Note 8. RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2011

Related Party Transactions Disclosure [Text Block]

Note 8.  RELATED PARTY TRANSACTIONS

Kohlberg & Co., L.L.C., whose affiliate holds all 1,131,551 shares of the Company’s Convertible Preferred Stock, provides ongoing management oversight and advisory services to the Company.  At September 30, 2011 and December 31, 2010, the Company owed Kohlberg $1.6 million and $0.5 million, respectively, for these services, which is recorded in current liabilities on the Condensed Consolidated Balance Sheets.  For each of the three and nine months ended September 30, 2011 and October 1, 2010, $0.1 million and $0.4 million, respectively, is recorded in selling, general and administrative expenses in the Condensed Consolidated Statements of Operations for these services.

Concurrent with the Third Amendment (described above), in February 2011, loans of $0.1 million each were received from two directors of the Company, and a loan of $50,000 was received from the Company’s Chief Executive Officer, which are recorded in other liabilities in the Condensed Consolidated Balance Sheets.  In connection with these loans, the Company entered into subordinated promissory notes with these individuals.  These notes mature on November 26, 2013 and accrue interest at a rate of 15% per year, to be paid in quarterly installments, which may be paid by capitalizing such interest and adding such capitalized interest to the principal amount of the subordinated notes.  For the three and nine months ended September 30, 2011, $10,000 and $24,000, respectively, of interest was capitalized into the principal amount of the notes.