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Long-Term Debt and Convertible Debt | 12 Months Ended
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Dec. 31, 2011
Long-Term Debt and Notes Payable [Abstract] |
Long-Term Debt and Notes Payable | Note 7 - Long-Term Debt and Convertible Debt The following table details the Company's long-term debt and convertible debt:
|  | Outstanding Balance |  |  |  |  |  |  |
|  | December 31, |  |  | December 31, |  |  | Current |  |  |  |
|  | 2011 |  |  | 2010 |  |  | Interest Rate |  |  | Maturity |
Texas Capital Bank note and line of credit (1)(2) |  | $ | 3,683,214 |  |  | $ | 4,383,218 |  |  |  | 6.0% |  |  |  | June 22, 2012 |
Mortgage payable |  |  | 2,064,887 |  |  |  | 2,165,167 |  |  |  | 6.7% |  |  |  | August 1, 2016 |
Settlement payment (3) |  |  | 160,750 |  |  |  | 287,121 |  |  |  | 8.0% |  |  |  | February 15, 2013 |
Notes payable |  |  | 13,936 |  |  |  | 300,010 |  |  |  | Various |  |  |  | Various |
Capital leases (4) |  |  | 52,098 |  |  |  | - |  |  |  | 17.4% |  |  |  | December, 2013 |
Covertible notes, net of discount (5) |  |  | - |  |  |  | 147,999 |  |  |  | 7.0% |  |  |  | n/a |
Sub-Total |  |  | 5,974,885 |  |  |  | 7,283,516 |  |  |  |  |  |  |  |  |
Less: Capital leases |  |  | 52,098 |  |  |  | - |  |  |  |  |  |  |  |  |
Less: Current maturities |  |  | 451,674 |  |  |  | 882,266 |  |  |  |  |  |  |  |  |
Long-term debt |  |  | 5,471,113 |  |  |  | 6,401,250 |  |  |  |  |  |  |  |  |
Less: Line of credit |  |  | 2,999,887 |  |  |  | 3,499,887 |  |  |  |  |  |  |  |  |
Long term debt, less current maturities |  | $ | 2,471,226 |  |  | $ | 2,901,363 |  |  |  |  |  |  |  |  |
| (1) | Based on the revolving promissory notes payable to the bank, a note of $2,999,887 and $3,499,887 at December 31, 2011 and 2010 respectively which bears an interest rate of 6% or prime plus 1% (6.0% at December 2011) and is due June 22, 2012. In addition, another note of $1,000,000 with a balance of $683,327 and $883,331 at December 31, 2011 and 2010, respectively, which bears an interest rate of 6% or prime plus 1% (6.0% at December 2011) due in equal monthly payments of $16,667 through June 22, 2012. These notes are secured by all accounts receivable, inventory, property and equipment and intangible assets. The notes contain certain covenants, restricting payment of dividends and requiring the Company to maintain certain financial ratios.
(2) Subsequent to the period covered by this report, on July 19, 2012, DGSE entered into a Loan Agreement with NTR, pursuant to which NTR agreed to provide the Company a guidance line of revolving credit in an amount up to $7,500,000. The Loan Agreement provides that the Loan Agreement will terminate-and the Obligations will be due and payable upon the earlier of (i) August 1, 2014, (ii) the date that is twelve months after the Registrant receives notice from NTR demanding the repayment of the Obligations, (iii) the date the Obligations are accelerated in accordance with the terms of the Loan Agreement or (iv) the date on which the commitment terminates under the Loan Agreement. In connection with the Loan Agreement, the Company granted a security interest in the respective personal property of each of its subsidiaries. The loan carries an interest rate of two percent (2%) per annum for all funds borrowed pursuant to the Loan Agreement. Proceeds received by the Company pursuant to the terms of the Loan Agreement were used for repayment of all outstanding financial obligations incurred in connection with that certain Loan Agreement, dated as of December 22, 2005, between the Registrant and Texas Capital Bank, N.A., and additional proceeds are expected to be used as working capital in the ordinary course of business.
| (3) | On February 26, 2010, Superior entered into a settlement agreement for a lawsuit filed by its previous landlord, DBKK $385,000 to be paid over three years bearing interest at 8%. The lawsuit resulted from a lease transaction entered into by certain officers of Superior Galleries. The Company had previously recorded a $385,000 loss related to the settlement of this litigation in other (income) expense in its 2010 Consolidated Statement of Operations. As part of the current review and restatement of its financial reports, Current Management believes that enough information was available as of December 31, 2009 to enable the Company to reasonably accrue for this settlement as a contingent loss in Fiscal 2009. As a result, the $385,000 loss is not included in the restated 2010 operating results, and its impact has been reflected as a reduction in retained earnings in the Company's December 31, 2009 Balance Sheet (see Note 1).
| (4) | On November 23, 2010, DGSE entered into a capital lease for $78,450 with Direct Capital Corporation for a radio-frequency identification (RFID) inventory management solution. The non-cancelable lease agreement required an advanced payment of $5,169 and monthly payments of $2,584 for 36 months at an interest rate of 11.5% beginning in January 2011. At the end of the lease in December 2013, the equipment can be purchased for $1.
| (5) | See Note 8.
Maturities of our long-term obligations over the next five years are as follows:
|  | Total |  |  | 2012 |  |  | 2013 |  |  | 2014 |  |  | 2015 |  |  | 2016 |
Notes payable |  | $ | 2,999,887 |  |  | $ | 2,999,887 |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
Long-term debt and capital leases |  |  | 2,974,998 |  |  |  | 956,181 |  |  |  | 166,025 |  |  |  | 132,266 |  |  |  | 131,003 |  |  |  | 1,589,523 |
Total |  | $ | 5,974,885 |  |  | $ | 3,956,068 |  |  | $ | 166,025 |  |  | $ | 132,266 |  |  | $ | 131,003 |  |  | $ | 1,589,523 |

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 19, 20, 22 -Article 5 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 129 -Paragraph 2, 4 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. + Details
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