14. Related Party Transactions

12 Months Ended

Dec. 31, 2012

Related Party Transactions [Abstract]

Related Party Transactions

14.  Related Party Transactions:

The Company’s primary preferred shareholder is L-PGI, with LIC being its general partner. The Company’s convertible debentures (Note 9) are held by L-1989 and LIC. LIC is also the controlling general partner of L-1989. LIC is primarily owned and managed by Andrew S. Love and Laurence A. Schiffer. Messrs. Love and Schiffer serve as the executive officers and directors of the Company.

As of December 31, 2012 the Company was in default of its primary credit agreements with PGIP, its Primary Lender (Note 7).

PGIP is owned and managed by Love Savings Holding Company (“LSHC”).  Messrs. Love and Schiffer are directors and executive officers of LSHC and own 90% of all the issued and outstanding voting stock of LSHC.

The Company maintains its administration and accounting offices with Love Real Estate Company (“LREC”).  LREC, which is owned by Mr. Love and Mr. Schiffer, is paid a monthly fee for the following:

1.    Maintain books of original entry;

2.    Prepare quarterly and annual SEC filings;

3.    Coordinate the annual audit;

4.    Assemble information for tax filing, review reports as prepared by tax accountants and file same;

5.    Track shareholder records through transfer agent;

6.    Maintain policies of insurance against property and liability exposure;

7.    Handle day-to-day accounting requirements

In addition, the Company receives office space, telephone service and computer service from LREC.  A fee of $2,800 per month was accrued in 2012 and 2011.  The Company made payments of $33,600 to LREC in 2012 and 2011 respectively for accounting service fees.  There were no accrued accounting service fees as of December 31, 2012 and 2011.

Effective March 25, 1987, the Company entered into a Management Consulting Agreement with LREC. As a consultant to the Company and in addition to the above services, LREC provides other services including, but not limited to, strategic planning, marketing and financing as requested by the Company. In consideration for these consulting services, the Company pays LREC a quarterly consulting fee of one-tenth of one percent of the carrying value of the Company’s assets, plus reasonable out-of-pocket expenses. As of December 31, 2012, the carrying value of the Company’s assets was approximately $1,375,000. Consulting fees were $6,000 in both 2012 and 2011, respectively. As of both December 31, 2012 and 2011, a total of $1,000 of unpaid fees had accrued under this agreement.

In 1985 a corporation owned by the former Chairman of the Board and his family made an uncollateralized loan to the Company, which at December 31, 2012 had an outstanding balance, including accrued interest, of $579,000.  Interest accrued on this loan was $9,000 in both 2012 and 2011, respectively.

From time to time, the Company invests in short-term debt obligations of an affiliate of L-PGI, the Company’s preferred shareholder, Love Investment Company (Note 2). The balance of this receivable including accrued interest at December 31, 2012 and 2011 was $543,000 and $631,000, respectively. Interest on the loans was $29,000 and $40,000 for 2012 and 2011, respectively.