7. LONG-TERM DEBT

9 Months Ended

Sep. 30, 2012

Long-Term Debt

NOTE 7: LONG-TERM DEBT

The components of long-term debt are summarized below:

	September 30, 2012			December 31, 2011
Secured credit agreement - Whitney Bank	$	1,769		$	2,342
6% Subordinated debenture		–			210
Capital lease obligations		935			514
Total debt		2,704			3,066
Less: Current portion of long-term debt		(2,579	)		(2,893	)
Long-term debt, net of current portion	$	125		$	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.  Our credit facility has been amended and/or restated four times, most recently on May 14, 2012, when we entered into the Fourth Amendment to the Amended and Restated Credit Agreement (“Fourth Amended Credit Agreement”) with Whitney effective as of April 15, 2012.  The Fourth Amended Credit Agreement (i) converted our original $1,150 term loan to a revolving loan amount of $2,000 (“Revolving Loan”), (ii) extended the maturity date of existing indebtedness to April 15, 2013, (iii) and lowered the interest rate of all loans from 6.5 percent fixed annual rate to a 4.0 percent fixed annual rate.

As of September 30, 2012, the outstanding indebtedness to Whitney under the Fourth Amended Credit Agreement consisted of $1,769 for a real estate loan related to our Channelview, Texas facility land and buildings. There was no indebtedness related to the Revolving Loan at September 30, 2012.

The Fourth Amended 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 September 30, 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 annual 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.