Letters of Credit

6 Months Ended

Jun. 30, 2011

Letters of Credit [Abstract]

Letters of credit

3. Letters of credit

In lieu of security deposits required pursuant to the terms of several operating leases, Crumbs has chosen to obtain letters of credit issued by two financial institutions, where such substitution is allowed by the landlords. As of June 30, 2011 and 2010, issued and unused letters of credit totaled $569,425 and $529,425, respectively. In May 2011, Crumbs entered into a loan agreement in connection with the letters of credit issued by one of the institutions in the form of a $575,000 revolving line of credit, with a variable rate based on the Wall Street Journal Prime Rate. Prior to entering into this agreement, the letters of credit were guaranteed by a Crumbs member. Letters of credit amounting to $539,425 and $499,425 were reserved under this line of credit as of June 30, 2011 and 2010, respectively, and therefore cannot exceed $575,000. The line of credit is secured by a certificate of deposit. A $30,000 letter of credit issued by the second institution is also secured by a certificate of deposit. No amounts were outstanding at June 30, 2011 and 2010.

The certificates of deposit used to secure the letters of credit are recorded as restricted cash in the balance sheet (See Note 1).