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COMMERCIAL LOANS

3 Months Ended

Mar. 31, 2012

COMMERCIAL LOANS

Short Term Loans Receivable

The Company offers short-term secured non–banking loans to real estate investors (also known as hard money) to fund their acquisition and construction of properties located in the New York Metropolitan area. The loans are principally secured by collateral consisting of real estate and, generally, accompanied by personal guarantees from the principals of the businesses. The loans are generally for a term of one year. The short term loans are initially recorded, and carried thereafter, in the financial statements at cost. Most of the loans provide for receipt of interest only during the term of the loan and a balloon payment at the end of the term.

At March 31, 2012, we were committed to an additional $2,209,500 in construction loans that can be drawn by the borrower when certain conditions are met.

At March 31, 2012, the Company has made loans to five different entities in the aggregate amount of $1,735,000, of which $225,000 is included in long-term loans receivable. One individual holds at least a fifty percent interest in each of the different entities. The Company also has made loans to five different entities in the aggregate amount of $1,669,000, none of which are long term loans receivable. One individual holds at least a fifty percent interest in each of the entities. The Company also has made loans to seven different entities in the aggregate amount of $1,412,500, none of which are long term loans receivable. One individual holds a fifty percent interest in each of the entities. The aggregate short term loans to all these entities totaled $4,591,500 or 62.3% of our short term loan portfolio. All individuals have no relationship to any of the officers or directors of the Company.

At March 31, 2012, one entity has loans outstanding representing 11% of the total balance of the loans outstanding.

At March 31, 2012, two of the loans in the Company’s portfolio were jointly funded by the Company and an unrelated entity, for aggregate loans of $385,000. The accompanying balance sheet includes the Company’s portion of the loans in the amount of $192,500.

The Company generally grants loans for a term of one year. In certain situations the Company and its borrowers have mutually agreed to the extension of the loans as a result of the downturn in the economy and the real estate industry in the New York metropolitan area. Potential buyers of the real estate serving as collateral for the short-term loans may have difficulty securing financing due to restrictions imposed by financial institutions resulting from the recent mortgage crisis. In addition, the Company’s borrowers may be having difficulty securing permanent financing. Prior to the Company granting an extension of any loan, it reevaluates the underlying collateral.

Long Term Loans Receivable

During 2011, management determined to reclassify a portion of the Company’s short term loans to long term loans receivable. Long term loans receivable comprise the loans that were extended beyond the original maturity dates, unless it is clear that the loan will be paid back within 12 month after the balance sheet date. At March 31, 2012, the Company’s loan portfolio consists of approximately $7,374,000 short term loans and approximately $2,557,000 long term loans receivable.

Credit Risk

Credit risk profile based on loan activity as of March 31, 2012:

	Developers- Residential		Developers- Commercial		Developers Mixed Used		Total outstanding loans

Performing loans	$	8,723,867	$	46,704	$	1,160,000	$	9,930,571

At March 31, 2012, the Company’s commercial loans include loans in the amount of $518,700, $1,397,200 and $750,000, originally due in 2009, 2010 and 2011, respectively. In all instances the borrowers are currently paying their interest and, generally, the Company receives a fee in connection with the extension of the loans. Accordingly, at March 31, 2012, no loan impairments exist and there are no provisions for impairments of loans or recoveries thereof included in operations.