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Derivative Instruments; Fair Value

3 Months Ended

Mar. 31, 2012

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Note 9 - Derivative Instruments; Fair Value

The following table represents information about the Company’s assets and liabilities measured at fair value on a recurring basis as of March 31, 2012, and indicate the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value:

	Amount as of
Description	3/31/2012			Level 1		Level 2			Level 3

Interest Rate Swap 2011	$	(5,000	)	$	-	$	(5,000	)	$	-

	$	(5,000	)	$	-	$	(5,000	)	$	-

The Company is exposed to certain market risks including the effect of changes in interest rates. The Company uses derivative instruments to manage financial exposures that occur in the normal course of business. It does not hold or issue derivatives for speculative trading purposes. The Company is exposed to non-performance risk from the counterparties in its derivative instruments. This risk would be limited to any unrealized gains on current positions. To help mitigate this risk, the Company transacts only with counterparties that are rated as investment grade or higher and all counterparties are monitored on a continuous basis. The fair value of the Company’s derivatives reflects this credit risk.

On July 1, 2011, we entered into a swap agreement with BMO Capital Markets with respect to $6,780,000 of our loan balances with Harris. This swap limits the Company’s exposure to interest rate fluctuations on the Company’s floating rate loans. The swap agreement has the effect of fixing the interest rate on the loan balances covered by the swap at 4.65% per annum. The swap agreement is a derivative financial instrument and we determine and record the fair market value of the swap agreement each quarter. This value is recorded on the balance sheet of the Company and the amount of the unrealized gain or loss for each period is recorded as interest income or expense on the statement of operations, as the swap is not designated as a hedge for accounting purposes.

Fair Values of Derivative Instruments in the Statement of Financial Position

Liability Derivatives

As of

March 31

2012

Derivatives not
designated as
hedging instruments
under ASC 815

Balance Sheet
Location

Fair Value

Interest Rate Contracts

Other Liabilities

(5,000)

The Effect of Derivative Instruments on the Statement of Financial Performance

for the 3 month
period ending	March 31	2012
	Derivatives not Designated as Hedging Instruments under ASC 815	Location of Gain (Loss) Recognized in Income on Derivative		Amount of Gain (Loss) Recognized in Income on Derivative
	Interest Rate Contracts	Interest Expense	*	$	(34,000)

* Includes interest of $19,000 associated with variances between fixed and variable rates.