3. Notes Payable - Related Party

3 Months Ended

Jul. 31, 2012

3. Notes Payable - Related Party:

3. Notes Payable - Related Party

3. Notes Payable – Related Party  

The Company had a note payable to G.S. Beckwith Gilbert, the Company’s significant shareholder and Chairman, of »$4,814,880 as of July 31, 2012 and October 31, 2011. The note payable bears a maturity date of November 1, 2014, with an annual interest rate of 6%. Interest payments are due by October 31 of each fiscal year. During fiscal year 2011, the Company paid fiscal year 2011 interest to Mr. Gilbert of $912,000, representing the entire fiscal year 2011 interest due, thereby meeting the payment requirements of the loan agreement. Total payments for interest made to Mr. Gilbert in fiscal year 2011 were $1,358,000, including the remaining fiscal year 2010 interest payment. The Company has paid all interest incurred on the note payable through July 31, 2012.    

The Company has received a commitment from Mr. Gilbert, dated September 5, 2012, that if the Company, at any time, is unable to meet its obligations through September 5, 2013, Mr. Gilbert will provide the necessary continuing financial support to the Company in order for the Company to meet such obligations. Such commitment for financial support may be in the form of additional advances or loans to the Company, in addition to the deferral of principal and/or interest payments due on the existing loans, if deemed necessary. The note payable is secured by the Company’s assets.

The Company believes that its liquidity is adequate to meet operating and investment requirements through October 31, 2012. During such period the Company does not anticipate borrowing additional funds from Mr. Gilbert, although it has received a commitment from Mr. Gilbert to do so if the Company requires additional funds.