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Related party transactions
 3 Months Ended
Mar. 31, 2012
Related party transactions [Abstract]  
Related party transactions
  (8) Related party transactions.

 

The Company purchases and sells a substantial portion of precious metal and bullion to NTR, a major stockholder of the Company. During the three months ended March 31, 2012, the Company sold approximately $13.1 million, or 38%, of precious metals and bullion to NTR. During the three months ended March 31, 2012, the Company purchased approximately $5.5 million, or 19%, in precious metal, bullion and other products from NTR to fulfill customer orders. As of March 31, 2012, the Company was obligated to pay $25,012 to NTR as a trade payable. During the three months ended March 31, 2011, the Company sold approximately $10.3 million, or 42%, of precious metals and bullion to NTR. During the three months ended March 31, 2011, the Company purchased approximately $3.8 million, or 16%, in precious metal and bullion from NTR to fulfill customer orders. As of December 31, 2011, the Company was obligated to pay $677,000 to NTR as a trade payable

 

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 all amounts outstanding thereunder will be due and payable (such amounts, the "Obligations")-upon the earlier of (i) August 1, 2014, (ii) the date that is twelve months after the Company 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 Company and Texas Capital Bank, N.A. ("Texas Capital Bank"), and additional proceeds are expected to be used as working capital in the ordinary course of business.

 

The Audit Committee has reviewed these transactions and deemed them to be on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances.