NOTE 18 - COMMITMENTS AND CONTINGENCIES

Other payable to Zurich

On July 12, 2012, the Company executed the Financing Agreement with Zurich. Under the terms of the Financing Agreement, Zurich advanced the Company $793,927 for the payment of labor and labor-related benefits to assist in completing the project contract with the Owner of Cooper Project. The Cooper Project was a $16.2 million project completed by the Company’s Trenton Operations. Zurich and its affiliate Fidelity and Deposit Company of Maryland (F&D), as surety, issued certain performance and payment bonds on behalf of the Owner in regard to the Company’s work on this project. The Company was to repay Zurich the financial advances by September 2012; however the Company was in default under the Financing Agreement as it had not repaid Zurich the $793,927 and Zurich paid certain of the Company’s vendors pursuant to Zurich’s obligations under its payment bond on the Cooper Project.

In addition, the Company is contingently liable to Zurich and its affiliate F&D under a General Agreement of Indemnity (the Indemnity Agreement). Zurich and F&D, as surety, have issued certain performance and payment bonds on behalf of owners or customers regarding the Company’s work on various projects under the Indemnity Agreement. The Company agrees to indemnify the surety for any payments made by Zurich on contracts of suretyship, guaranty or indemnity.

On April 17, 2013, the Company executed the Forbearance Agreement with Zurich, which supersedes the Financing Agreement. Under the Forbearance Agreement, among other things, the parties have agreed to the following payments which will be credited against the Loss Amount owed to Zurich by the Company: (1) the Company shall make monthly payments to Zurich of $25,000 due upon the fifth of each month, up to and including December 5, 2013 (the Interim Liability Payments); (2) Zurich is to receive any and all amounts due under the contracts for which Zurich has issued one or more bonds (the Customer Payments); and (3) the Claim, up to the Loss Amount as it exists at the time. As of April 30, 2014, the net Other Payable for the Loss Amount owed Zurich under the Forbearance Agreement was $1,533,757.

Each or any of the following shall constitute an event of default under the Forbearance Agreement: (a) failure by the Company to make any of the Interim Liability Payments; (b) failure by the Company to remit any Customer Payments received; (c) the failure by the Company or the Owner to remit the proceeds of the Claim to Zurich; and (d) any Loss Amount that still exists as of December 31, 2013. If an event of default occurs, Zurich is authorized to confess judgment against the Company; however the entry of any judgment by confession shall not constitute a waiver or release of any of Zurich’s rights under the Indemnity Agreement. The Company is currently in default under the Forbearance Agreement due to the failure to: (1) pay the monthly Interim Liability Payment of $25,000 per month since December 1, 2013; and (2) pay the Loss Amount of $1,533,757 due December 31, 2013 under the Forbearance Agreement. The Company is currently in discussions with Zurich for the settlement of the Loss Amount due under the Forbearance Agreement. There can be no assurance that the Company will be successful in settling with Zurich the Loss Amount due.

The Company submitted the Claim to the Owner of $2,421,425 for significant delays, disruptions, and construction changes that were beyond its control and required us to perform additional work related to the Cooper Project, which was completed in the fiscal year ended April 30, 2013. On April 15, 2013, the Company filed a Mediation request with the American Arbitration Association with regard to the Claim. The Mediation has been postponed. The Company is presently awaiting a time to file a complaint against the Owner in federal court in New Jersey. If the Company is successful in the settlement of this Claim, it expects to use the proceeds from the Claim to repay Zurich the Loss Amount as it exists at the time and any excess for working capital purposes. There can be no assurance that the Company will be successful in settling with the Owner for all or a portion of the submitted claim.

Hartford and Lakewood Operations Asset Sales

On July 25, 2012, the Company and the Hartford and Lakewood Operations entered into an asset purchase agreement, for a purchase price of $5.5 million in cash, subject to adjustment, and the assumption of their various liabilities. At closing, the Company received $4.9 million in cash, with the remaining purchase price to be settled upon (1) completing the assignment of certain contracts post-closing, which was concluded, and (2) satisfying certain adjustments to the purchase price based on a final net asset valuation to be completed after closing as well as repurchase obligations of certain delinquent accounts receivables. To date, the Company has not reached agreement with Kavveri with regard to a resolution for settling the net asset valuation. The Company is currently in discussions with Kavveri for the settlement of the final adjustments to the purchase price, and has reserved a total of $450,000 for possible future settlement, which includes approximately $104,000 recorded for the year ended April 30, 2014. There can be no assurance that the Company will be successful in settling with Kavveri the amounts claimed by them.

Employment Agreements

The Company has entered into employment contracts ranging from one to two years with certain of its employees. The aggregate base salary commitments under these contracts at April 30, 2014 are summarized as follows:

Year Ending April 30,

2015	$	463,333

2016		20,000

Total aggregate base salary commitments	$	483,333

Litigation

On July 14, 2014, Eric Greenberg, a stockholder of the Company (the Plaintiff), filed suit in the United States District Court Southern District of New York, against defendants Hudson Bay Master Fund Ltd., Iroquois Master Fund Ltd., American Capital Management LLC, GRQ Consultants, Inc. 401K, Barry Honig, Richard Molinsky (the Defendants), and the Company. While the suit named the Company as a nominal defendant, it contains no claims against nor seeks relief from the Company. The suit alleges violations of Section 16(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78p (b) (Section 16(b)), and deems the Defendants were statutory insiders of the Company,

The complaint seeks that the Defendants disgorge profits earned for any "short-swing profits" obtained by them in violation of Section 16(b), as a result of the sales and purchases of the Company’s common stock during the three months ended January 31, 2014, within periods of less than six months while the Defendants were beneficial owners of more than 10% of the Company’s common stock.

Previously, on January 29, 2014, a demand for prosecution was made on the Company based on the allegations above (the Demand), and on March 20, 2014, counsel for the Company responded to the Demand and indicated that the Company declined to pursue Section 16(b) claims against the Defendants. As more than sixty (60) days have passed from the date of the Demand and the Company has failed to recover the alleged profits or instituted a lawsuit to recover those profits, the Plaintiff filed the above suit. The Plaintiff seeks an unspecified amount of the profits earned by the Defendants on the transactions, to be determined at trial, plus interest and other expenses.

Lease Commitments

The Company leases its office facilities pursuant to noncancelable operating leases expiring through December 2017. The Company also has noncancelable vehicle leases. The minimum rental commitments under these noncancelable leases at April 30, 2014 are summarized as follows:

Year ending April 30,
2015	$	119,607
2016		76,200
2017		57,150
Total minimum lease payments	$	252,957

Rent expense for all operating leases was approximately $363,000 and $271,000 in 2014 and 2013, respectively.