NOTE 7: LONG-TERM DEBT

3 Months Ended

Mar. 31, 2012

NOTE 7: LONG-TERM DEBT

The components of long-term debt are summarized below:

	March 31, 2012			December 31, 2011
Secured credit agreement - Whitney Bank	$	1,970		$	2,342
6% Subordinated debenture		-			210
Capital lease obligations		1,363			514
Total debt		3,333			3,066
Less: Current portion of long-term debt		(1,156	)		(2,893	)
Long-term debt, net of current portion	$	2,177		$	173

Whitney Credit Agreement

We originally entered into our credit agreement with Whitney in November 2008 to provide us with revolving and letter of credit facilities for our operations. In December 2008, we amended the credit agreement to add a term loan in the principal amount of $1,150 to purchase certain equipment. Thereafter, we further amended the credit agreement in May 2009 to add another term loan in the principal amount of $2,100 to purchase our operating facility in Channelview, Texas (the “RE Term Loan”). Whitney possesses a first priority lien on all of our and our subsidiaries’ assets and properties, including the real property in Channelview, to secure all of the outstanding indebtedness under the credit agreement.

In April 2010, we amended and restated our credit agreement with Whitney. As part of such amendment and restatement we generally established new maturity dates and payment terms regarding the outstanding indebtedness under the credit agreement. Pursuant to the terms of such amendment and restatement, interest for all principal amounts outstanding under the credit agreement accrued at a rate of 6.5 percent per annum.

At the time of such amendment and restatement, we had $850 outstanding under the revolving line of credit of the credit agreement. Per the terms of the amended and restated credit agreement this amount was converted to a further term loan requiring repayment in monthly installments of $40, plus the amount of accrued and unpaid interest, with a final balloon payment of unpaid amounts to be made at maturity on April 15, 2011.

With regard to the RE Term Loan, the amended and restated credit agreement further established a monthly payment of $18, and a final balloon payment of unpaid amounts to be made at maturity on April 15, 2011.

Under the amended and restated credit agreement, the repayment terms of the December 2008 term loan required a monthly payment of $35, and a final balloon payment of unpaid amounts to be made at maturity on April 15, 2011.

On April 14, 2011, we further amended and restated the credit agreement to extend the maturity dates of the indebtedness thereunder from April 15, 2011 to April 15, 2012. Under such extensions, the final payments of the December 2008 and April 2010 term loans were made during the three months ended March 31, 2012. Under the terms of the extension, the RE Term Loan required a balloon payment of approximately $1,820 on April 15, 2012.

On June 9, 2011, we further amended and restated the credit agreement with Whitney to extend further credit in the form of a single advance term loan in the amount of $800 for the purpose of effecting the purchase of 8,350 shares of the Company’s outstanding common stock (the “Acquisition Term Loan”). Once purchased, these shares were retired and removed from the number of shares outstanding. Outstanding principal of the additional term loan accrued interest at a rate of 6.5 percent per annum; the Company was obligated to make repayment in monthly installments of $65, plus the amount of accrued and unpaid interest beginning July 1, 2011. The Acquisition Term Loan, the balance of which was $150 as of March 31, 2012, was scheduled to mature on April 15, 2012, along with all of the indebtedness outstanding at such time under the amended and restated credit agreement. In addition, under this amendment, Whitney agreed to reduce the requirement of the tangible net worth covenant under the credit agreement to be $13,000 from a previous amount of $15,000.

On May 14, 2012, we further amended our existing credit agreement with Whitney. See Note 13, “Subsequent Events” for further information.

As of March 31, 2012, the outstanding principal balances of the Acquisition Term Loan and RE Term Loan were $150 and $1,820, respectively.

The amended and restated credit agreement obligates us to comply with the following financial covenants:

Leverage Ratio - The ratio of total debt to consolidated EBITDA must be less than 3.0 to 1.0.

Fixed Charge Coverage Ratio - The ratio of consolidated EBITDA to consolidated net interest expense, plus principal payments on total debt, must be greater than 1.5 to 1.0.

Tangible Net Worth - Our consolidated net worth, after deducting other assets as are properly classified as “intangible assets,” plus 50 percent of net income, after provision for taxes, must be in excess of $13,000.

Moreover, we continue to have obligations for other covenants, including, among others, limitations on issuance of common stock, liens, transactions with affiliates, additional indebtedness and permitted investments.

As of March 31, 2012, we were in compliance with all of the aforementioned financial covenants.

Other Debt

We had a subordinated debenture in the original outstanding principal amount of $500 that originated from the exchange of preferred stock in a prior year. The subordinated debenture had a fixed interest rate of 6.0 percent per annum, and interest was required to be paid annually on March 31st. The subordinated debenture matured on March 31, 2011 and we made the payment of accrued interest as required. However, we agreed to terms for an extension of the maturity of the subordinated debenture to May 2012. On February 8, 2012, we settled the remaining $160 balance of the subordinated debenture for a cash payment of $150. The holder of the subordinated debenture forgave the remaining $10 principal balance.