Annual report pursuant to section 13 and 15(d)

9. Restricted Cash

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9. Restricted Cash
12 Months Ended
Dec. 31, 2012
Notes to Financial Statements  
9. Restricted Cash

As of December 31, 2012 and 2011, the Company had approximately $1,026,000 and $300,000, respectively, of cash restricted from withdrawal.

 

Restricted cash at December 31, 2012 includes $1,000,000 of cash held in reserve as required by the terms of the Company’s senior lending agreement (see note 12).

 

Restricted cash also includes certificates of deposit collateralizing letters of credit in the amounts of $26,326 and $299,536 and December 31, 2012 and 2011. These letters of credit are required as security for certain of the Company’s non-cancelable operating leases for office facilities. During the year ended December 31, 2012 the landlord over premises leased by the Company drew down $274,055 on the letter of credit in settlement of outstanding rent and utilities due under the lease.

 

On October 27, 2011, the landlord over other premises leased by the Company exercised its right under the lease to draw down the full amount of a letter of credit in the amount of $428,391 that the Company had posted as security under the terms of the lease. The lessor subsequently acknowledged its receipt of the entire amount of the letter of credit and the Company reflects that amount as a security deposit on its consolidated balance sheet as of December 31, 2012 and 2011. As a result of the drawdown of this letter of credit, the Company was required to pay the issuer of the letter of credit the difference between the full amount of the letter of credit and the amount that the Company had collateralized, which difference was approximately $189,000 and is reflected in Notes payable – non-related parties, current portion as of December 31, 2011. This amount was repaid on October 22, 2012.