Tel: 787-754-3999 PO Box 363436 Fax: 787~754-3105 San juan, PR 00936-3436 DEPTO. ESTADO INDEPENDENT REPORT ON BALANCE SHEET FILED WITH THE DEPARTMENT OF STATE To the Stockholder of Carrion, Laffitte Caselias, Inc.: Report on the Financial Statement We have audited the accompanying financial statements of Carrion, Laffitte Casellas, inc. (the ?Company?) (a wholly-owned subsidiary of Hub international Limited) which comprise the balance sheet as of December 31, 2013 and the related notes to the financial statement. Management?s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of this financial statement in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of the financial statement that is free from material misstatement, whether due to fraud or error. Auditors? Responsibilities Our responsibility is to express an opinion on this financial statement based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor?s judgment, including the assessment of the risks of material misstatement 0f the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity?s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity?s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statement. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 800 Puerto Rico, PSC, a Poem) Rico Professional Services Corporation, is a member of 800 international Limited. a UK company limited by guarantee, and forms part of the international i300 network of independent member firms. Stockholder of Carrion, Laffitte Casellas, inc. Page 2 Opinion In our opinion, the financial statement referred to above present fairly, in all material respects, the financial position of Carrion, Laffitte Casellas, Inc. as of December 31, 2013 in accordance with accounting principles generally accepted in the United States of America. Restriction on Use This report is intended solely for the information and use of the Company?s management and the Department of State of Puerto Rico responsible for the administration of the annual reports and is not intended to be and should not be used by anyone other than these Specified parties. We certify that none of our shareholders is a shareholder or employee of the above Company. . 2881 San Juan, Puerto Rico March 21, 2014 License No. 53 Expires December 1, 2015 000 Puerto Rico, PSC, a Puerto Rico Professional Services Corporation. is a member of BOO International Limited, a UK company limited by guarantee. and forms part of the international I300 network of independent member firms. 31, 2013 Assets Current Assets: Cash 3; 4,059,099 Trust cash 36,772 Accounts and other receivable 3,324,523 Deferred income tax assets 158,813 Due from affiliate 385 Prepaid expenses 45,199 Total Current Assets 7,624,791 Deferred income tax assets 634,732 Goodwill 14,603,326 Intangible assets, net 16,003,422 Property and equipment, net 252,423 Total Assets 8 39,1 18,694 Liabilities and Steeltliolders? Equity Current Liabilities: Accounts payable and accrued liabilities 2,717,369 Income taxes payable 170,452 Due to parent company 665,188 Total Current Liabilities 3,553,009 Other liabilities 8,878 Total Liabilities 3,561,887 Stockholder's Equity: Common stock, 331 par value. 1,000 shares authorized; 1,000 shares issued and outstanding 1,000 Additional paid-in capital 34,754,590 Retained earnings 801,217 Total Stockholder's Equity Total Liabilities and Stockholder's Equity 35 CARRION, CASELLAS, INC. Balance Sheet 39,118,694 Sec accompanying notes to ?nancial statements. BDO Puerto Rico, PSC, a Puerto Rico Professional Services Corporation, is a member of International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member ?rms. (1) CARRION, LAFFITTE CASELLAS, mo. Notes to Financial Statements December 3 1, 2013 Organization and Summary of Signi?cant Accounting Policies Organization Carrion, Laf?tte Casellas, Inc. (the ?Company?) was organized under the laws of the Commonwealth of Pueito Rico on December 24, 2003. The Company provides insurance brokerage and risk management services in Puerto Rico. Estimates The preparation of the ?nancial statements in conformity with accounting principles generally accepted in the United States of America requires the company management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results may differ from use estimates. Trust cash Trust cash is defined as funds collected from clients and insurance carriers that are held in a fiduciary capacity for the future payment of ?duciary liabilities. Fiduciary liabilities primarily represent premiums due to carriers and return premiums due to clients. The payment of ?ducialy liabilities is generally governed by the contractual terms contained in brokerearrier agreements and regulations within the states in which we operate. The Company invests trust cash balances in non-interest bearing accounts. Accounts and Other Receivable In its capacity as an insurance broker, the Company may collect premiums from clients and, after deducting commissions, remit those premiums to the reSpective insurance carrier. The Company may also collect claims or premium refunds from insurance carriers on behalf of clients. Uncollected premiums from clients are recorded as accounts receivable on the balance sheet. As required by law and various contractual obligations, unremitted insurance premiums and claims are held in a ?duciaiy capacity as trust cash. The obligation to remit these funds is recorded as accounts payable on the balance sheet. The period for which the Company holds these funds is generally dependent upon the time between the date the client remits the payment to us and the date we are contractually required to forward such payment to the insurance carrier. 7 BOO Puerto Rico, PSC. a Puerto Rico Professional Services Corporation, is a member of 300 international Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member ?rms. CARRION, LAFFITTE CASELLAS, INC. Notes to Financial Statements December 31, 2013 Accounts and other receivable are recorded at net realizable value. An allowance for possible cancellations is the Company?s best estimate of the amount of probable cancellations in the Company?s existing accounts receivable. Income Taxes The Company. recognizes deferred income tax assets and liabilities based upon the expected future income tax consequences of temporary differences between the carrying amounts of assets or liabilities and their tax bases by applying statutory income tax rates expected to be in effect when the asset or liability is settled. The carrying amount of deferred income tax assets, including the expected future bene?t of operating loss carry forwards, is reduced by a valuation allowance if it is more likely than not that some portion of the deferred income tax asset will not be realized. If applicable, we record interest and penalties related to unrecognized tax benefits within the provision for income taxes in statement of earnings. Property and Equipment. Net Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are provided by the use of the straight?line method using estimated useful lives of the respective asset. Goodwill Goodwill represents the excess of cost over fair value of identi?able net assets acquired through business acquisitions. Goodwill is not amortized, but instead is reviewed for impairment on at least an annual basis by applying a fair?valuebased test. In evaluating the recoverability of the carrying value of goodwill the Company determines if an indicator of goodwill impairment exists by comparing the carrying value of the reporting units with the? estimated fair value. If the Company determines that an indicator of goodwill impairment exists, the Company quanti?es the actual goodwill impairment charge, if any, by comparing the carrying value of goodwill to its estimated fair value, based on the fair value of the reporting unit?s assets and liabilities as of the impairment test date. No such loss was incurred during the year ended December 3 l, 2013. Lon g?lived Assets Longulived assets, such as property and equipment, and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Events or circumstances that would result in an impairment review primarily include operating losses, a signi?cant change in the use of an asset, or the planned disposal or sale of the asset. The asset would be considered impaired when the future net 8 BBQ Puerto Rico, PSC. a Puerto Rico Professional Services Corporation, is a member of 300 International Limited, a UK company limited by guarantee. and forms part of the international BDO network of independent member firms. CARRION, LAFFITTE CASELLAS, INC. Notes to Financial Statements December 31, 2013 undiscounted cash flows generated by the asset are less than its carrying value. An impairment loss would be recognized based on the amount by which the carrying value of the asset exceeds its fair value. No such loss was incurred during the year ended December 31, 2013. Revenue Recognition The Company?s revenue is primarily derived from commissions collected from insurance carriers or agencies with whom insurance policies are placed on behalf of our clients. Commission Income. Revenue recognition for commission income is primarily based on the billing arrangement for the underlying client policy. The Company has two primary types of billing arrangements: (1) agency billed commissions and (2) direct billed commissions. Agency Bill Comini'ssions. In an agency bill arrangement, the Company is responsible for billing and collecting premiums and fees due from clients for insurance policies. The Company generally bill clients on or before the effective date. The Company subsequently remits client premiums, net of commission income earned, to the applicable insurance carrier or agency. The Company recognizes commission income on agency bill arrangements upon the placement of insurance, which generally coincides with the effective date of the policy unless at that time we are unable to reasonably determine the actual policy premium. In these circumstances, the Company defers the recognition of commission income until we are able to reasonably determine the amount of commission earned on the policy, which generally occurs on the date that the client is billed for the policy. Direct Bill Commissions. In a direct bill arrangement, the client is billed by the insurance carrier or agency directly for any premiums and fees related to the policy. The Company is subsequently paid the commission by the insurance carrier or agency for the brokerage services. Accordingly, we do not bill or collect premiums or fees directly from clients. The Company recognizes commission income on direct bill arrangements upon the placement of insurance with an insurance carrier or agency, which generally coincides with the effective date of the policy, unless it is unable to reasonably determine the amount of the commission earned on the policy. In which case commission income related to the policy is recognized when information becomes available and the revenue can reasonably be determined. The Company is entitled to commission income for a policy as of its effective date as our earnings process is substantially complete, because we have performed all contracted services for the clients and substantially all of the related costs to produce, market, and place the coverage have been incurred. In addition, as of the effective date, we become entitled to the commission because the insurance coverage has been placed with the insurance carrier and the premium is owed by the client. 9 BDO Puerto Rico, PSC, a Puerto Rico Professional Services Corporation, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member ?rms. (2) CARRION, LAFFITTE CASELLAS, INC. Notes to Financial Statements December 31, 2013 Subsequent changes to commission income, including, but not limited to those related to changes in commission rates, are recognized during the period that they occur. The Company also recognizes co?broker commission expense concurrent with the recognition of the related commission income. Co-broker commission expense represents amounts paid by us to third-party insurance brokers who provide us referral and assistance with clients. During the year ended December 31, 2013, coubroker commission expense amounted to $1,927,644. Consulting eeS. Consulting fees are recognized as revenue based 011 the arrangements in place with the consulting client. Consulting fees are recorded when the services are performed and the amounts are reasonably estimable. Subsequent Events Management evaluated subsequent events through March 21, 2014 the date the Company?s ?nancial statements were available to be issued. Based on this evaluation, the Company has determined that no subsequent events have occurred which require adjustment or disclosure in these ?nancial statements. Acquisition of Bixler Associates, Inc. On November 21, 2013, the Company entered into an Asset Purchase Agreement with Bixler Associates, Inc. (?Bixler?) and its shareholders, for the acquisition of the then business and certain operating assets. Bixler is an insurance brokerage providing a broad array of property, casualty, risk management, life and health products, and employee bene?ts in Puerto Rico. The Company has accounted for the business acquisition of Bixler using the acquisition method, whereby the results of operations are included in the Company?s ?nancial results from the date of acquisition going forward. In connection with the business acquisition, the Company allocated the total purchase price to the estimated fair values of acquired tangible and intangible assets. No liabilities were assumed by the Company as of the date of the acquisition. The Company determined the fair value of acquired tangible and intangible assets and assumed liabilities using various valuation methods, including, but not limited to, net realizable values, quoted market prices, and discounted cash flows. 10 BDO Puerto Rico, PSC, a Puerto Rico Professional Services Corporation, is a member of BBC International Limited, a UK company limited by guarantee, and forms part of the international BDD network of independent member ?rms. (3) CARRION, LAFFITTE CASELLAS, INC. Notes to Financial Statements December 31, 2013 In connection with acquisition of Bixler, the Company entered into an agreement with the former shareholders of Bixler, which included certain management personnel that continue their employment with the Company, and to pay consideration that is contingent on maintaining or achieving speci?ed ?nancial performance measures in future periods. The Company recorded such contingent consideration as part of the total purchase price at fair value based on management?s best estimate of the future earnout payment as of the acquisition date. When the contingency is earned, the consideration is paid. The agreement further provides for the withholding of certain escrow and reserve amounts relating to particular contingencies. The accompanying ?nancial statements include the obligation resulting from the earnout and escrow/reserve provisions of the Asset Purchase Agreement. Such liability amounting to $485,000 is recognized in Accounts Payable and Accrued Liabilities. The Company recorded the purchase price allocations of the estimated fair values of acquired tangible and intangible assets as of the date of the acquisition as follows: Accounts and other receivable 34,359 Intangible asset customer relationships 834,000 Goodwill 484 741 Net assets acquired .391 32.5.3 .100. Accounts and Other Receivable, Net Accounts and other receivable, net are cemposed of the following at December 31, 2013: Direct bill receivable $3,129,465 Agency bill receivable 449,087 Consulting fee receivable 149,959 Other receivable 3,224 3,731,735 Less: allowance for policy cancellations 407,212 Accounts receivable, net $3,324,523 11 300 Puerto Rico, PSC, a Puerto Rico Professional Sewices Corporation, is a member of 300 International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member ?rms. CARRION, LAFFITTE CASELLAS, INC. Notes to Financial Statements December 31, 2013 (4) Property and Equipment, Net A detail of property and equipment, net as of December 31, 2013 is as follows: Accumulated Useful Depreciation and Net Book life ILLS) Cost Amortization 173,133 Furniture and ?xtures 4-7 $153 ,720 $3 6,45 7 $1 17,263 Equipment 3-5 119,177 48,581 70,596 Leasehold improvement 1?3 105,13 8 40,574 64,564 Software 1?3 4,875 4,875 $3 82,910 ?130 48] (5) Intangible Assets, Net Intangible assets, net as of December 31, 2013 consist of the following: Gross Carrying Accumulated Net Carrying Amount Amortization Amount Customer relationships $17,080,000 $3,3 69,328 13,710,672 Non-compete agreements 2,103,000 525,750 1,577,250 Trade name 954,000 238,500 715,500 Intangible assets, net 7,000 13 3 5 78 ?16 003 Amortization expense of each class of intangible assets during the year ended December 31, 2013 is as follows: Customer relationships $2,459,182 Non?compete covenants 420,600 Trade name 190,800 Intangible amortization expense $3,070,582 12 800 Puerto Rico, PSC, a Puerto Rico Professional Services Corporation, is a member of B00 International Limited, a UK company limited by guarantee, and forms part of the internationat BDO network of independent member ?rms. CARRION, LAFFITTE CASELLAS, INC. Notes to Financial Statements December 31, 2013 Estimated total future amortization expense of intangible assets is as follows: Year Ending December 31, 2014 $2,956,986 2015 2,581,776 2016 2,201,160 . 2017 1,738,660 2018 1,139,650 Thereafter 5,385,190 $16,003,422 Customer Relationships. The Company utilizes an accelerated amortization methodology for its customer relationship asset. The accelerated amortization methodology aligns the amortization of customer relationship asset with the accelerated pattern of consumption of the expected bene?ts derived from client relationships existing as of the date of the acquisition. The Company amortizes customer relationship assets over a maximum of 16 years. The determination of the useful life for customer relationship asset is based upon the estimate of the timeframe over which the acquired customer relationship is expected to contribute directly or indirectly to the future cash flows of the Company. Non?compete Covenants. The Company amortizes non?compete covenant assets on a straight?line basis over the estimated useful life of 5 years. The estimated useful life generally includes, for each applicable employee who is subject to a non~competition covenant, (1) his or her effective term of employment plus (2) a contractually determined period, which typically ranges from one year to three years, after his or her employment is terminated. Upon the employee?s termination, we amortize the net book value of the related non? competition covenant on a straight?line basis over the applicable contractual period. Tradename. The Company specifically identi?ed tradenarne intangible assets subject to amortization. Tradename is amortized on a straight?line basis over the applicable estimated useful life of 5 years. 13 BDO Puerto Rico, PSC, a Puerto Rico Professional Services Corporation, is a member of BDD International Limited, a UK company limited by guarantee, and forms part of the international 1300 network of independent member ?rms. CARRION, LAFFITTE CASELLAS, INC. Notes to Financial Statements December 31, 2013 (6) Accounts Payable and Accrued Expenses Accounts payable and accrued expenses as of December 31, 2013 are as follows: Accounts payable 8 45,338 Due to former stockholders 7,121 Deferred consideration (note 2) 485,000 Due to producers 609,600 Due to insurance companies 490,385 Termination agreement payable 534,126 Deferred income 1,309 Accrued expenses 544,490 L42 11.? ?16? The Company, on September 30, 2012, entered into a Termination by Mutual Consent, Indemnity and Settlement Agreement with the Chairman of the Board of Directors. Under the terms of this agreement the parties agree to early terminate the terms of the Chairman?s employment agreement in consideration for a payment of $1,068,252 in two annual installments of $534,126 each, payable on January 1, 2013 and 2014. The January 1, 2013 installment was paid directly by Hub and recorded by the Company as a capital contribution. As of December 31, 2013, the Company has recognized in Accounts Payable and Accrued Liabilities the January 1, 2014 installment of $534,126. 14 1300 Puerto Rico, PSC, a Puerto Rico Professional Services Corporation, is a member of BBC) International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member ?rms. CARRION, LAFFITTE CASELLAS, INC. Notes to Financial Statements December 31, 2013 (7) Income Taxes The Company is subject to income taxes in Puerto Rico, which range from 20% to 39% depending on the level of taxable income. The following table sets forth components of provision for income taxes during the year ended December 31, 2013: Current income taxes $920,453 Deferred income taxes (587,075! Provision for income taxes $333,378 The following table presents a reconciliation of expected income taxes to the actual provision for income taxes during the year ended December 31, 2013: Expected income taxes $283,599 Non?deductible expenses 141,345 Effect of progressive tax rates (20,250) Effect of change in tax rates (61,941) Other 1 9,3 75 1 Provision for income taxes L33 3,318 The components of deferred income tax assets and liabilities at December 31, 2013 are as follows: Deferred tax assets: Allowance for policy cancellations 158,813 Intangible assets 979,327 Deferred rent 3,462 Net capital loss carry forward 17,257 Deferred tax assets gross 1,158,859 Valuation allowance 17,2571 Deferred tax assets - net 1,141,602 Deferred tax liability Goodwill 1348,0571 Net deferred tax assets 223,545 15 800 Puerto Rico, PSC, a Puertc Rico Professional Services Corporation, is a member of BDO international Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member ?rms. CARRION, LAFFITTE CASELLAS, INC. Notes to Financial Statements December 31, 2013 The Company evaluates its deferred income tax assets to determine if they may be realized. Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not (a likelihood of more than 50%) that some portion or the entire balance of the deferred income tax assets will not be realized. In making such assessment, signi?cant weight is given to evidence that can be objectively veri?ed, including both positive?and negative evidence. Consideration must be given to all sources of taxable income available to realize the deferred tax assets, including the future reversal of existing temporary differences, future taxable income exclusive of the reversal of temporary differences and carry forwards, taxable income in carry back years, and tax planning strategies. The determination of a valuation allowance requires judgment based on the weight of all available evidence and considering the relative impact of negative and positive evidence. As a result, the Company has recognized a valuation allowance as of December 31, 2013 of $17,257 resulting from the net capital loss carry forward arising from the transfer in 2012 of its investment in CLC Risk Services, Inc. There has been no change in the valuation allowance during the year ended December 31, 2013. As of December 31, 2013, the Company had $115,050 in net capital loss carry forward which are available through 2017 to offset future net capital gains. The Company has no unrecognized income tax bene?ts or provisions due to uncertain income tax positions. The Company?s income tax return is subject to audit by the Puerto Rico Department of Treasury. Audit periods remain open for review until the statute of limitations has passed. The statute of limitations under the Puerto Rico Internal Revenue Code is four years in which the Company?s income tax returns 2009-2012 remain open. The completion of an audit by the taxing authorities or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Company?s liability for income taxes. Any such adjustment could be material to results of operations for any given year based, in part upon the results of operations for the given year. 16 800 Puerto Rico, PSC. a Puerto Rico Professional Services Corporation, is a member of 300 International Limited, a UK company limited by guarantee, and forms part of the international 1300 network of independent member ?rms. (3) CARRION, LAFFITTE CASELLAS, INC. Notes to Financial Statements December 31, 2013 On June 30, 2013, the Puerto Rico Governor enacted law Act 40, known as the Tax Burden Redistribution and Adjustment Act as one of the laws conforming the budget for the general fund of the Government of Puerto Rice for ?scal year 2013?2014. TBRAA provides for signi?cant amendments to the Puerto Rico Internal Revenue Code of 201 1, as amended (the ?Code?), including but not limited to: a maximum corporate tax rate reestablished to 39% and the surtax credit reduced from $750,000 to $25,000; (ii) a nonrefundable special Withholding tax of 1.50% imposed on all payments made to service providers of the Commonwealth of a National velume of business tax ranging from 0.2% to 0.85% depending on level of gross income; (iv) an increase to the alternative minimum tax from 20% to 30%, subject to other changes in the formula to determine the and 49% of any expense paid or incurred to a related party, as de?ned in the Code, may be deducted if such payment is not subject to tax in PR. in the year it is paid or incurred. In addition, On December 25, 2013, the Governor of Puerto Rico signed into law, House Bill 1524 (?Act known as the ?Act of Effective Mechanisms for Tax Fiscalization? (the with the purpoSe of facilitating ?scalization by the taxing agencies, and among other amendments, the law modi?es the ?nancial statements content and ?ling requirements for income, personal property, and volume of business tax purposes. The provisions of the Act were effective upon approval of the Act, except with respect to the new supplemental information required for the audited ?nancial statements to be ?led with the income tax return, which are effective for taxable years commencing after December 31, 2012, with the exception of certain supplemental information for income tax purposes, as postponed by the Puerto Rico Treasury Department issued Administrative Determinations. Operating Leases The Company conducts their operations from leased premises. The leases are classified as an operating lease. Rent expense related to leased premises and other property for the year ended December 31, 2013 amounted to $507,419. Future annual rental commitments related to the leased premises and other property are as follows: Year Ending December 31, 2014 $436,869 2015 82,463 2016 11,167 $530,492 17 800 Puerto Rico, PSC, a Puerto Rico Professional Services Corporation, is a member of BOO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member ?rms. (9) (10) CARRION, LAFFITTE CASELLAS, INC. Notes to Financial Statements December 31, 2013 The Company recognizes rent expense based on a straight?line method over the lease term. The difference between the amount paid and the rent expense is recorded as deferred rent. As . of December 31, 2013 the Company had recorded $8,878 in deferred rent and is included in Other Long?Term Liabilities in the accompanying Balance Sheet. Retirement Plan The Company has Section 1081.01 (formerly Section 1165(e)) pro?t sharing plan covering substantially all employees meeting certain minimum eligibility requirements. Participants may make salary deferral contributions to the Plan up to $15,000 the limit as established in the Puerto Rico Internal Revenue Code Section 1081.01; whereas, the pro?t sharing contribution is determined solely at management?s discretion. Employer contributions are 100% vested after 3 years of service. Retirement plan expense during the year ended December 31, 2013 amounted to $88,546 and is included in Compensation Expense in the accompanying Statement of Earnings. Related Party Transactions 011 October 2, 2013, Hub was acquired by funds advised by Hellman Friedman LLC, a leading private equity firm. This buyout transaction has been accounted by Hub for using the acquisition method. However, any adjustments resulting from the purchase price allocations of the estimated fair values of acquired tangible and intangible assets and liabilities assumed have not been recorded in the accompanying ?nancial statements of the Company. Hub charges a management fee to reimburse them for certain corporate expense incurred for the bene?t of the Company. Such management fee, which included in Selling, Occupancy and Administrative Expenses in the accompanying Statement of Earnings, is based on a stated percentage of commission and fees and amounted to $63 5,707 during the year ended December 31, 2013. Hub is obligated under a Senior Secured Credit Agreement with a syndicate of institutional lenders and ?nancial institutions. This credit agreement is collateralized, among other instruments, with a portion of the outstanding shares of the Company. 18 Puerto Rico, PSC, a Puerto Rico Professional Services Corporation, is a member of 300 International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member ?rms. CARRION, LAFFITTE CASELLAS, INC. Notes to Financial Statements December 31, 2013 (11) Concentration of Credit Risk Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of cash, and accounts and other receivables. The Company maintains a policy providing for the diversi?cation of cash and places its cash in a number of high quality ?nancial institutions to limit the amount of credit risk exposure. Concentrations of credit risk with respect to receivables are generally limited due to the large number of clients and markets in which the Company does business. The Company attempts to limit concentration of credit risk due to cash in bank accounts, however its deposit balances may, at times, exceed federally insured limits of $250,000. The Company has not experienced any losses on such accounts. (12) Contingencies The Company is party to litigation and other claims arising from the ordinary course of business. The Company is vigorously defending itself from these claims. Management believes that the ?nal disposition of these matters will not have a material adverse effect on the Company?s ?nancial position or results of operations. 19 800 Puerto Rico, PSC, a Puerte Rico Professional Services Corporation, is a member of 390 international Limited, a UK company limiter] by guarantee, and forms part of the international BDO network of independent member ?rms.