory; (d) Goods (other than Inventory), but including Equipment; (e) Instruments, including Promissory Notes; (f) Investment Property and Securities; (g) Documents ; (h) Deposit Accounts; (i) Commercial Tort Claims specifically identified by Crestrnark ; (k) Money ; (l) Letters of Credit and Letter of Credit Rights; (m) General Intangibles (including payment intangibles and software); (n) Supporting Obligations; and (o) to the extent not listed above as original collateral, all proceeds and products of the foregoing.

Terms used and not otherwise defined in this Agreement shall have the meaning given such terms in the Michigan Uniform Commercial Code. In the event the meaning of any term defined in the Michigan Uniform Code is amended after the date of this Agreement, the meaning of such term as used in this Agreement shall be that of the more encompassing of: (i) the definition contained in the Michigan Uniform Commercial Code prior to the amendment, and (ii) the definition contained in the Michigan Uniform Commercial Code after the amendment.

The parties agree that the foregoing description is meant to cover "all assets" of Guarantor.

3. PERFECTION OF SECURITY INTEREST: Guarantor hereby irrevocably authorizes Crestmark to file financing statement(s) describing the Collateral in all public offices deemed necessary by Crestmark, and to take any and all actions , including, without limitation, filing all fmancing statements, continuation financing statements and all other documents that Crestmark may reasonably determine to be necessary to perfect and maintain Crestrnark's security interests in the Collateral. Guarantor shall have possession of the Collateral , except where expressly otherwise provided in this Agreement or where Crestmark chooses to perfect its security interest by possession, whether or not in addition to the filing of a financing statement. Where Collateral is in the possession of a third party, Guarantor will join with Crestrnark in notifying the third party of Crestrnark's security interest and obtaining an acknowledgement from the third party that it is holding the Collateral for the benefit of Crestmark. Guarantor will cooperate with Crestmark in obtaining control with respect to Collateral consisting of Deposit Accounts, Investment Property, Letter-of-Credit Rights, and Electronic Chattel Paper . Guarantor will not create any Chattel Paper without placing a legend on the Chattel Paper acceptable to Crestmark indicating tbat Crestmark has a security interest in the Chattel Paper. Guarantor shall pay the cost of filing or recording all financing statement(s) and other documents. Guarantor agrees to promptl y execute and deliver to Crestmark all financing statements, continuation financing statements, assignments, certificates of title, applications for vehicle titles, affidavits, reports , notices, schedules of Accounts, designations of Inventory , letters of authority and all other documents that Crestmark may reasonably request i n form satisfactory to Crestmark to perfect and maintain Crestrnark's security inter ests in the Collateral. In order to fully consummate all of the transactions contemplated hereunder , Guarantor sha ll make appropriate entries on its books and records disclosing Crestmark ' s security interests in the Collateral.

4. REPRESENTATIONS AND WARRANTIES: Guarantor represents and warrants that (a) the Collateral is free and clear of all liens or secur ity interests, except Crestmark's security interest and any Permitted Encumbrance described on Exhibit A attached hereto; (b) all Chattel Paper constituting Collateral evidences a perfected secur ity interest in the goods covered by it free from all other liens and security interests; (c) Crestmark has a security interest in the Collateral; (d) if Inventory i s represented or covered by documents of title, Guarantor i s the owner of the documents free of all liens and sec urity interests other than Crestmark's security interest and warehousemen's charges, if any, not delinquent; (e) the Guarantor's exact legal name and the address of the Guarantor's chief executive office are as set forth in the first paragraph of this Agreement; (f) the State under which Guarantor is organized is as set forth in the first paragraph of this Agreement; (g) all Collateral consisting of Goods is located in the State where the Guarantor's chief executive office is located except as otherwise disclosed in a schedule attached to this Agreement; (h) the Co llateral , wherever located, i s covered by this Agreement; (i) each Account, Chattel Paper and General Intangible constituting Co llateral is genuine and enforceable against the account debtor according to its terms , and it, and the transaction out of which it arose, comply with all applicable laws and regulations, the amount represented by Guarantor to Crestmark as owing by each account debtor is the amount actually owing and is not subject to setoff, credit , allowance or adjustment except any discount for prompt payment, nor bas any account debtor returned the goods or disputed his liab ility, there has been no default according to the term s of any such Co llateral , and no step has been taken to foreclose the security interest it evidences or to otherwise enforce its payment; U) the execution and delivery of this Agreement and any instruments evide ncing Liabilities will not violate nor constitute a breach of Guarantor's Articles of Incorporation, By-Laws, or any agreement or restriction of any type whatsoever to which Guarantor is a party or is subject; (k) all financial statements and information relating to Guarantor delivered or to be delivered b y Guarantor to Crestmark are true and correct and prepared in accordance with generally accepted accounting principles, and there has been no material adverse change in the financial condition of Guarantor since the submission of any s uch financial inform a tion to Crestmark; (1) there are no actions or proceedings which are threatened or pending against Guarantor which might result in any material adverse change in Guarantor's financial condition or which might materially affect any of Guarantor's assets; and (m) Guarantor has duly filed all federal, state, and other governmenta l tax returns which Guarantor is required by law to file, and will continue to file same during such time as any of the Liabilities hereunder remain owing to Cres trnark , and all such ta xes required to be paid have been paid , in full.

5. COVENANTS: Guarantor covenants and agrees that while any of the Liabilities remain unperformed and unpaid it will: (a) preserve its leg al existe nce and not, in one transaction or a s erie s of related transactions, merge into or conso lidate wit h any other entity, or sell all or s ubst ant i ally all of its assets; (b) not change the s tate where it is located; (c) neither change its name, form of business entity nor address of its chief executive office without giving written notice to Crestmark thereof at lea st thirty (30) days prior to the effective date of such change, and Guarantor agrees that all documents, instrument s, and agreements demanded by C re stmark in response to such change shall be prepared, filed, and recorded at Guarantor's expense prior to the effective date of such change; (d) not use the Collateral, nor permit the Collateral to be used, for any unlawful purpose, whatsoever; (e) maintain the Co llat eral in first-cla ss condition and repair; and (f) indemnify and hold Crestmark harmless against claims of any persons or entities not a party to this Agreement concerning disputes arising over the Collateral.

6. GUARANTOR REMAINS LIABLE: Anything contained herein to the contrary notwithstanding, (a) Guaran tor sha ll remain liable under the contracts and agreements included in the Collateral to perform a ll of its duties and obligations to the same extent as if this Agreement had not been executed, (b) the exercise by Crestmark of any of its right s under the Loan Agreement, Loan Documents, including the Guaranty, or this Agreement shalJ not release the Guarantor from any of its duties or obligations under the contracts and agreements included in the Collateral and ( c) Crestmark shall h ave no obligation or lia bilit y under t he contrac ts and agreements included in the Co llateral by reason of this Agreement, nor shall Crestrnark be obligated to perform any of the obligations or duties of Guarantor thereunder or to take any action to collect or enforce any claim for payment assigned thereunder.

7. INSURANCE, TAXES, ETC.: Guarantor shall (a) pay all taxes, levies, assessments, judgments and charges of any kind upon or relating to the Collateral, to Guarantor's business, and to Guarantor's ownership or use of any of its assets, income or gross receipts; (b) at its own expense, keep and maintain all of the Co llateral fully insured against loss or damage by fire, theft , explosion and other risks in such amounts, with such companies , under such policies and in such form as shall be satisfactory to Crestmark, which policies shall expressly provide that loss thereunder shall be payable to Crestmark as its interest may appear (and Crestmark shall have a security interest in the proceeds of such insmance and may apply any such proceeds which may be received by it toward payment of Guarantor's Liabilities, whether or not due , in such order of application as Crestmark may determine); (c) maintain at its own expense public liability and property damage insurance in such amounts with such companies, under such policies and in such form as shall be reasonably satisfactory to Crestmark; and , upon Crestmark's request , shall furnish Crestmark with such policies and evidence of payment o f premiums thereon. If Guarantor at any time hereafter should fail to obtain or maintain any of the policies required above or pay a premium in whole or in part relating thereto, or shall fail to pay any such tax , assessment , levy, or charge or to discharge any such lien or encumbrance, then Crestmark, without waiving or releasing any obligation or default of Guarantor hereunder , may at any time hereafter (but shaJJ be under no obligation to do so) make such payment or obtain such discharge or obtain and maintain such policies of insurance and pay such premiums, and take such action with respect thereto as Crestmark deems advisable. All sums so disbursed by Crestmark, including reasonable attorneys' fees, court costs, expenses , and other charges relating thereto, shall be part of Guarantor's Liabilities , secured hereby , and payable on demand.

8. INFORMATION: Guarantor s hall permit Crestmark or its agents to have access to and to inspect and verify the Collateral in the name of Crestmark or Guarantor. Guarantor will make same available at any time for such ptrrposes. In addition , Guarantor shall promptly supply Crestmark with financial and such other information concerning its affairs and assets a s Crestmark may request from time to time.

9. CARE, CUSTODY, AND DEALINGS WITH COLLATERAL. Crestmark shall have no liability to Guarantor with respect to Crestmark's care and custody of any Collateral in Crestmark's possession and shall have no duty to sell, smrender, collect or protect the same or to preserve rights against prior parties or to take any action with respect thereto beyond the custod y thereof , exercising that reasonable custodial care which it would exercise in holding similar interests for its own account. Crestmark shall only be liable for its act s of gros s negligence. Crestmark is hereby authorized and empowered to take the following steps, either prior or subsequent to default hereunder: (a) to deal directly with issuers , entities , owners , transfer agents and cu s todians to effect changes in the registered name of an y such Collateral , to effect substitution s and replacements thereof necessitated by any reason (including b y reason of recapitalization , merger , acquisition, debt restructtrring or otherwise), to execute and deliver receipts therefor and to take possession thereof; (b) to communicate and deal directly with payors of instruments (including securities , promissory notes , letters of credit , certificates of deposits and other instruments), which may be payable to or for the benefit of Guarantor at any time, with respect to the terms of payment thereof ; (c) in the Guarantor's name , to agree to any extension of payment , any sub s titution of Collateral or any other action or event with respect to the Collateral; (d) to notify parties who have an obligation to pay or deliver anything of value (including money or securities) with respect to the Collateral to pay or deliver the same directly to Crestmark on behalf of Guarantor and to receive and receipt for any such payment or delivery in Guarantor's name as an addition to the Collateral; (e) to surrender renewable certificates or any other instrument s or securities forming a portion of the Collateral which may permit or require reissuance , renewal or substitution at any time and to immediately take possession of and receive directly from the issuer , maker or other obligor, the substituted instrument or s ecurities; (f) to exercise any right which Guarantor may have with respect to any portion of the Collateral, including rights to seek and receive information with respect thereto; and (g) to do or perform any other act and to enjoy all other benefits with respect to the Collateral as Guarantor could in its own name.

10. DISPOSITION OF COLLATERAL. Crestmark does not authorize , and Guarantor agrees not to make any sales or lease s of any of the Collateral , license any of the Collateral, or grant any other security interest in any of the Collateral; provided, however , that until such time as Crestmark shall notify Guarantor of the revocation of such pow e r and authority , Guarantor (a) may only in the ordinary comse of it s bu s ines s, at its own expense , sell, lease or furnish under contracts of service any of the inventory normally held by Guarantor for such purpose; (b) may use and consume any raw materials , work in process or materials, the use and consumption of which is necessary in order to carry on Guarantor' s business ; and (c) will at its own expense, endeavor to collect , as and when due, all accounts due with respect to any of the Collateral, including the taking of such action with respect to s uch collection a s Crestrnark may reasbnably request or , in the absence of such request , a s Guarantor may deem advisable. A sale in the ordinary course of business does not include a transfer in partial or total satisfaction of a debt. To the e x tent Guarantor uses any proceeds of any of the Liabilities to purchase Collateral, Guarantor ' s repayment of the L iabilities shall apply on a " first-in-first-out " basis so that the portion of the Liabilities used to purchase a particular item of Collateral shall be deemed paid in the chronological order the Guarantor purchased the Collateral.

11. DEFAULT:

A. The occurrence of any of the following events w it hout not i ce or demand of any kind, shall constitute a Default u n der this Agreemen t ; (a) the non - paymen t , when due, of any amount payable on any of the Liabilities or any extension or renewal thereof or the failure to perform any agreement of Guarantor contained herein or in the Guaranty; (b) any statement, representation or warranty of Guarantor herein or in the Guaranty , or in any other wri t ing furnished by Guarantor to Crestmark, at any time, i s untrue in any respect as of the date made; (c) any Obligor (which term, as used herein, shall mean Guarantor or Borrower and each other party primarily or secondarily liable on any of the Liabilities) becomes insolvent or unable to pay debts as they mature or makes an assignment for the benefit of creditors, conveys any assets to a trustee for the benefit of Obligor's creditors, conveys substantially all of its assets, or any proceeding is instituted by or agai n st any Obligor alleging that such Obligor is insolvent or unable to pay debts as they mature or a petition of any kind is filed under the Federal Bankruptcy Act by or against such Obligor; (d) entry of any final judgment, and the expiration of any appeal period related thereto, against any Ob l igor or order of attachment, execution , sequestration or other order in the nature of a writ is levied on the Collateral; (e) dissolution , merger, consolidation, or transfer of a substantial part of the property of any Obligor; (t) the occurrence of a Default as set forth in t he Loan Agreement.

B. Upon tbe occurrence of a Default, the notes and all other Liabilities may (notwithstanding any provisions thereof) at the option of Crestmark and without demand or notice of any kind, be declared, and thereupon immediately shall become due and payable, and Crestmark may exercise from time to time any rights and remedies, including the right to i mmediate possession of the Collateral, ava i lable to it under the Loan Agreement, Loan Documents and applicable l aw. Guarantor agrees to assemble, at i ts expense, all the CoJlateral at a convenient place acceptable to Crestmark and to pay all costs of Crestmark of collection of the not e s and all other Liabilities, and to pay all costs of the enforcement of this Agreement, including reasonable attorneys' fees and expenses of locating the Collateral and repairing any realty or other property to which any of the Collateral may be affixed or be a part.

C. If any notification of intended disposition of any of the Collateral is required by law, such notification, if mailed, shall be deemed reasonably and properly given if sent at least ten (10) days before such disposition , postage pre - paid, addressed to the Guarantor either at the address shown above or at any other address of the Guarantor appearing on the records of Crestmark and to such other parties as may be required by the Michigan Uniform Commercial Code. Guarantor acknowledges that Crestmark may be unable to effect a public sale of all or any portion of the Collateral because of certain legal and/or practical restrictions and provisions which may be applicable to the Collateral and, therefore , may be compelled to resort to one or more private sales to a restricted group of offerees and purchasers. Guarantor consents to any such private sale so made even though at places and upon terms less favorable than if the Collateral were so l d at public sale. Crestmark shall have no obligation to clean-up or otherwise prepare the Collateral for sale. Crestmark may comply with any applicable state or federal law requirements in connection with a disposition of the Collateral and compliance will not be considered to adversely affect t he commercial reasonableness of any sale of the Collateral. Crestmark may specifically disclaim any warranties as to the Collateral. ff Crestmark sells any of the Collateral upon credit, Guarantor will be credited only with payments actually made by the purchaser , received by Crestmark and applied to the indebtedness of the purchaser. Tn the event the purchaser fails to pay for the Collateral, Crestrnark may resell the Collateral and the Guarantor sha ll be credited with the proceeds of sale. Crestmark shall have no obligation to marshal any assets in favor of the Guarantor. Guaran t or waives the right to jury trial in any proceeding instituted with respect to the Collateral. Out of the net proceeds from sale or disposition of the Collateral, Crestrnark shall retain all the Liabilities then owing to it and the actual cost of collection (including reasonable attorney fees) and shall tender any excess to Guarantor or its successors or assigns. If the Collateral shall be insufficient to pay the entire Liabilities, Guarantor shall pay to Crestmark the resulting deficiency upon demand. Guarantor expressly waives any and all claims of any nature , kind or description which it has or may hereafter have against Cr stmark or its representatives, by reason of taking, selling or collecting any portion of the Collateral. Guarantor consents to releases of the Collateral at any time (including prior to default) and to sales of the Collateral in groups, parcels or portions , or as an entirety, as Crestmark shall deem appropriate. Guarantor expressly absolves Crestmark from any loss or decline in market value of any Collateral by reason of delay in the enforcement or assertion or nonenforcement of any rights or remedies under this Agreement. Guarantor agrees that Crestmark shall, upon the occurrence ofan Event of Default , have the right to peacefully retake any of the collateral. Guarantor waives any right it may have in such instance to a judicial hearing prior to such retaking.

D. GUARANTOR AGREES THAT CRESTMARK SHALL, IN THE EVENT OF ANY DEFAULT, HAVE THE RIGHT TO PEACEFULLY RETAKE ANY OF THE COLLATERAL, GUARANTOR WAIVES ANY RIGHT IT MAY HAVE, IN SUCH INSTANCE, TO A JUDICIAL HEARING PRIOR TO SUCH RETAKING.

12. GENERAL: Time shall be deemed of the very essence of this Agreement. Except as otherwise defined in this Agreement, all terms in this Agreement shall have the meanings provided by the Michigan Uniform Commercial Code. Crestmark shall be deemed to have exercised reasonable care in the custody and preservation of any Collateral in its possession if it takes such action for that purpose as Guarantor requests in writing, but failure of Crestmark to comply with any such request shall not of itself be deemed a failure to exercise reasonable care , and failure of Crestmark to preserve or protect any rights with respect to such Collateral against any prior parties or to do any act with respect to the preservation of such Collateral not so requested by Guarantor shall not be deemed a failure to exercise reasonable care in the custody and preservation of such Collateral. Any delay on the part of Crestmark in exerci s ing any power , privilege or right hereunder , or under any other instrument executed by Guarantor to Crestmark in connection herewith shall not operate as a waiver thereof , and no single or partial exercise thereof , or the exercise of an y other power, privilege or right shall preclude other or further exerci s e thereof , or the exercise of any other power, privilege or right. The waiver by Crestmark of any Default by Guarantor shall not constitute a waiver of an y subsequent defaults , but shall be restricted to the default so waived. If any part of this Agreement shall be contrary to any law which Crestmark might seek to apply or enforce , or should otherwise be defective, the other provision s of this Agreement shall not be affected thereby, but shall continue in full force and effect. All rights , remedies and powers of Crestmark hereunder are irrevocable and cumulative, and not alternative or exclusive, and shall be in addition to all rights , remedies and powers given hereunder or in or by any other instruments or by the Michigan Uniform Commercial Code , or any laws now existing or hereafter enacted.

This Agreement has been delivered in Michigan, and shall be construed in accordance with the laws of the State of Michigan. Whenever possible each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law , but if any provision of this Agreement shall be prohibited by or invalid under applicable law , such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. The rights and privileges of Crestmark hereunder shall inure to the benefit of its s uccessors and assigns and this Agreement shall be binding on all heirs , executors , administrators , a s signs and successor s of Guarantor.

13. COUNTERPARTS: This Agreement may be e x ecuted in several counterparts , and each executed counterpart shall con s titute an original instrument , but such counterparts shall together con s titute but one and the same instrument.

14. ENTIRE AGREEMENT: Guarantor acknowledges that this is the entire agreement between the parties except to the extent that writings signed by the party to be charged are specifically incorporated herein by reference either in this Agreement or in such writings, and acknowledge s receipt o f a true and complete copy of this Agreement.

The Guarantor hereto executes this Agreement on the date and year first above written.

	G UARANTOR :


	SMG INDIUM RESOURCES LTD.,
	a Delaware corporation

	By:	/s/ Matthew C. Flemming
		Matthew C. Flemming, CEO and Chairman

EXHIBIT A

Permitted Encumbrances

None

Exhibit 21

Subsidiaries of the Registrant

1 - MG CLEANERS LLC, a Texas limited liability company