Margin Account Loan

9 Months Ended

Sep. 30, 2011

Margin Account Loan

Margin Account Loan

Note 10: Margin Account Loan

A "Margin Account" was established with Wells Fargo Advisors for which the proceeds of this flexible form of indebtedness effectively serves the Company as a line of credit to finance the capital improvement project underway at the New Brunswick, New Jersey Manufacturing facility (see Note 9: Construction in Progress).  In order to maintain this Margin Account, established on July 26, 2011 with an estimated maximum dollar value of $4 million, the Company needs to pledge, restrict from sale and segregate to a dedicated Margin Account its Marketable Securities at an approximate ratio of two to one of security collateral to debt undertaken.  With the exception of collateral requirements, the Company maintains all the rights and benefits of ownership including receipt of interest, dividends or proceeds from the securities.  While this Margin Account has no material establishment or maintenance fees, it currently carries an effective interest rate of approximately 3% per annum applied against the "Margin Debit Balance" (i.e., those funds withdrawn and outstanding), based on the prevailing "Wells Fargo Base Rate" less 2.75%.  On September 28, 2011, the principal loan balance of the Margin Account was undertaken for approximately $1,156,000, for which approximately $3,142,000 in Marketable Securities became restricted as dedicated collateral for the indebtedness.  As a result of the loan being outstanding for only three days at the end of the quarter, the finance charge was approximately $244 for both three and nine months ended.