Loans and Lines of Credit

12 Months Ended

Dec. 31, 2012

Loans And Line Of Credit [Abstract]

Loans And Line Of Credit [Text Block]

7. Loans and Lines of Credit

Short Term Loans

During 2012, the Company received five separate short-term loans from three different entities, in the aggregate amount of $1,030,000, bearing interest at rates ranging from 10% to 14%, per annum. By the end of December 31, 2012, the Company repaid in full three of the five loans in the aggregate amount of $590,000.

During 2011, the Company received six separate short-term loans from five different entities, in the aggregate amount of $1,329,465, bearing interest at rates ranging from 8% to 14%, per annum. One of the loans in the amount of $170,000 was repaid in full by the Company in 2011. During 2012, one of the loans in the amount of $200,000 was repaid, and the other four loans were extended an additional year under the same terms.

At December 31, 2012, the outstanding balance of the short-term loans is $1,399,465, of which five of the loans are secured by certain of the Company’s short term loans, pursuant to a security agreement, and two of the loans are also personally guaranteed by our CEO.

Subsequent to the balance sheet date, the Company repaid in full one of the short-term loans received in 2012, in the amount of $240,000, at an interest rate of 14%, per annum.

Lines of Credit

In September 2009 the Company established a secured line of credit with Valley National Bank. The line of credit provided for maximum borrowings in the amount of up to $300,000, which may be repaid by the Company at any time without penalty. The line required monthly payments of interest only at the rate of 9%, per annum, with borrowings still outstanding due in October, 2012. Pursuant to a security agreement, the line of credit was secured by certain of the Company’s short term loans. In October 2011, the Company repaid the outstanding borrowings in full and closed the line of credit.

On May 2, 2012, the Company entered into a one-year revolving Line of Credit Agreement with Sterling National Bank pursuant to which the Bank has agreed to advance up to $3.5 million (the “Sterling Credit Line”) against assignments of mortgages and other collateral. The Sterling Credit Line was conditioned on an unlimited personal guarantee from Assaf Ran, the Company’s CEO, and requires the maintenance of certain non-financial covenants including limitations on the percentage of loans outstanding in excess of one year, loans made to affiliated groups and the extent of construction loans made by the Company. The interest rate on the Sterling Credit Line is 2% in excess of the Wall Street Journal prime rate (3.25% at December 31, 2012), but in no event less than 6%, per annum, on the money in use. Total initiation costs for the Sterling Credit Line were approximately $16,000. These costs are being amortized over one year, using the straight-line method. The amortization costs for the year ended December 31, 2012 were $10,683. At December 31, 2012, the outstanding balance of the Sterling Credit Line is $3,500,000.

On January 31, 2013, the Company entered into an amendment to the Line of Credit Agreement with Sterling National Bank to increase the Sterling Credit Line from $3,500,000 to $5,000,000, under the same terms as the original line of credit.