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LINE OF CREDIT
9 Months Ended
Feb. 29, 2012
Line Of Credit [Abstract]  
Line Of Credit [Text Block]

NOTE 9. LINE OF CREDIT

 

In June 2010, Black Rock entered into a three year line of credit (“LOC”) with FSB. The LOC has a maximum draw amount of approximately $3,475,000, and is secured by a first security lien against the Villarreal, Frost Bank, Resendez and La Duquesa properties (“Black Rock Collateral”) (see Note 3), certain of the Cross Border shares (see Note 4) and additional property described below. The LOC bears interest at the bank's reference rate plus 275 basis points, which as of February 29, 2012 was 6.039% in total. The LOC is payable on demand, however if no demand is made, principal payments of $1 million and $1.1 million are required after the first and second years, respectively, and the loan is due in full at maturity. In addition to a security interest in the Black Rock Collateral, Alan Barksdale and Ernest Bartlett, the managing member of a shareholder of the Company, have personally guaranteed the LOC. In addition, Mr. Bartlett has also provided a mortgage in favor of FSB on certain property owned by him as additional collateral.

 

In June 2010, Black Rock borrowed approximately $3,400,000 to fund the purchase price of the Villarreal property plus make its first capital call on the property. The Company borrowed an additional $351,000 in November 2010 to fund additional capital calls. As of February 29, 2012, the outstanding balance of the LOC was $1,137,281 and the Company was in compliance with the covenants related to the loan.  On March 9, 2012, the Company borrowed an additional $800,000 to fund capital expenditures. As part of the LOC agreement with FSB, the Company entered into a lock box arrangement to further secure the credit facility for the bank, in the event the Company failed to timely meet its repayment obligations.  Under accounting standards, borrowings outstanding under a revolving credit agreement that includes both a subjective acceleration clause and a requirement to maintain a lock-box arrangement shall be considered short-term obligations.