UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly period ended ~~September~~March 3031, ~~2009~~2010

¨	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period to

COMMISSION FILE NUMBER 0-23383

OMNI ENERGY SERVICES CORP.

(Exact name of registrant as specified in its charter)

LOUISIANA		72-1395273
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
4500 N.E. EVANGELINE THRUWAY CARENCRO, LOUISIANA		70520
(Address of principal executive offices)		(Zip Code)

4500 N.E. EVANGELINE THRUWAY CARENCRO, LOUISIANA		70520
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (337) 896-6664

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes x¨ No ¨x

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨ Accelerated filer x¨ Non-accelerated filer ¨ Smaller reporting company ¨x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of ~~November~~August 1125, ~~2009,~~2010 there were 2022,~~980~~815,~~202~~198 shares of the Registrant’s common stock, $0.01 par value per share, outstanding.

OMNI ENERGY SERVICES CORP

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED ~~SEPTEMBER 30~~MARCH 31, ~~2009~~2010

INDEX

			PAGE
PART I. FINANCIAL INFORMATION
	Item 1	Financial Statements
	Item 1.	Financial Statements	3
		Consolidated Balance Sheets - As of September 30, 2009 (Unaudited) and December 31, 2008	3
		Consolidated Balance Sheets - As of March 31, 2010 (Unaudited) and December 31, 2009	3
		Consolidated Statements of Operations (Unaudited) - For the three-month and nine-month periods ended September 30, 2009 and 2008	4
		Consolidated Statements of Operations (Unaudited) - For the three-month periods ended March 31, 2010 and 2009	4
		Consolidated Statement of Stockholders’ Equity (Unaudited) - For the nine-month period ended September 30, 2009	5
		Consolidated Statements of Stockholders’ Equity (Unaudited) - For the three-month period ended March 31, 2010	5
		Consolidated Statements of Cash Flows (Unaudited) - For the nine-month periods ended September 30, 2009 and 2008	6
		Consolidated Statements of Cash Flows (Unaudited) - For the three-month periods ended March 31, 2010 and 2009	6
		Notes to Consolidated Financial Statements	87
	Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
	Item 3	Quantitative and Qualitative Disclosures About Market Risk	25
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	21
	Item 4	Controls and Procedures	25
	Item 4.	Controls and Procedures	21
PART II. OTHER INFORMATION			2523
	Item 1	Legal Proceedings	25
	Item 1.	Legal Proceedings	23
	Item 1A.	Risk Factors	2624
	Item 2	Unregistered Sale of Securities and Use of Proceeds	26
	Item 2.	Unregistered Sales of Securities and Use of Proceeds	24
	Item 3	Defaults Upon Senior Securities	26
	Item 3.	Defaults Upon Senior Securities	24
	Item 4	Submission of Matters to a Vote of Security Holders	26
	Item 4.	Reserved	24
	Item 5	Other Information	26
	Item 5.	Other Information	24
	Item 6	Exhibits	26
	Item 6.	Exhibits	24
		SIGNATURES	2725

PART I — FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

OMNI ENERGY SERVICES CORP.

CONSOLIDATED BALANCE SHEETS

	December 31, 2008			September 30, 2009
	December 31, 2009			March 31, 2010
	(Dollars in thousands, except share amounts)
	(In thousands, except share and per share amounts)
				(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	21,~~043~~931		$	21,~~237~~821
Restricted cash		942			350
Trade receivables, net		15,016			18,203
Trade receivables, net		33,848			19,158
Other receivables		578			222
Other receivables		682			611
Parts and supplies inventory		6,811			6,953
Parts and supplies inventory		7,897			6,431
Prepaid expenses and other current assets		4,638			3,512
Prepaid expenses and other current assets		5,789			4,006
Deferred tax assets		66			1,020
Deferred tax assets		384			—
Due from related party		131			131
Due from related party		204			131
Assets held for sale		736			736
Assets held for sale		900			736
Total current assets		29,907			32,598
Total current assets		52,689			33,660
PROPERTY, PLANT AND EQUIPMENT, net		72,144			69,774
PROPERTY, PLANT AND EQUIPMENT, net		80,654			74,142
OTHER ASSETS:
Goodwill		86,~~614~~586			86,~~614~~586
Customer intangible assets, net		23,~~726~~539			23,~~370~~387
Licenses, permits and other intangible assets, net		139,~~626~~424			129,~~926~~200
Loan closing costs, net		43,~~963~~758			43,~~096~~534
Other assets		~~250~~286			~~406~~306
Total other assets		3023,~~179~~593			2823,~~412~~013
TOTAL ASSETS	$	~~163~~125,~~522~~644		$	~~136~~125,~~214~~385
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	123,~~005~~911		$	76,~~580~~669
Accrued expenses		75,~~599~~817			54,~~473~~173
Line of credit		~~9,801~~—			8060
Current maturities of long-term debt		17,564			19,435
Current maturities of long-term debt and capital leases		11,881			12,018
Insurance notes payable		~~1,710~~248			~~370~~125
Total current liabilities		4821,~~679~~857			3223,~~938~~045
LONG-TERM LIABILITIES:
Long-term debt, less current maturities		45,710			34,587
Long-term debt and capital leases, less current maturities		33,731			33,020
Other long-term liabilities		~~527~~172			~~263~~80
Deferred tax liabilities		1718,~~597~~449			1518,~~870~~449
Total long-term liabilities		6352,~~834~~352			5051,~~720~~549
Total liabilities		~~112~~74,~~513~~209			8374,~~658~~594
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY:
Convertible Preferred stock, no par value, 5,000,000 shares authorized; 29 shares of Series B issued and outstanding at December 31, 2008 and September 30, 2009 and 5,396 shares of Series C issued and outstanding at December 31, 2008 and September 30, 2009, respectively, liquidation preference of $1,000 per share		1,074			1,074
Convertible preferred stock, no par value, 5,000,000 shares authorized; 29 and 0 shares of Series B issued and outstanding at December 31, 2009 and March 31, 2010, respectively, and 5,396 shares of Series C issued and outstanding at December 31, 2009 and March 31, 2010, respectively, liquidation preference of $1,000 per share		1,074			1,045
Common stock, $0.01 par value, 45,000,000 shares authorized; 20,647,496 and 20,980,202 issued and outstanding at December 31, 2008 and September 30, 2009, respectively		206			209
Common stock, $0.01 par value, 45,000,000 shares authorized; 20,980,202 and 21,325,648 issued and outstanding at December 31, 2009 and March 31, 2010, respectively		209			213
Preferred stock dividends declared		3			3—
Additional paid-in capital		99100,~~045~~887			~~100~~101,~~632~~300
Accumulated deficit		(4950,~~319~~738	)		(4951,~~362~~767	)
Total stockholders’ equity		51,~~009~~435			5250,~~556~~791
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	~~163~~125,~~522~~644		$	~~136~~125,~~214~~385

The accompanying notes are an integral part of these consolidated financial statements.

OMNI ENERGY SERVICES CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

	Three Months EndedSeptember 30,						Nine Months EndedSeptember 30,
	Three Months EndedMarch 31,
	2008			2009			2008			2009
	2009			2010
	(in thousands, except per share amounts)
Operating revenue
	(Restated)
Services	$	40,676		$	22,844		$	111,496		$	75,926
Operating revenue
Rentals		12,608			5,515			31,669			19,938
Services	$	25,981		$	20,129
Total operating revenue		53,284			28,359			143,165			95,864
Rentals		8,923			6,716
Operating expenses:
Total operating revenue		34,904			26,845
Direct costs (exclusive of depreciation and amortization shown separately below)
Operating expenses:
Services		27,856			17,206			79,524			53,702
Direct costs (exclusive of depreciation and amortization shown separately below)
Rentals		6,392			2,883			15,945			10,459
Services		18,189			16,099
Depreciation and amortization		3,620			3,365			9,776			10,145
Rentals		4,458			3,438
General and administrative expenses		7,282			5,007			23,417			17,707
Depreciation and amortization		3,337			3,412
Total operating expenses		45,150			28,461			128,662			92,013
General and administrative expenses		7,371			4,623
Impairment of fixed assets		—			164			—			237
Total operating expenses		33,355			27,572
Operating income (loss)		81,~~134~~549			(~~266~~727	)		~~14,503~~			~~3,614~~
Interest expense		(~~1,518~~959	)		(~~691~~1,156	)		~~(5,231~~	)		~~(2,414~~	)
Other income (expense), net		65			18			(137	)		16
Other income, net		6			20
Income (loss) before provision for income taxes		6,681			(939	)		9,135			1,216
Income (loss) before income taxes		596			(1,863	)
Provision for income tax (expense) benefit		(2,572	)		94			(3,688	)		(896	)
(Provision) benefit for income taxes		(784	)		954
Net income (loss)		4,109			(845	)		5,447			320
Net loss		(188	)		(909	)
Dividends on preferred stock		(~~123~~120	)		(~~122~~120	)		~~(367~~	)		~~(363~~	)
Net income (loss) available to common stockholders	$	3,986		$	(967	)	$	5,080		$	(43	)
Net loss available to common stockholders	$	(308	)	$	(1,029	)
Basic income (loss) per share:
Net income (loss) available to common stockholders	$	0.20		$	(0.05	)	$	0.26		$	(0.00	)
Net loss available to common stockholders	$	(0.02	)	$	(0.05	)
Diluted income (loss) per share:
Net income (loss) available to common stockholders	$	0.15		$	(0.05	)	$	0.21		$	(0.00	)
Net loss available to common stockholders	$	(0.02	)	$	(0.05	)
Weighted average common shares outstanding:
Basic		1920,~~919~~577			2021,~~931~~014			~~19,460~~			~~20,747~~
Diluted		2720,~~480~~658			2021,~~931~~014			~~26,384~~			~~20,806~~

The accompanying notes are an integral part of these consolidated financial statements.

OMNI ENERGY SERVICES CORP.

CONSOLIDATED ~~STATEMENT~~STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE ~~NINE~~THREE MONTHS ENDED ~~SEPTEMBER~~MARCH 3031, ~~2009~~2010

(unaudited)

	Preferred Stock				Common Stock
	Shares		Amount		Shares			Amount
	(in thousands, except share amounts)
BALANCE, December 31, 2008		5,425	$	1,074		20,647,496		$	206
— Stock based compensation		—		—		—			—
— Restricted stock awards, net of forfeitures		—		—		16,500			—
— Common stock issued in legal settlement		—		—		82,873			1
— Common stock issued in debt extinguishment		—		—		233,333			2
— Preferred stock dividends declared		—		—		—			—
— Net income		—		—		—			—
BALANCE, September 30, 2009		5,425	$	1,074		20,980,202		$	209
	Preferred StockDividendsDeclared		AdditionalPaid-InCapital		AccumulatedDeficit			Total
	(in thousands)
BALANCE, December 31, 2008	$	3	$	99,045	$	(49,319	)	$	51,009
— Stock based compensation		—		1,128		—			1,128
— Restricted stock awards, net of forfeitures		—		—		—			—
— Common stock issued in legal settlement		—		111		—			112
— Common stock issued in debt extinguishment		—		348		—			350
— Preferred stock dividends declared		—		—		(363	)		(363	)
— Net income		—		—		320			320
BALANCE, September 30, 2009	$	3	$	100,632	$	(49,362	)	$	52,556

(in thousands, except share amounts)


	Preferred Stock						Common Stock
	Shares			Amount			Shares			Amount
BALANCE, December 31, 2009		5,425		$	1,074			20,980,202		$	209
— Stock based compensation		—			—			—			—
— Restricted stock awards		—			—			95,000			1
— Common stock issued for note modifications		—			—			250,446			3
— Preferred stock dividends declared		—			—			—			—
— Preferred stock and dividends cancelled		(29	)		(29	)		—			—
— Net loss		—			—			—			—

BALANCE, March 31, 2010		5,396		$	1,045			21,325,648		$	213


	Preferred Stock Dividends Declared			Additional Paid-In Capital			Accumulated Deficit			Total

BALANCE, December 31, 2009	$	3		$	100,887		$	(50,738	)	$	51,435
— Stock based compensation		—			258			—			258
— Restricted stock awards		—			(1	)		—			—
— Common stock issued for note modifications		—			124			—			127
— Preferred stock dividends declared		—			—			(120	)		(120	)
— Preferred stock and dividends cancelled		(3	)		32			—			—
— Net loss		—			—			(909	)		(909	)

BALANCE, March 31, 2010	$	—		$	101,300		$	(51,767	)	$	50,791

The accompanying notes are an integral part of these consolidated financial statements.

OMNI ENERGY SERVICES CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

	Nine Months EndedSeptember 30,
	Three Months EndedMarch 31,
	2008			2009
	2009			2010
	(in thousands)
	(Restated)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	5,447		$	320
Net loss	$	(188	)	$	(909	)
Adjustments to reconcile net income to net cash provided by operating activities:
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		93,~~776~~337			103,~~145~~412
Amortization of deferred loan issuance costs		~~860~~289			~~867~~416
Loss on fixed asset dispositions		311			222
(Gain) loss on fixed asset dispositions		16			(20	)
Asset impairment charges		—			237
Stock based compensation expense		398			258
Provision for doubtful accounts		275			1,359
Other		13			9
Stock based compensation expense		990			1,128
Provision for doubtful accounts		64			(7	)
Stock issued in legal settlement		—			112
Deferred income taxes		769			(954	)
Accretion of discount on convertible notes and other		116			36
Deferred income taxes		2,637			2,128
Changes in operating assets and liabilities:
Trade receivables		(38,~~711~~889	)		13(3,~~331~~180	)
Other receivables		~~101~~607			~~144~~356
Parts and supplies inventory		~~(200~~453	)		~~1,466~~(142	)
Prepaid expenses and other current assets		41,~~753~~542			~~198~~1,126
Other assets		~~(132~~—	)		(~~211~~16	)
Accounts payable and accrued expenses		~~688~~(5,435	)		(83,~~061~~448	)
Other long term liabilities		—(100	)		(~~300~~100	)
Net cash provided by operating activities		2110,~~911~~654			233,~~121~~697
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment		(~~9,686~~935	)		(~~1,849~~387	)
Proceeds from disposal of property, plant and equipment		~~424~~82			~~391~~182
Acquisitions, net of cash received		(20,836	)		—
Decrease in restricted cash		942			—
Tax benefit associated with exercise of non-qualified stock options		857			—
Net cash provided by (used in) investing activities		89			(205	)
Investment in restricted cash		(1,130	)		(350	)
Return of restricted cash		489			942
Net cash used in investing activities		(29,882	)		(866	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of long-term debt		19,232			—
Principal payments on long-term debt and insurance notes		(6,391	)		(3,477	)
Proceeds from issuance of common stock for cash and exercise of stock options and warrants		2,648			—
Principal payments on line of credit		(51,035	)		(60	)
Preferred stock dividends paid in cash		(491	)		(363	)
Borrowings on line of credit		46,234			120
Principal payments on long-term debt		(14,827	)		(11,977	)
Loan closing costs		—			(65	)
Loan closing costs		(1,752	)		—
Preferred stock dividends paid in cash		(122	)		(120	)
Principal payments on line of credit		(183,842	)		(73,362	)
Net cash used in financing activities		(11,314	)		(3,602	)
Borrowings on line of credit		175,753			63,641
NET DECREASE IN CASH AND CASH EQUIVALENTS		(571	)		(110	)
Net cash used in financing activities		(3,279	)		(22,061	)
Cash and cash equivalents, at beginning of period		2,043			1,931
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(11,250	)		194
Cash and cash equivalents, at end of period	$	1,472		$	1,821
Cash and cash equivalents, at beginning of period		13,431			2,043
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash and cash equivalents, at end of period	$	2,181		$	2,237
Cash paid for interest	$	635		$	701
Cash paid for taxes	$	765		$	—
NON-CASH TRANSACTIONS:
Equipment financed through capital lease	$	—		$	446
Preferred stock and dividends cancelled	$	—		$	32
Common stock issued in exchange for note modifications	$	—		$	127

The accompanying notes are an integral part of these consolidated financial statements.

	Nine Months EndedSeptember 30,
	2008		2009
	(in thousands)
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash paid for interest	$	4,262	$	1,877
Cash paid for taxes	$	205	$	1,404
NON-CASH TRANSACTIONS:
Application of restricted cash to capital lease payable and other	$	625	$	—
Stock issued in satisfaction of note payable	$	—	$	350
Conversion of preferred stock to common	$	88	$	—
Premiums financed with insurance carrier	$	3,109	$	450
Notes payable issued to former owners of acquired entities	$	8,000	$	—
Equipment financed through capital lease	$	—	$	1,285
Equipment transferred in satisfaction of settlement of accrued liability	$	750	$	—

The accompanying notes are an integral part of these consolidated financial statements.

OMNI ENERGY SERVICES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The financial statements included herein, which have not been audited pursuant to the rules and regulations of the Securities and Exchange ~~Commission~~ Commission (“SEC”), reflect all adjustments which, in the opinion of management, are necessary for a fair presentation of our financial position, results of operations and cash flows for the interim periods on a basis consistent with the ~~annual~~ annual audited statements. All such adjustments are of a normal recurring nature. The results of operations for interim periods are not necessarily indicative of the results that may be expected for any other interim period of a full year. Certain information, accounting policies and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been omitted pursuant to such rules and regulations, although we believe that the disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with our audited financial statements included in our Annual Report on Form 10-K/A, for the year ended December 31, ~~2008~~2009 filed with the SEC on ~~March~~August 1326, ~~2009~~2010.

IMPAIRMENT OF LONG-LIVED ASSETS

We review our long lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable in accordance with Accounting Standards Codification (“ASC”) 360, “Property, Plant and Equipment” (“ASC 360”). If the carrying amount of the asset, including any intangible assets associated with that asset, exceeds its estimated undiscounted net cash flow, before interest, we will recognize an impairment loss equal to the difference between its carrying amount and its estimated fair value. ~~During~~There ~~the~~was ~~quarter ended September 30,~~no ~~2009, we incurred additional~~ impairment ~~charges~~recognized ofduring ~~$0.2 million to adjust~~ the ~~aircraft~~quarter ~~currently~~ended ~~classified~~March 31, ~~at held for sale to estimated realizable value~~2010.

CASH AND CASH EQUIVALENTS

We consider highly liquid investments with an original maturity of 90 days or less to be cash equivalents. The $0.9 million included in restricted cash at December 31, 2008 represents cash deposited into an irrevocable trust as part of a legal settlement which was paid to the trust beneficiary in January 2009.

During the quarter ended June 30, 2009, an additional $0.4 million in cash was deposited into an irrevocable trust as partial security against the future payment of a shareholder note associated with the acquisition of Industrial Lift Truck and Equipment Co., Inc. in April 2008.

STOCK BASED COMPENSATION

We follow the provisions of ASC 718, “Compensation – Stock Compensation” (“ASC 718”), which requires that compensation cost relating to share-based payment transactions be recognized in the financial statements. The cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the employee’s requisite service period (generally the vesting period of the equity award).

ACCOUNTING PRONOUNCEMENTS RECENTLY ADOPTED

In ~~June~~ May 2009, the FASB issued a standard regarding subsequent events that provides guidance as to when an ~~update~~entity should ofrecognize ~~ASC~~events ~~105,~~or ~~“Generally~~transactions ~~Accepted~~occurring ~~Accounting~~after ~~Principles”~~a ~~(“ASC~~balance ~~105”)~~sheet ~~which~~date ~~establishes~~in its financial statements and the ~~FASB~~necessary ~~Accounting~~disclosures ~~Standards~~related ~~CodificationTM~~to (these events. Specifically, the ~~“Codification”)~~entity should recognize subsequent events that provide evidence about conditions that existed at the balance sheet date, ~~which~~including ~~supercedes~~significant ~~all~~estimates ~~exiting~~used ~~accounting~~to prepare financial statements. Originally, this standard ~~documents~~required ~~and~~entities ~~will~~to ~~become~~disclose the ~~single~~date through which subsequent events had been evaluated and whether ~~source~~that ofdate ~~authoritative~~was ~~non-governmental~~the ~~GAAP.~~date ~~All~~the ~~other~~financial ~~accounting~~statements ~~literature~~were ~~not~~issued ~~included~~or inthe date the ~~Codification~~financial ~~will~~statements bewere ~~considered~~available ~~non-authoritative~~to be issued. ~~The~~We ~~Codification~~adopted ~~did~~this ~~not~~accounting ~~change~~standard ~~GAAP~~effective ~~but~~June 30, ~~reorganizes~~2009 ~~the~~and ~~literature~~applied its provisions prospectively. In February We2010, ~~have~~the ~~conformed~~FASB ~~our financial~~modified ~~statements~~this ~~and~~standard ~~related~~to ~~Notes~~eliminate the requirement for an SEC filing entity to disclose the ~~new~~date ~~Codification~~through which subsequent events have been evaluated. Therefore, we omitted the disclosure in this Quarterly Report on Form 10-Q as of ~~September~~March 3031, ~~2009~~2010.

In ~~May~~January ~~2009~~2010, the ~~Financial~~FASB ~~Accounting Standards~~issued ~~Board~~“Fair Value Measurements and Disclosure (~~“FASB”~~Topic 820)” ~~issued~~which ~~ASC~~clarified ~~855,~~the ~~“Subsequent~~disclosure ~~Events,”~~requirements ~~(“ASC~~of ~~855”)~~existing U.S. ~~ASC~~GAAP ~~855~~related ~~establishes~~to ~~general~~fair ~~standards~~value ofmeasurements. ~~accounting~~This standard requires additional disclosures about recurring and non-recurring fair value measurements as follows: (1) for transfers in and ~~disclosure~~out of ~~events~~Level ~~that~~1 ~~occur~~and ~~after~~Level ~~the~~2 ~~balance~~fair ~~sheet~~value ~~date~~measurements, ~~but~~as ~~before financial~~those ~~statements~~terms are ~~issued~~currently ordefined ~~are~~in ~~available~~existing toauthoritative beliterature, ~~issued.~~a Itreporting ~~requires~~entity ~~disclosure~~is required to disclose the amount of the ~~date~~movement ~~through~~between ~~which~~levels and an explanation for the movement; (2) for activity at Level 3, primarily fair value measurements based on unobservable inputs, a reporting entity ~~has~~is ~~evaluated~~required ~~subsequent~~to ~~events.~~present Weseparately ~~adopted~~information ~~ASC~~about ~~855~~purchases, sales, issuances and settlements, as opposed to presenting such transactions on a net basis; (3) in the ~~second~~event ~~quarter~~of a disaggregation, a reporting entity is required to provide fair value measurement disclosure for each class of ~~2009~~assets and ~~the~~liabilities; ~~adoption~~and of(4) a ~~ASC~~reporting ~~855~~entity ~~did~~is ~~not~~required ~~materially~~to ~~impact~~provide ~~our~~disclosures ~~consolidated~~about ~~financial~~the ~~statements.~~valuation Wetechniques ~~evaluated~~and ~~all~~inputs ~~events~~used orto ~~transactions~~measure fair value for both recurring and non-recurring fair value measurements for items that ~~occurred~~fall in either Level 2 or Level 3. These disclosure requirements are effective for interim and annual reporting periods beginning after ~~September~~December 3015, 2009, upexcept ~~through~~for ~~November 13~~disclosures about purchases, ~~2009~~sales, issuances and settlements in the ~~date~~roll weforward ~~issued~~of ~~these~~activity ~~financial~~in ~~statements.~~Level ~~Subsequent~~3 ~~to September 30,~~fair ~~2009,~~value wemeasurements ~~entered~~for ~~into~~which andisclosure ~~amendment~~becomes effective tofor ~~our~~fiscal ~~credit~~years ~~facility.~~beginning ~~See~~after ~~Note~~December 15, 92010, and for ~~additional~~interim ~~information~~periods within those fiscal years.

~~ACCOUNTING~~OMNI ~~PRONOUNCEMENTS~~ENERGY ~~NOT~~SERVICES ~~YET~~CORP. ~~ADOPTED~~

InNOTES ~~June 2009,~~TO ~~the~~CONSOLIDATED ~~FASB~~FINANCIAL ~~issued~~STATEMENTS—(Continued) an update of ASC 105, changing the accounting for securitizations and special purpose entities. ASC 860-40 eliminates the concept of a qualifying special-purpose entity, creates more stringent conditions for reporting a transfer of a portion of a financial asset as a sale, clarifies other sale-accounting criteria, and changes the initial measurement of a transferor’s interest in transferred financial assets. ASC 860-40 is effective for fiscal years beginning after November 15, 2009. We are currently assessing the potential impacts, if any, on our consolidated financial statements and do not anticipate any material impact on our financial statements.

~~In August 2009, the FASB further updated ASC 820, “Fair Value Measurements and Disclosures”~~ (~~“ASC 820”~~unaudited) to clarify how an entity should measure liabilities at fair value. The update reaffirms that fair value is based on an orderly transaction between market participants, even though liabilities are infrequently transferred due to contractual or other legal restrictions. However, identical liabilities traded in the active market should be used when available. When quoted prices are not available, the quoted price of the identical liability traded as an asset, quoted prices for similar liabilities or similar liabilities traded as an asset, or another valuation approach should be used. This update also clarifies that restrictions preventing the transfer of a liability should not be considered as a separate input or adjustment in the measurement of fair value. We are currently assessing potential impacts, if any, of this update on our consolidated financial statements.

InAUTHORITATIVE ~~September~~LITERATURE ~~2009,~~NOT ~~the~~YET ~~FASB~~ADOPTED reached final consensus on an update to ASC 605, “Revenue Recognition”, which changes the accounting for certain revenue arrangements. The new requirements change the allocation methods used in determining how to account for multiple payment streams and will result in the ability to separately account for more deliverables, and potentially less revenue deferrals. Additionally, enhanced disclosures in financial statements will be required. This change is effective for revenue arrangements entered into or materially modified in fiscal years beginning after June 15, 2010 on a prospective basis, with early application permitted. We are currently assessing the potential impacts, if any, on our consolidated financial statements.

On March 30, 2010, the President of the United States signed the Health Care and Education Reconciliation Act of 2010, which is a reconciliation bill that amends the Patient Protection and Affordable Care Act that was signed by the President on March 23, 2010. We are currently awaiting guidance from the FASB and SEC related to the implications of this new legislation on accounting and disclosure requirements. We expect that this legislation will have an impact on our financial position, results of operations and cash flows, but we cannot determine the extent of the impact at this time.

RECLASSIFICATIONS

We have reclassified our reporting of gains and losses from the disposal of fixed assets from other income and expense to income from operations for ~~all~~the ~~periods~~three ~~presented.~~months ~~The~~ended ~~reclassifications~~March 31, ~~that~~2009 ~~have been made in prior period financial statements~~ to conform to the current period presentation ~~have not resulted in any changes to previously reported net income for any periods~~.

NOTE 2. ~~PROPERTY,~~RESTATEMENT ~~PLANT~~OF ~~AND~~PREVIOUSLY ~~EQUIPMENT~~ISSUED FINANCIAL STATEMENTS

~~Property~~As discussed in our Annual Report on Form 10-K/A, ~~plant~~filed ~~and~~on ~~equipment~~August 26, ~~net~~2010, ~~consists~~the financials as of and for the ~~following~~three atmonth ~~December~~period ended March 31, ~~2008~~2009 ~~and~~have ~~September~~been restated to reflect certain contingent obligations associated with certain subordinated promissory notes recorded as compensation for services in accordance with Emerging Issues Task Force No. 3095-8 “Accounting for Contingent Consideration Paid to the Shareholders of an Acquired Enterprise in a Purchase Business Combination” (“EITF 95-8”) rather than purchase price consideration, ~~2009~~as originally presented. Accordingly, goodwill ~~respectively~~and other intangibles initially recorded were likewise revised as a result of the reduction in purchase price that was replaced by compensation for services recorded during the period of the required contingent employment of the shareholders of the acquired entities. The effect on the previously filed financial statements is included below:

	December 31,2008			September 30,2009
	For the three months ended March 31, 2009
	(In thousands)
	As PreviouslyReported			Adjustment			As Restated
Land	$	493		$	493
	(In thousands, except per share amounts)
Building and improvements		9,103			8,874
Operating expenses
Drilling, field and support equipment		105,894			107,329
General and administrative expense (exclusive of depreciation and amortization shown separately above)	$	6,172		$	1,199		$	7,371
Shop equipment		721			742
Operating income (loss)		2,764			(1,215	)		1,549
Office equipment		2,387			2,389
Interest expense		(1,040	)		81			(959	)
Vehicles		4,991			4,615
Income (loss) before taxes		1,714			(1,118	)		596
Construction in progress		751			1,235
Income tax expense		(784	)		—			(784	)
		124,340			125,677
Net income (loss)		930			(1,118	)		(188	)
Less: accumulated depreciation		(43,686	)		(51,535	)
Net income (loss) available to common stockholders		810			(1,118	)		(308	)
Total property, plant and equipment, net	$	80,654		$	74,142
Basic income (loss) per common share:
Net income (loss) available to common stockholders	$	0.04		$	(0.06	)	$	(0.02	)
Diluted income (loss) per common share:
Net income (loss) available to common stockholders	$	0.04		$	(0.06	)	$	(0.02	)
Number of weighted average shares:
Basic		20,577			—			20,577
Diluted		24,226			(3,568	)		20,658

OMNI ENERGY SERVICES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

NOTE 3. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment, net, consists of the following at December 31, 2009 and March 31, 2010, respectively:


	December 31, 2009			March 31, 2010
	(In thousands)
Land	$	493		$	493
Building and improvements		8,874			8,874
Drilling, field and support equipment		108,393			109,524
Shop equipment		742			819
Office equipment		2,389			2,405
Vehicles		4,404			4,424
Construction in progress		1,202			581

		126,497			127,120
Less: accumulated depreciation		(54,353	)		(57,346	)

Total property, plant and equipment, net	$	72,144		$	69,774

NOTE 4. LONG-TERM DEBT AND LINE OF CREDIT

At December 31, 2009 and March 31, 2010, long-term debt consists of the following:


	December 31, 2009			March 31, 2010
	(In thousands)
Notes payable to a bank with interest payable at prime plus 1.50% (4.75% at December 31, 2009 and March 31, 2010) maturing July 31, 2023, secured by real estate	$	1,183		$	1,167
Promissory notes payable to certain former owners of acquired companies with interest at 5%, maturing at various dates through April 2013		2,000			2,000
Convertible promissory notes payable to certain former stockholders of acquired companies with interest at 5%, maturing at various dates through April 2013		4,133			5,349
Promissory notes payable to finance companies secured by vehicles and equipment		329			286
Capital leases payable to finance companies secured by equipment		1,967			2,236
Term Loan payable to a bank, variable interest rate at 30-day LIBOR with 1% floor plus 4.50% (5.50% at December 31, 2009 and March 31, 2010), secured by various equipment, maturing April 23, 2013		36,000			34,000

Total		45,612		$	45,038
Less: current maturities		(11,881	)		(12,018	)

Long-term debt, less current maturities	$	33,731		$	33,020

Our Senior Credit Facility consists of a $50.0 million term loan (the “Term Loan”) and a $20.0 million working capital revolving line of credit (the “Revolver”). Availability under the Revolver is the lower of: (i) $20.0 million or (ii) the sum of eligible accounts receivable and inventory, as defined under the agreement governing the Revolver. The Revolver accrued interest at the 30-day LIBOR rate with a 1% floor plus 4.0% (5.0% at December 31, 2009 and March 31, 2010), and matures in April 2013. The Revolver is collateralized by accounts receivable and inventory. As of December 31, 2009 and March 31, 2010, we had $0.0 million and $0.1 million outstanding under the Revolver, respectively. Due to the lock-box arrangement and the subjective acceleration clause in the agreements governing the Revolver, the debt under the Revolver has been classified as a current liability as of December 31, 2009 and March 31, 2010, as required by ASC 470-10-45 (formerly Emerging Issues Task Force (“EITF”) No. 95-22), “Balance Sheet Classification of Borrowings Outstanding under Revolving Credit Agreements that include both a Subjective Acceleration Clause and a Lock-box Arrangement.”

Under the Term Loan, the funding limits are limited to the lesser of $50.0 million and 80% of the orderly liquidation value of our equipment. In addition, the Term Loan matures in April 2013 and will be repaid quarterly in equal payments of $2.0 million. Interest is due monthly in arrears and accrues at the 30-day LIBOR rate with a 1% floor plus 4.5% (5.50% at December 31, 2009 and March 31, 2010). The Term Loan contains customary financial covenants and limitations on capital expenditures. As of December 31, 2009 and March 31, 2010, we had $36.0 million and $34.0 million outstanding under the Term Loan, respectively.

During March 2010, we entered into an amendment and waiver to the Senior Credit Facility. The waiver provided relief from violations related to the timely filing of certain reports with the lender. Additionally, the amendment adjusted the required covenants related to our leverage ratio for the remainder of the term of the loan. As a result, at March 31, 2010, we were in compliance with all covenants under the Senior Credit Facility.

~~NOTE~~OMNI 3.ENERGY ~~LONG-TERM~~SERVICES ~~DEBT~~CORP. ~~AND LINE OF CREDIT~~

AtNOTES ~~December 31,~~TO ~~2008~~CONSOLIDATED ~~and~~FINANCIAL ~~September 30,~~STATEMENTS—(Continued) ~~2009, long-term debt consists of the following:~~

	December 31,2008			September 30,2009
	(In thousands)
Notes payable to a bank with interest payable at prime plus 1.50% (6.50% at December 31, 2008 and 4.75 % at September 30, 2009) maturing July 31, 2023, secured by real estate	$	1,243		$	1,198
Promissory notes payable to certain former owners of acquired companies with interest at 5%, maturing at various dates through April 2011		6,000			5,850
Convertible promissory notes payable to certain former stockholders of acquired companies with interest at 5%, maturing at various dates through April 2011		11,500			7,317
Promissory notes payable to finance companies secured by vehicles and equipment		492			371
Capital leases payable to finance companies secured by equipment		39			1,286
Term Loan payable to a bank, variable interest rate at 30-day LIBOR plus 3.00% (3.71% at December 31, 2008 and 3.25% at September 30, 2009), secured by various equipment, maturing April 23, 2013		44,000			38,000
Total		63,274		$	54,022
Less: current maturities		(17,564	)		(19,435	)
Long-term debt, less current maturities	$	45,710		$	34,587

(unaudited)

SENIOR CREDIT FACILITY

Effective April 24, 2008, we increased our credit facility to $90.0 million (“Senior Credit Facility”), including a $50.0 million term loan (the “Term Loan”), a $25.0 million working capital revolving line of credit (the “Revolver”), and a $15.0 million delayed draw term loan available to fund future acquisitions. The Revolver replaced our previous line of credit (the “Line”). Availability under the Revolver is the lower of: (i) $25.0 million or (ii) the sum of eligible accounts receivable and inventory, as defined under the agreement governing the Revolver. The Revolver accrues interest at the 30-day LIBOR plus 2.50% (3.22% at December 31, 2008) and at Prime plus 1.00 % (4.25% at September 30, 2009) and matures in April 2013. The Revolver is collateralized by accounts receivable and inventory. As of December 31, 2008 and September 30, 2009, we had $9.8 million and $0.1 million, respectively, outstanding under the Revolver, with approximately $12.0 million and $10.5 million, respectively, available for future borrowings. Due to the lock-box arrangement and the subjective acceleration clause in the agreement governing the Revolver, the debt under the Revolver has been classified as a current liability as of December 31, 2008 and September 30, 2009, as required by ASC 470 “Debt.”

On August 28, 2008, the Senior Credit Facility was amended to remove the $15.0 million delayed draw term loan. As an accommodation to our lender, we agreed to remove the delayed draw portion of the Senior Credit Facility in order to make syndication of the Senior Credit Facility more manageable.

The funding limits under the Term Loan are limited to the lesser of $50.0 million and 80% of the orderly liquidation value of our equipment. In addition, the Term Loan matures in April 2013 and will be repaid quarterly in equal payments of $2.0 million, with interest paid monthly in arrears and accrues interest at the 30-day LIBOR plus 3.00% (3.71% at December 31, 2008 and 3.25% at September 30, 2009). The Term Loan contains customary financial covenants and limitations on capital expenditures. As of December 31, 2008 we were in compliance with these covenants. At September 30, 2009, we were not in compliance with the fixed charge ratio covenant of the Term Loan. See Note 9 for an explanation of the waiver and loan modifications entered into with the agent bank. With the proceeds from the Senior Credit Facility, we (i) repaid approximately $28.7 million of outstanding principal balance under our previous term loan; (ii) repaid approximately $2.1 million of outstanding principal balance under our previous capital expenditure loan; (iii) repaid the balance on the Line; and (iv) closed the acquisition of Industrial Lift Truck and Equipment Co., Inc. (“Industrial Lift”). The balance of the proceeds available under the Senior Credit Facility was used to pay fees and expenses of the aforementioned transaction and to provide additional working capital. As of December 31, 2008 and September 30, 2009, we had $44.0 million and $38.0 million, respectively, outstanding under the Term Loan.

CAPITAL LEASES

InWe ~~March~~have ~~2007,~~several wepieces ~~acquired~~of equipment ~~under~~which awere ~~capital~~acquired ~~lease~~under ~~maturing~~capital ~~February 2012~~lease. In ~~the~~2009 ~~third~~and ~~quarter~~thus offar ~~2009~~in 2010, we acquired ~~equipment~~several pieces of ~~under~~equipment ~~several~~for the Seismic Services and Environmental and Other Services segments under capital leases. ~~maturing~~These ~~August~~leases have maturity dates ranging from February 2011 to July 2014. The balance of all capital leases payable as of December 31, 2009 and March 31, 2010 was $2.0 million and $2.2 million, respectively.

~~Total~~The cost and related accumulated depreciation of assets held under capital lease ~~were~~was ~~nominal~~$2.3 atmillion ~~December 31,~~and ~~2008~~$0.1 million and $12.48 million and $0.042 million, respectively, at ~~September~~December 3031, 2009 and March 31, 2010, respectively.

10Depreciation expense for the three months ended March 31, 2009 and 2010 was approximately $0.0 million and $0.1 million, respectively, for all assets held under capital lease.

Depreciation expense for the three and nine months ended September 30, 2008 and 2009 was nominal for all assets held under capital lease.

PREHEAT NOTES

In connection with the purchase of all of the issued and outstanding stock of Preheat, Inc. in February 2006, we issued $4.0 million in 5% promissory notes payable to certain Preheat stockholders (“Preheat Notes”). The Preheat Notes consisted of three separate notes with $2.7 million maturing in February 2008 and $1.3 million maturing in February 2009. One of the Preheat Notes maturing in February 2009 in the amount of $0.8 million (“Preheat Retention Note”) was tied to the retention of certain employees who joined the Company at the time of the acquisition of Preheat. Upon the maturity of the Preheat Retention Note, $0.15 million was paid to employees who had completed three years of uninterrupted service with the Company in accordance with an agreement executed in connection with the Preheat Retention Note. At December 31, 2008 and September 30, 2009, the Preheat Notes had a balance of $4.0 million and $3.85 million, respectively. In February 2008, we terminated the employment of one of the Preheat stockholders for cause, and the other Preheat stockholder subsequently resigned. The terms of the Preheat Notes provide that a termination for cause or resignation of either of the Preheat stockholders’ employment results in the cancellation of the Preheat Notes, other than those payments due to certain employees under the Preheat Retention Note. The Preheat stockholders are contesting our assertion and have filed a lawsuit against the Company pursuant to which state law claims may still be brought (See Note 4). Consequently, the Preheat Notes remain recorded as a liability in the financial statements pending resolution of the matter.

CHARLES HOLSTON NOTES

In connection with the acquisition of BMJ Industrial Investments, L.L.C. and its wholly- owned subsidiary, Charles Holston, Inc. (“Holston”) in March 2007, we issued $5.0 million in 5% promissory notes payable to certain Holston owners (“Holston Notes”) which included an employment contingency for $3.3 million of this obligation. This portion of the obligation is being recognized as compensation expense ratably over the three-year contingency period. The remaining $1.7 million of the obligation was recorded as a liability as no contingent employment was required. The Holston Notes ~~consisted~~consist of three separate notes with $1.0 million maturing in February 2008, $2.0 million maturing in February 2009 and $2.0 million maturing in February 2010. The Holston Notes maturing in 2009 and 2010 are convertible into shares of our common stock at a price of $9.24 per share. Based upon the stock valuation at the time of issuance, no beneficial conversion feature existed. At December 31, ~~2008~~2009 and ~~September~~March 3031, ~~2009~~2010, the Holston Notes had a balance of $42.0 ~~million~~ and $21.09 million, respectively.

~~CYPRESS~~During ~~NOTES~~February 2010, each of the holders of the Holston Notes signed note modification agreements (“Holston Note Modifications”) whereby the payment terms of the Holston Notes were modified to thirty-five monthly payments of principal and interest of $0.06 million beginning February 28, 2010 and one payment for the balance on January 28, 2013. This modification included the removal of all associated employment contingencies. As a result, the portion of the outstanding obligation in the amount of $0.08 million not previously recorded due to the contingency was included in compensation expense in the first quarter of 2010. At the time of the Holston Note Modifications, we issued an aggregate of 107,334 shares of our unregistered restricted common stock to the holders of the Holston Notes. The restrictions on the shares will lapse at various times prior to the maturity of the Holston Notes and we may, at our option, pay the Holston Note balances prior to the new maturity date without penalty. If payment of the Holston Notes is made prior to the lapse of the periodic restrictions, the remaining restricted shares will be forfeited to us and cancelled. As the shares vest, the expense is recognized as a current period charge to interest expense.

InCYPRESS ~~connection~~NOTE with the acquisition of certain assets of Cypress Consulting Services, Inc. d/b/a Cypress energy Services (“Cypress”) in February 2007, we issued $3.0 million in a 5% promissory note payable to a certain Cypress stockholder (“Cypress Note”). The Cypress Note is payable over three years with $1.0 million maturing in February 2008, $1.0 million maturing in February 2009 and $1.0 million maturing in February 2010. In November 2008, as an accommodation to the holder of the note, we paid the $1.0 million due in February 2009 in exchange for a discounted payment by $0.1 million. This discount was reflected as a gain on early extinguishment of debt in the financial statements in 2008. At December 31, 2008 and September 30, 2009, the Cypress Note had a balance of $1.0 million.

In connection with the acquisition of certain assets of Cypress Consulting Services, Inc. d/b/a Cypress Energy Services (“Cypress”) effective in February 2007, we issued $3.0 million in a 5% promissory note payable to a certain Cypress stockholder (“Cypress Note”). The Cypress Note was payable over three years with $1.0 million maturing in February 2008, $1.0 million maturing in February 2009 and $1.0 million maturing in February 2010. In November 2008, as an accommodation to the holder of the Cypress Note, we paid the $1.0 million due in February 2009 in exchange for a discounted payment by $0.1 million. At December 31, 2009 and March 31, 2010, the Cypress Note had a balance of $1.0 million. The principal shareholder of Cypress passed away prior to the maturity date of the Cypress Note. After his death, some uncertainty arose among the minority shareholders of Cypress and the heirs to the principal shareholder’s estate. Consequently, payment on the Cypress Note has not been made. We have filed a Petition for Declaratory Judgment with the court seeking guidance on how the final installment on the Cypress Note should be made and to confirm the exact setoff amount to which we are entitled as a result of the breaches of agreements by and between Cypress, affiliates of Cypress, and us. See Note 10 for additional information related to the Cypress Note.

BAILEY NOTE

In connection with the acquisition of ~~certain assets of~~ Bailey Operating, Inc. (“BOI”) in June 2007, we issued $0.5 million in a 5% promissory note payable to BOI (“Bailey Note”). The Bailey Note is payable on or before May 31, 2010. At December 31, ~~2008~~2009 and ~~September~~March 3031, ~~2009~~2010, the Bailey Note had a balance of $0.5 million.

~~BEG~~In ~~NOTES~~January 2010, the holder of the Bailey Note executed a note modification agreement (“Bailey Note Modification”) whereby the payment terms of the Bailey Note were modified to thirty-five monthly payments of principal and interest of $0.015 million beginning May 30, 2010 and one payment for the balance on April 30, 2013. At the time of the Bailey Note Modification, we became obligated to issue an aggregate of 26,832 shares of our unregistered restricted common stock to the holder of the Bailey Note. The restrictions on the shares will lapse at various times prior to the maturity of the Bailey Note and we may, at our option, pay the Bailey Note balance prior to the new maturity date without penalty. If payment of the Bailey Note is made prior to the lapse of the periodic restrictions, the remaining restricted shares will be forfeited to us and cancelled. The allocation between current and long-term debt was adjusted in the 2009 financial statements to reflect this modification. The charge related to these shares will be recognized as the restrictions are lifted. As the shares vest, the expense is recognized as a current period charge to interest expense.

In10 connection with the acquisition of certain assets of B.E.G. Liquid Mud Services, Inc. (“BEG”) in January 2008, we issued $4.0 million in 5% promissory notes payable to certain shareholders of BEG (“BEG Notes”). The BEG Notes are payable over three years with $1.3 million maturing in January 2009, $1.3 million maturing in January 2010 and $1.4 million maturing in January 2011 and are convertible into shares of our common stock at a price of $3.70 per share under certain circumstances. Based upon the stock valuation at the time of the issuance, no beneficial conversion feature exists. At December 31, 2008 and September 30, 2009, the BEG Notes had a balance of $4.0 million and $2.7 million, respectively.

ILT NOTES

In connection with the acquisition of Industrial Lift in April 2008, we issued $4.0 million in promissory notes payable to the shareholders of Industrial Lift (“ILT Notes”). $3.5 million of the ILT Notes are payable over three years and interest at 5% per annum, payable in arrears with $2.0 million maturing in April 2009, $1.0 million maturing in April 2010 and $0.5 million maturing in April 2011. This $3.5 million of the ILT Notes are convertible into shares of our common stock at a price of $10.50 per share under certain circumstances. Based upon the stock valuation at the time of the issuance, no beneficial conversion feature exists. The remaining $0.5 million in ILT Notes are non-convertible, non-interest bearing and mature in April 2011. In April 2009, an agreement was reached with the former shareholder of Industrial Lift whereby $0.5 million of the scheduled principal payment due in April 2009 was paid in cash and $0.3 million of the obligation was satisfied through the issuance of 233,333 shares of our common stock valued at $0.3

~~million.~~OMNI ~~Additionally,~~ENERGY ~~$0.4~~SERVICES ~~million was deposited into an irrevocable trust with a maturity date in April 2010~~CORP. ~~At December 31, 2008 and September 30, 2009, the ILT Notes had a balance of $4.0 million and $3.2 million, respectively.~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

BEG NOTES

In connection with the acquisition of certain assets of B.E.G. Liquid Mud Services, Inc. (“BEG”) in January 2008, we issued $4.0 million of 5% promissory notes payable to certain shareholders of BEG (“BEG Notes”). The BEG Notes were payable over three years with $1.3 million maturing in January 2009, $1.3 million maturing in January 2010 and $1.4 million maturing in January 2011 and are convertible into shares of our common stock at a rate of $3.70 per share under certain circumstances. Based upon the stock valuation at the time of the issuance, no beneficial conversion feature exists. At December 31, 2009 and March 31, 2010, the BEG Notes had a balance of $2.7 million and $2.5 million, respectively.

In January 2010, each of the holders of the BEG Notes executed note modification agreements (“BEG Note Modifications”) whereby the payment terms of the BEG Notes were modified to thirty-five monthly payments of principal and interest of $0.08 million beginning January 18, 2010 and one payment for the balance on December 18, 2013. At the time of the BEG Note Modifications, we issued an aggregate of 143,112 shares of our unregistered restricted common stock to the holders of the BEG Notes. The restrictions on the shares will lapse at various times prior to the maturity of the BEG Notes and we may, at our option, pay the note balance prior to the new maturity date without penalty. If payment of the BEG Notes are made prior to the lapse of the periodic restrictions, the remaining restricted shares will be forfeited to us and cancelled. The allocation between current and long-term debt was adjusted in the 2009 financial statements to reflect these modifications. The charge related to these shares will be recognized as the restrictions are lifted. As the shares vest, the expense is recognized as a current period charge to interest expense.

INDUSTRIAL LIFT NOTES

In connection with the acquisition of Industrial Lift Truck and Equipment Co., Inc. (“Industrial Lift”) in April 2008, we issued $4.0 million of promissory notes payable to the shareholders of Industrial Lift (the “ILT Notes”). The ILT Notes are payable over three years with $2.0 million maturing in April 2009, $1.0 million maturing in April 2010 and $0.5 million maturing in April 2011. An employment contingency was included in the ILT Notes requiring the continued employment of one of the former owners of Industrial Lift requiring these notes to be recognized as compensation expense ratably over the three-year contingency period. As a result of the employment contingency, the ILT Notes were not included as a portion of the purchase price of Industrial Lift. The ILT Notes bear interest at a rate of 5% per annum payable in arrears and are convertible into shares of our common stock at a rate of $10.50 per share under certain circumstances. Based upon the stock valuation at the time of the issuance, no beneficial conversion feature exists. An additional note in the amount of $0.5 million, which is non-convertible and non-interest bearing, matures in April 2011. In April 2009, an agreement was reached with the former shareholder of Industrial Lift whereby $0.5 million of the scheduled principal payment due in April 2009 was paid in cash and $0.3 million of the obligation was satisfied through the issuance of 233,333 unregistered restricted shares of our common stock valued at $0.3 million. Additionally, $0.4 million was deposited into an irrevocable trust which was released prior to December 31, 2009. In January 2010, a cash payment in the amount of $0.8 million was made to the holder of the ILT Notes. At December 31, 2009 and March 31, 2010, the ILT Notes had a balance of $2.8 million and $2.0 million, respectively.

In March 2010, each of the holders of the ILT Notes signed a note modification agreement (“ILT Note Modification”) whereby the payment terms of $1.0 million of the ILT Notes were modified to thirty-five monthly payments of principal and interest of $0.03 million beginning April 23, 2010 and one payment for the balance on March 23, 2013. This modification included the removal of the associated employment contingencies. As a result, this portion of the outstanding obligation not previously recorded in the amount of $0.3 million was recorded as compensation expense in the first quarter of 2010. This payable is included in the monthly payments of principal and interest of $0.03 million. At the time of the ILT Note Modification, we issued an aggregate of 53,665 shares of our unregistered restricted common stock to the holders of the ILT Notes. The restrictions on the shares will lapse at various times prior to the maturity of the ILT Notes and we may, at our option, pay the note balance prior to the new maturity date without penalty. If payment of the ILT Notes is made prior to the lapse of the periodic restrictions, the remaining restricted shares will be forfeited to us and cancelled. The charge related to these shares will be recognized as the restrictions are lifted. The terms and maturity on the $1.0 million of ILT Notes originally maturing in April 2011 remain unchanged. As the shares vest, the expense is recognized as a current period charge to interest expense.

INSURANCE NOTES PAYABLE

A portion of our property and casualty insurance premiums are financed through certain short-term installment loan agreements. The insurance notes are payable in monthly installments through June 2010 and accrue interest at 5.16%.

~~NOTE~~11 ~~4. COMMITMENTS AND CONTINGENCIES~~

OMNI ENERGY SERVICES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

NOTE 5. COMMITMENTS AND CONTINGENCIES

INSURANCE RESERVES

We maintain reserves for workers’ compensation and general liability on our balance sheet based on our judgment and the adjusters’ best estimates based on claims incurred. Estimated workers’ compensation and general liability claims are determined by an outside adjuster on a case-by-case basis. We maintain insurance policies for workers’ compensation and general liability claims. These insurance policies carry retention limits or deductibles on a per occurrence basis. The retention limits or deductibles are accounted for in our process for all workers’ compensation and general liability claims. As of December 31, ~~2008~~2009 and ~~September~~March 3031, ~~2009~~2010, we have recorded $0.058 million and $0.87 million, respectively, of insurance reserves related to workers’ compensation and general liability claims. We feel that the liabilities we have recorded are appropriate based on the known facts and circumstances and do not expect further losses materially in excess of the amounts already accrued for existing claims.

EMPLOYMENT AGREEMENTS

We have employment agreements with our executive officers and ~~some~~certain former shareholders of companies we acquired. These agreements generally last two to four years and have renewal provisions at our option.

OTHER CONTINGENCIES

On May 1, 2008, the former owners of Preheat, Inc., which we acquired in February 2006, filed a lawsuit in federal court (the “Federal Suit”) in the United States District Court for the Western District of Louisiana in Lafayette, Louisiana, against us, our directors, our current Chief Executive Officer, our current Senior Vice President/Chief Financial Officer, one of our investment advisors, and a principal of the investment advisor. The ~~lawsuit~~Federal Suit sought, among other things, (i) a declaratory judgment that the Preheat purchase agreement executed in December 2005 is null because of alleged inducement to enter into the purchase agreement by criminal or fraudulent conduct, securities fraud and bad faith breach of the purchase agreement and that one of the former owner’s ERISA rights be clarified, (ii) injunctive relief to halt alleged securities disclosure violations by us and to remove three board members, and (iii) damages resulting from the nullification of the Preheat purchase agreement. OnThe ~~June 23,~~Federal ~~2009~~Suit has been dismissed. Subsequent to this dismissal, the former owners of Preheat filed a ~~judgment~~lawsuit in ~~our~~the ~~favor~~16th ~~was~~Judicial ~~received~~District ~~which~~Court, ~~dismissed~~Parish of Iberia, ~~with~~situated in ~~prejudice~~New Iberia, ~~all~~Louisiana. ~~federal~~This ~~law~~lawsuit ~~claims~~sought ~~alleging~~essentially ~~securities~~the ~~law~~same ~~violations~~relief ~~against~~as usrequested ~~and~~in ~~other~~the Federal Suit, named ~~parties~~many of the same defendants as the Federal Suit, and ~~dismissed~~contained many of the same allegations as the Federal Suit. We, ~~without~~together ~~prejudice~~with the other defendants, ~~all~~filed ~~state~~a ~~law~~motion ~~claims.~~to ~~The~~dismiss ~~possibility~~the ~~remains~~suit based upon the fact that ~~some~~it ofwas filed in the ~~state law~~wrong ~~claims~~venue. ~~will~~A beruling ~~brought~~was ~~again~~issued indismissing ~~state~~the ~~court~~case on that basis, and a judgment reflecting that ruling has been submitted to the trial judge for signature. At this point, we are unable to assess the ultimate impact of ~~the~~this ~~state court~~ litigation on our financial position, results of operations or cash flows. We, together with the other defendants, have filed a motion to dismiss the lawsuit and that motion remains pending with the court. We believe the claims against us are without merit and weare ~~will continue to~~ vigorously ~~contest~~contesting the legal action.

On June 3, 2010, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Wellspring OMNI Holdings Corporation, a Delaware Corporation (“Parent”), and Wellspring OMNI Acquisition Corporation, a Delaware corporation and wholly-owned subsidiary of Parent, providing for the Merger of Acquisition with and into the Company, with the Company surviving the merger (the “Merger”) as a subsidiary of Parent. Six purported class action lawsuits have been filed in connection with the Merger in state courts in Lafayette Parish, Louisiana, and two purported class actions were filed in connection with the Merger in the federal district court for the Western District of Louisiana. Each court action named the Company and its directors as defendants, and the state court actions also named Wellspring, Parent and Acquisition. One of the federal actions filed named Parent and Acquisition as defendants. The state court complaints allege, among other things, that the director defendants have breached their fiduciary duties to shareholders of the Company by entering into the Merger Agreement, failing to disclose certain information with respect to the Company and failing to maximize shareholder value. The Wellspring entities are claimed to have aided and abetted the alleged fiduciary duty breaches by the directors of the Company. The federal court complaints make substantially the same claims as the state court complaints, but also allege violations of federal law relating to the Company’s proxy statement disclosures. One or more of the complaints seek injunctions against the Merger, rescission of the Merger if it is consummated, imposition of a constructive trust, damages, attorneys’ fees, expenses and other relief. The complaints request class action certification and rulings that the named complainants are representatives of the class. No class has been certified at present. Plaintiffs in certain of the state actions and both federal actions have moved for expedited discovery. The defendants have filed the appropriate motions in the state proceedings to consolidate them into a single proceeding and further to stay such state actions pending the federal court’s consideration of the federal suit. A hearing is set for August 30, 2010, as to the motions filed in state court. Moreover, the defendants are contesting discovery requests made by some of the state plaintiffs. The defendants have also filed a motion in the federal court requesting consolidation of the federal actions, a state of all proceedings until lead plaintiffs and plaintiffs’ counsel are appointed and defendants’ motion to dismiss is resolved, and requesting that outstanding discovery requests be quashed. No hearing date has yet been set regarding this motion. The Company believes that all of the lawsuits that have been filed and the allegations contained therein are without merit, and it, along with the directors of the Company, intends to vigorously defend the lawsuits.

In the normal course of our business, we become involved in various litigation matters including, among other things, claims by third parties for alleged property damages, personal injuries and other matters. While we believe we have meritorious defenses against these claims, management has used estimates in determining our potential exposure and has recorded reserves in our financial statements related thereto where appropriate. It is possible that a change in our estimates of that exposure could occur, but we do not expect such changes in estimated costs will have a material effect on our financial position or results of operations.

NOTE 56. STOCKHOLDERS’ EQUITY

PREFERRED STOCK

At December 31, ~~2008~~ 2009 and ~~September~~March 3031, ~~2009~~2010, 29 and 0 shares, respectively, of Series B Preferred Stock remain outstanding and are convertible into 7,733 and 0 shares of our common stock, respectively. The previously remaining shares of Series B Preferred Stock were cancelled in accordance with a settlement agreement between the Company and the holders of the stock executed in the first quarter of 2010.

~~On May~~At December 1731, ~~2005,~~2009 ~~we entered into a Securities Purchase Agreement with certain of our affiliates~~ and ~~executive~~March 31, ~~officers~~2010, ~~to issue up to $~~5.0,396 ~~million~~shares of Series C 9% Convertible Preferred Stock (the “Series C Preferred”) inremain ~~conjunction~~outstanding ~~with~~and ~~the completion~~are ~~of a senior credit facility. Our Series C Preferred is~~ convertible into 2,767,179 shares of our common stock at a conversion ~~price~~rate of $1.95 per share ~~and includes detachable warrants to purchase up to 6,550,000 additional shares of our common stock at exercise prices ranging between $1~~.95 ~~and~~

STOCK BASED COMPENSATION

We have two stock-based compensation plans available to grant nonqualified stock options, incentive stock options, stock appreciation rights, restricted units and restricted stock to key employees, officers, directors, advisors and consultants to the Company. The Eighth Amended and Restated OMNI Energy Services Corp. Stock Incentive Plan (“Stock Plan”), provides for 5,750,000 shares of our common stock. The principal awards outstanding under our stock-based compensation plans include non-qualified stock options. In addition, we have the 1999 Stock Option Plan (the “1999 Plan”) which became effective on November 11, 1999 and was not approved by the stockholders. The total shares of our common stock available for issuance under the 1999 Plan is 100,000 shares as of March 31, 2010.

~~$3.50~~OMNI ~~per~~ENERGY ~~share.~~SERVICES ~~The conversion prices of our Series C Preferred and the warrant exercise prices were supported by a fairness opinion issued by a third party~~CORP. The transactions contemplated by the Securities Purchase Agreement closed in two tranches. On May 17, 2005, we issued an aggregate of 3,500 shares of Series C Preferred and warrants to acquire 4,585,000 shares of our common stock, in exchange for $3.3 million, net of offering costs of $0.2 million. The proceeds of the issuance were allocated to the warrants and Series C Preferred based on the relative fair value of each instrument. The value attributed to the warrants was $2.9 million ($2.7 million net of offering costs) and was recorded as additional paid in capital while $0.6 million was the remaining allocated value to the Series C Preferred. In addition, the conversion terms of the Series C Preferred result in a beneficial conversion feature valued at approximately $0.7 million. As a result of the terms of conversion, we recorded a one time charge to retained earnings for this amount representing a deemed dividend to the Series C Preferred stockholders with the offset recorded in additional paid in capital.

OnNOTES ~~August 29,~~TO ~~2005,~~CONSOLIDATED ~~the~~FINANCIAL ~~remainder~~STATEMENTS—(Continued) of the Series C Preferred and warrants were issued generating gross proceeds of $1.5 million. The proceeds of the issuance of the second tranche were allocated to the warrants and Series C Preferred stock based on the relative fair value of each instrument. The entire value of $1.5 million was attributed to the fair value of the warrants and was recorded as additional paid in capital. In addition, the conversion terms of the Series C Preferred issued in the second tranche resulted in no beneficial conversion feature.

The prior term loan agreement and the senior credit facility restricted the payment of cash dividends. Consequently, the 9% dividend obligation related to the Series C Preferred had been satisfied through the issuance of payment-in-kind (~~“PIK”~~unaudited) dividends. The PIK dividends are paid through the issuance of additional shares of Series C Preferred. These additional shares of preferred stock do not have warrants attached to them. During the year ended December 31, 2007, 256 shares of Series C Preferred were issued as PIK dividends. In addition, the conversion terms of the Series C Preferred issued as PIK dividends resulted in a beneficial conversion feature resulting in a one time charge to retained earnings representing a dividend to the Series C Preferred stockholders with the offset recorded in additional paid in capital.

Effective April 29, 2007, the loan and security agreement governing our previous term loan was amended to remove the restriction on cash dividend payments on the preferred equity shares, provided we had sufficient availability under our Revolver and were in compliance with all other loan covenants. Consequently, the accrued dividends since April 2007 have been paid in cash, $0.1 million and $0.4 million, and $0.0 million and $0.4 million for the three and nine month periods ended September 30, 2008 and 2009, respectively.

During 2007, a total of 379 shares of our Series C Preferred were converted into 194,359 shares of our common stock. Additionally, a total of 618,000 warrants were exercised during 2007 resulting in proceeds to the Company of approximately $1.4 million. During 2008, a total of 88 shares of our Series C Preferred were converted into 44,615 shares of our common stock. Additionally, a total of 1,050,000 warrants were exercised during 2008 resulting in proceeds to the Company of approximately $2.6 million.

At December 31, 2008 and September 30, 2009, 5,396 shares of Series C Preferred remain outstanding and are convertible into 2,767,179 shares of our common stock at a conversion rate of $1.95 per share.

STOCK BASED COMPENSATION

We have two stock-based compensation plans available to grant nonqualified stock options, incentive stock options, stock appreciation rights, restricted units and restricted stock to key employees. The Eighth Amended and Restated OMNI Energy Services Corp. Stock Incentive Plan (“Stock Plan”), provides for 5,750,000 shares of our common stock. The principal awards outstanding under our stock-based compensation plans include non-qualified stock options. In addition, we have the 1999 Stock Option Plan (the “1999 Plan”) which became effective on November 11, 1999 and was not approved by the stockholders. The 1999 Plan provides for 100,000 shares of our common stock.

The exercise price, term and other conditions applicable to each stock option granted under the stock plans are generally determined by the Compensation Committee of the Board of Directors. The exercise price of stock options is set on the grant date and may not be less than the fair market value per share of our stock on that date. The options generally become exercisable over a three-year period and expire after ten years.

There was $0.4 million and ~~$1.0~~ ~~million, and~~ $0.3 million ~~and $1.1 million~~ of compensation cost related to non-qualified stock options recognized in operating results (included in general and administrative expenses) for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2008~~ 2009 and ~~September~~March 3031, ~~2009~~2010, respectively.

~~The~~Historically, the fair value of each option award iswas estimated on the date of grant using the Black-Scholes option-pricing model. Expected volatility iswas based on implied volatilities from historical trading of our stock. We used the simplified method to derive an expected term. The expected term represents an estimate of the time that options are expected to remain outstanding. The risk-free rate for periods within the contractual life of the option iswas based on the U.S. treasury yield curve in effect at the time of grant. ~~The~~There ~~following~~were ~~table~~no ~~sets~~options ~~forth~~granted using the ~~assumptions used to determine compensation cost for our non~~Black-~~qualified~~Scholes ~~stock~~model ~~options~~during ~~consistent~~the ~~with~~three ~~the~~months ended ~~requirements~~March 31, of2009 ~~ASC~~or ~~718~~March 31, 2010.

During the three months ended March 31, 2010, 800,000 options were granted to senior management at an exercise price $1.26 per share. Because the vesting of the options is based on several variable criteria (financial performance of the Company and the Company’s stock price as it relates to its peer group), the fair value of these options was estimated using the Monte Carlo valuation method. The shares will vest over a four year period. The value of options vesting based upon the stock price of the Company is being expensed ratably over the vesting period. The options which vest based upon the financial performance of the Company are charged against earnings based upon management’s assessment of the likelihood that the pre-established targets will be met. As the financial performance targets are met, compensation expense will be recognized. For the options based upon share price performance, the compensation is expensed ratably over the vesting period. For the quarter ended March 31, 2010, the amount of expense related to this award was de minimus.

The following table summarizes information about stock option activity for the three months ended March 31, 2010 (in thousands, except option amounts):


	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value
Outstanding at December 31, 2009	1,646,841		$	2.21
Granted	800,000			1.26
Exercised	—			—
Lapsed or canceled	(27,084	)		2.26

Outstanding at March 31, 2010	2,419,757		$	1.90	7.5	$	73

Exercisable at March 31, 2010	1,115,823		$	2.23	7.1	$	—

WARRANTS

A summary of our warrants as of March 31, 2010 and changes during the three months then ended are presented below:


	WEIGHTED AVERAGE EXERCISE PRICE		WARRANTS
Balance at December 31, 2009	$	2.10	4,594,000
Granted		—	—
Exercised		—	—
Forfeited		—	—

Balance at March 31, 2010	$	2.10	4,594,000

Exercisable	$	2.10	4,594,000

	Nine Months EndedSeptember 30, 2008		Nine Months EndedSeptember 30, 2009
Expected volatility	52.98	%	78.53	%
Expected annual dividend yield	0.00	%	0.00	%
Risk free rate of return	3.39	%	3.30	%
Expected option term (years)	6.50		6.50

OMNI ENERGY SERVICES CORP.

~~The~~NOTES ~~weighted~~TO ~~average~~CONSOLIDATED ~~fair~~FINANCIAL ~~value~~STATEMENTS—(Continued) ~~at date of grant for options granted during the nine months ended September 30, 2008 and 2009 was $2.68 and $1.47 per option, respectively.~~

On(unaudited) April 13, 2009, the Compensation Committee of our Board of Directors approved a resolution whereby the exercise price of options held by certain of our officers, directors and employees would be changed to a price equal to the closing price of our stock on May 29, 2009. The closing price on May 29, 2009 was $2.28. This decision was approved by an advisory vote of our stockholders at the annual shareholder’s meeting on May 27, 2009. The total number of options subject to the repricing was 1,487,477. The repriced options had original exercise prices ranging from $2.32 to $10.14, which prices reflected the then current market prices our stock on the dates of the original grant. The other terms of the options, including the vesting schedules, remained unchanged as a result of the repricing. As a result of the sharp reduction in our stock price, the Compensation Committee and Board of Directors believed that such options no longer would properly incentivize the option holders to work in our and our stockholders’ best interests. Moreover, the Board of Directors believed that if these options were repriced, such options would provide better incentives to such employees, officers and directors. Under terms of the repricing plan, the number of options outstanding was reduced to 1,190,573 in order to have no impact on compensation expense.

The following table summarizes information about stock option activity for the three and nine months ended September 30, 2009 (in thousands, except option amounts):

	Number ofOptions		WeightedAverageExercisePrice		WeightedAverageRemainingContractualTerm (years)	AggregateIntrinsicValue
Outstanding at December 31, 2008	1,554,137		$	5.59
Granted	—			—
Exercised	—			—
Lapsed or canceled	(27,707	)		5.96
Outstanding at March 31, 2009	1,526,430		$	5.59	8.0	$	—
Granted	33,000			1.75
Replaced during repricing	(1,487,477	)		5.62
Issued under the repricing	1,190,573			2.28
Exercised	—			—
Lapsed or canceled	(20,646	)		6.01
Outstanding at June 30, 2009	1,241,880		$	2.27	7.9	$	—
Granted	457,841			2.08
Exercised	—			—
Lapsed or canceled	(26,493	)		2.14
Outstanding at September 30, 2009	1,673,228		$	2.22	8.1	$	—
Exercisable at September 30, 2009	947,703		$	2.27	7.3	$	—

At September 30, 2009, $1.1 million of total unrecognized compensation costs related to the unvested portion of the option awards is expected to be recognized over a weighted average period of 2.1 years.

WARRANTS

A summary of our warrants as of September 30, 2009 and changes during the three and nine months then ended are presented below:

	WEIGHTED AVERAGEEXERCISE PRICE		WARRANTS
Balance at December 31, 2008	$	2.84	5,192,650
Granted		—	—
Exercised		—	—
Forfeited		—	—
Balance at March 31, 2009	$	2.84	5,192,650
Granted		—	—
Exercised		—	—
Forfeited		—	—
Balance at June 30, 2009	$	2.84	5,192,650
Granted		—	—
Exercised		—	—
Forfeited		8.33	(447,150	)
Balance at September 30, 2009	$	2.32	4,745,500
Exercisable	$	2.32	4,745,500

RESTRICTED STOCK

The following table summarizes activity of ~~unvested~~management’s restricted stock awards for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2009~~2010:

	SHARES		WEIGHTED AVERAGEGRANT DATEFAIR VALUE		AGGREGATEINTRINSICVALUE
					(in thousands)
Unvested at December 31, 2008	70,833		$	4.53
Unvested at December 31, 2009	37,419		$	3.81
Granted	1695,~~500~~000		$	1.1627
Vested	(2429,~~477~~479	)	$	41.4592
Unvested at March 31, 2009	62,856		$	3.68	$	82
Unvested at March 31, 2010	102,940		$	2.01	$	199
Granted	—		$	—
Vested	(13,979	)	$	3.70
Unvested at June 30, 2009	48,877		$	3.99	$	90
Granted	—		$	—
Vested	(5,729	)	$	4.63
Unvested at September 30, 2009	43,148		$	3.91	$	67

AtOn ~~September~~January 305, ~~2009~~2010, ~~$0.2~~we ~~million~~entered ofinto ~~total~~Restricted Stock ~~unrecognized~~Agreements ~~compensation~~(collectively, ~~cost~~the ~~related~~“Agreements”) with certain of our executive officers pursuant to ~~the~~which we granted 95,000 shares of restricted stock under our Stock Plan. The restricted stock will ratably vest annually in equal 25% ~~unvested~~installments ~~portion~~over a period of four years beginning on the grant date, January 5, 2010, and continuing on each anniversary thereof until January 5, 2013. However, the restricted stock ~~awards~~will vest sooner if (i) the executive’s employment relationship with the Company is ~~expected~~terminated due to bethe ~~recognized~~executive’s ~~over~~death or disability, (ii) the Company terminates the executive’s employment relationship with the Company without cause, or (iii) there is a ~~remaining~~change ~~weighted~~in control ~~average~~(as ~~period~~defined in the Stock Plan) of 1the Company.5 ~~years~~All unvested restricted stock will be forfeited if (i) the executive terminates his employment during the term of his employment agreement, (ii) the Company terminates the executive for cause (as defined in each executive’s employment agreement), or (iii) either the Company or the executive elect not to renew the executive’s employment pursuant to the terms of his employment agreement.

At March 31, 2010, $0.2 million of total unrecognized compensation cost related to the unvested portion of management’s restricted stock awards is expected to be recognized over a weighted average period of three years.

Subsequent to December 31, 2009, certain of our subordinated notes payable were modified resulting in adjustment to the maturity dates and payment schedules of the notes. As an incentive to modify the notes, the Company authorized the issuance of an aggregate of 330,943 unregistered, restricted shares of our common stock in amounts dependent upon the balances modified. The restrictions on the shares will lapse at various times prior to the maturity of the notes and we may, at our option, pay the note balances prior to the new maturity dates. If payment of the notes is made prior to the lapse of the periodic restriction on the stock, the remaining restricted shares will be forfeited to us and cancelled. As of March 31, 2010, 250,446 of the shares have been issued. An additional 53,665 share were issued subsequent to March 31, 2010 and the remainder will be issued in accordance with the relevant note modification agreement.

The following table summarizes activity of restricted stock awards related to the modified subordinated notes for the three months ended March 31, 2010:


	SHARES		WEIGHTED AVERAGE GRANT DATE FAIR VALUE		AGGREGATE INTRINSIC VALUE
					(in thousands)
Unvested at December 31, 2009	—			—
Granted	250,446		$	1.52
Vested	(62,616	)	$	1.52

Unvested at March 31, 2010	187,830		$	1.52	$	363

EARNINGS PER SHARE

Basic earnings per share (“EPS”) is determined by dividing income (loss) available to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted EPS reflects the potential dilution that could occur if options and other contracts to issue shares of common stock were exercised or converted into common stock.

~~For~~As ~~the~~of ~~three~~March 31, 2009 and ~~nine months ended September 30~~2010, ~~2008,~~ we had 1,~~450~~488,~~132~~284 and 1,~~233~~768,~~052~~004 options and restricted shares, respectively, and ~~598~~5,192,650 and 4,594,000 warrants, respectively, that were excluded from the calculation of Diluted EPS as they were antidilutive. In addition, ~~promissory~~Holston ~~notes~~Notes ~~that~~convertible weinto ~~issued~~358,345 inand ~~connection~~212,364 ~~with~~shares ~~our acquisition~~ of ~~Rig~~common ~~Tools~~stock, ~~Inc.~~BEG inNotes ~~November 2006 were~~ convertible into ~~125,000~~0 and ~~125~~693,~~000~~ 556 shares of common stock, ~~Holston~~and ILT Notes convertible into 0333,333 and ~~432~~164,~~900~~867 shares of common stock were excluded from the calculation for the three months ended March 31, 2009 and ~~ILT~~2010, ~~Notes~~respectively. Also, preferred stock convertible into 0 and ~~193~~ 2,~~431~~773,624 shares of common stock were excluded from the calculation ~~for~~of ~~the three~~diluted ~~and~~EPS ~~nine~~at ~~months ended September~~March 3031, ~~2008~~2009 and 2010, respectively, because they were antidilutive.

~~For~~14 the three and nine months ended September 30, 2009, we had 1,516,418 and 1,489,629 options and restricted shares, respectively, and 4,928,404 and 5,103,600 warrants, respectively, that were excluded from the calculation of Diluted EPS as they were antidilutive. In addition, Holston Notes convertible into 216,450 and 263,229 shares of common stock, BEG Notes convertible into 720,721 and

OMNI ENERGY SERVICES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

(unaudited)

The following table reconciles net loss available to common stockholders and common equivalent shares for the Basic EPS calculation to net loss available to common stockholders and common equivalent shares for the Diluted EPS calculation for the three months ended March 31, 2009 and 2010, respectively:


	Three Months Ended March 31, 2009				Three Months Ended March 31, 2010
	Dollars			Weighted Average Shares	Dollars			Weighted Average Shares
	(in thousands)
	(Restated)			(Restated)
Basic EPS net loss available to common stockholders	$	(308	)	20,577	$	(1,029	)	21,014

Add: Stock Options		—		—		—		—
Warrants		—		—		—		—
Contingently issuable shares		—		81		—		—
Preferred stock		—		—		—		—
Shareholder notes		—		—		—		—

Total dilutive effect		—		81		—		—

Diluted EPS net loss available to common stockholders and common equivalent shares	$	(308	)	20,658	$	(1,029	)	21,014

NOTE 7. SEGMENT INFORMATION

ASC 280, “Segment Reporting” (“ASC 280”), requires that companies disclose segment data based on how management makes decisions about allocating resources to segments and measuring their performance. We revised our reportable business segments during the fourth quarter of 2009. The new operating segments are Seismic Services, Environmental and Other Services and Equipment Leasing. Financial results for the quarter ended March 31, 2009 have been restated to reflect the change in operating segments. We revised our segments to align with changes in management’s resource allocation and performance assessment in making decisions regarding our operations. Our saltwater transportation and disposal, solids removal and hauling and liquid mud services, and boat tank and pit cleaning services are now included within our Environmental and Other Services segment. These changes reflect our current operating focus. All of our assets and operations are exclusively in North America. The segment classified as Corporate includes operating activities that support the executive offices, capital structure and costs of being a public registrant. These costs are not allocated to the operating segments when determining segment profit or loss. Certain of the March 31, 2009 information below has also been restated for the impact of the restatement discussed in Note 2.

The following table shows segment information (net of intercompany transactions) for the three months ended March 31, 2010 and 2009 (in thousands):


Three Months Ended March 31,	SEISMIC SERVICES			ENVIRONMENTAL AND OTHER SERVICES		EQUIPMENT LEASING			CORPORATE			TOTAL
	(In thousands)
2010
Operating revenues	$	4,630		$	15,499	$	6,716		$	—		$	26,845
Operating income (loss)		(430	)		890		481			(1,668	)		(727	)
Interest expense		25			110		23			998			1,156
Depreciation and amortization		214			1,549		1,578			71			3,412
Identifiable assets		15,035			46,074		51,445			12,831			125,385
Capital expenditures		322			64		—			1			387

2009 (Restated)
Operating revenues	$	9,729		$	16,252	$	8,923		$	—		$	34,904
Operating income (loss) (Restated)		1,259			2,165		(11	)		(1,864	)		1,549
Interest expense (Restated)		15			82		25			837			959
Depreciation and amortization		234			1,434		1,594			75			3,337
Identifiable assets (Restated)		19,085			50,171		61,408			12,112			142,776
Capital expenditures		10			388		537			—			935

~~744,481~~OMNI ~~shares~~ENERGY ofSERVICES ~~common stock and ILT Notes convertible into 266,667 and 303,297 shares of common stock were excluded from the calculation for the three and nine months ended September 30, 2009, respectively~~CORP. Also, preferred stock convertible into 2,774,913 shares of common stock were excluded from the calculation of Diluted EPS for the three months and nine months ended September 30, 2009, respectively, because they were antidilutive.

~~The~~NOTES ~~following~~TO ~~table~~CONSOLIDATED ~~reconciles~~FINANCIAL ~~net~~STATEMENTS—(Continued) income available to common stockholders and common equivalent shares for the Basic EPS calculation to net income available to common stockholders and common equivalent shares for the Diluted EPS calculation for the three and nine months ended September 30, 2008 and 2009, respectively:

	Three Months EndedSeptember 30, 2008			Three Months EndedSeptember 30, 2009
	Dollars		WeightedAverageShares	Dollars			WeightedAverageShares
	(in thousands)
Basic EPS net income (loss) available to common stockholders	$	3,986	19,919	$	(967	)	20,931
Add:
Stock Options		—	96		—		—
Warrants		—	2,707		—		—
Contingently issuable shares		—	120		—		—
Preferred stock		123	2,775		—		—
Shareholder notes		88	1,863		—		—
Total dilutive effect		211	7,561		—		—
Diluted EPS net income (loss) available to common stockholders and common equivalent shares	$	4,197	27,480	$	(967	)	20,931

(unaudited)

	Nine Months EndedSeptember 30, 2008			Nine Months EndedSeptember 30, 2009
	Dollars		WeightedAverageShares	Dollars			WeightedAverageShares
	(in thousands)
Basic EPS net income (loss) available to common stockholders	$	5,080	19,460	$	(43	)	20,747
Add:
Stock Options		—	101		—		—
Warrants		—	2,907		—		—
Contingently issuable shares		—	116		—		59
Preferred stock		367	2,790		—		—
Shareholder notes		86	1,010		—		—
Total dilutive effect		453	6,924		—		59
Diluted EPS net income (loss) available to common stockholders and common equivalent shares	$	5,533	26,384	$	(43	)	20,806

NOTE 8. INCOME TAXES

~~NOTE~~We 6account for income taxes under the provisions of ASC 740, “Income Taxes” (“ASC 740”), which requires recognition of future tax benefits (temporary differences), subject to a valuation allowance based on more-likely-than-not that such asset will be realized. ~~SEGMENT~~In ~~INFORMATION~~determining whether it is more-likely-than-not that we will realize such tax asset, ASC 740 requires that all negative and positive evidence be considered (with more weight given to evidence that is “objective and verifiable”) in making the determination. We recorded income tax expense of $0.8 million and an income tax benefit of $1.0 million for the three months ended March 31, 2009 and 2010, respectively.

~~ASC~~On ~~280~~January 1, ~~“Segment Reporting~~2007,” ~~requires~~we adopted ~~that~~and ~~companies~~implemented ~~disclose~~ASC ~~segment~~740 ~~data~~as ~~based~~it onrelates ~~how management makes decisions about allocating resources~~ to ~~segments~~uncertainties ~~and~~in ~~measuring~~income ~~their performance~~taxes. ~~Currently,~~ weAs ~~conduct~~a ~~our~~result ~~operations~~of ~~principally~~the ~~in five segments – Seismic Services~~implementation, ~~Fluid~~management ~~and~~assessed ~~Transportation~~its ~~Services,~~various ~~Environmental~~income ~~Services,~~tax ~~Equipment~~positions; ~~Leasing,~~this ~~and~~assessment ~~Other~~resulted ~~Services,~~in ~~all~~no ofadjustment ~~which~~to ~~operate~~the ~~exclusively~~tax inasset ~~North~~or ~~America~~liability. ~~The~~ ~~Seismic~~We ~~Services~~will ~~segment~~account isfor ~~comprised~~interest ofand ~~three~~penalties ~~divisions~~relating –to ~~Drilling,~~uncertain ~~Survey~~tax ~~and~~positions ~~Permitting.~~in ~~All~~the ~~remaining~~current ~~assets,~~period ~~primarily~~income ~~our~~statement ~~corporate~~as ~~offices,~~part ~~warehouses~~of ~~and~~the ~~underlying~~provision ~~real~~for ~~estate~~income taxes, ~~also~~as ~~are located in North America~~necessary. The ~~segment~~2004, ~~classified as~~2005, ~~corporate includes all other operating activities to support the executive offices~~2006, ~~capital~~2007 ~~structure~~ and ~~costs~~2008 oftax ~~being~~years aremain ~~public~~subject ~~registrant. These costs are not allocated~~ to examination ~~the business segments~~ by ~~management~~various ~~when~~federal, ~~determining~~state ~~segment~~and ~~profit~~foreign ~~or loss~~tax jurisdictions.

~~Drilling~~NOTE ~~revenue is derived primarily from drilling and loading of the source points for seismic analysis~~9. ~~Survey~~RELATED ~~revenue~~PARTY isTRANSACTIONS recorded after the customer has determined the placement of source and receiving points, and after survey crews are sent into the field to plot each source and receiving point prior to drilling. Permitting revenue is derived from services provided in conjunction with obtaining permits from landowners. Transportation revenues are billed by the hour, load or barrel. Environmental revenue is earned from tank,

On May 17, 2005, we entered into a Securities Purchase Agreement with certain of our affiliates and executive officers to issue up to $5.0 million of Series C Preferred in conjunction with the completion of a term loan. Our Series C Preferred is convertible into our common stock at a conversion price of $1.95 per share and includes detachable warrants to purchase up to 6,550,000 additional shares of our common stock at exercise prices ranging between $1.95 and $3.50 per share. The transactions contemplated by the Securities Purchase Agreement closed in two tranches. On May 17, 2005, we issued an aggregate of 3,500 shares of Series C Preferred and warrants to acquire 4,585,000 shares of our common stock, in exchange for $3.5 million. On August 29, 2005, the remainder of the Series C Preferred and warrants were issued generating proceeds of $1.5 million and we granted the remaining 1,965,000 warrants.

The prior term loan agreement and senior credit facility restricted the payment of cash dividends. Consequently, a portion of the 9% dividend obligation related to the Series C Preferred were satisfied through the issuance of payment-in-kind (“PIK”) dividends. The PIK dividends were paid through the issuance of additional shares of Series C Preferred. These additional shares of preferred stock did not have warrants attached to them. During the year ended December 31, 2007, 256 shares of Series C Preferred were issued as PIK dividends at par. Effective April 29, 2007, the loan and security agreement governing the Term Loan was amended to remove the restriction on cash dividend payments on the preferred equity shares, provided we had sufficient availability under our Revolver and were in compliance with all other covenants. Consequently, the accrued dividends since April 2007 have been paid in cash, $0.1 million for each of the three month periods ended March 31, 2009 and 2010.

NOTE 10. SUBSEQUENT EVENTS

On May 6, 2010, the parties to the Petition for Declaratory Judgment reached a settlement with respect to the payment of the final installment of the Cypress Note. We paid to the claimants named in the Petition for Declaratory Judgment a total of $0.8 million and agreed to assume liabilities of $0.2 million. We received from all claimants, a release of any and all claims for amounts due under the Cypress Note. The settlement also provided for the resolution of the matters involving accounts receivable retention, sub-lease obligations and advances in our relationship with Cypress.

On May 6, 2010, certain holders of the Series C Preferred exercised a total of 3,897,550 warrants with an exercise price of $1.95 on a cashless basis. As a result of the cashless exercise, the Company issued 1,267,716 shares of common stock. Additionally, on the same day, 100,000 warrants with an exercise price of $1.95 were exercised for cash resulting in an additional 100,000 shares of common stock being issued and the Company receiving cash of approximately $0.2 million.

On June 3, 2010, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Wellspring OMNI Holdings Corporation, a Delaware corporation (“Parent”), and Wellspring OMNI Acquisition Corporation, a Delaware corporation and wholly-owned subsidiary of Parent (“Acquisition”), providing for the merger of Acquisition with and into the Company, with the Company surviving the merger (the “Merger”) as a subsidiary of Parent. Parent and Acquisition are affiliates of Wellspring Capital Management LLC (“Wellspring Capital”), a middle market private equity firm. Each outstanding share of common stock of the Company (other than treasury shares, shares held by Parent and Acquisition and any of their subsidiaries, shares with respect to which dissenters rights are properly exercised and shares held by our Chief Executive Officer, Chairman of the Board and one other director on our Board of Directors) will be cancelled and converted into the right to receive $2.75 per share in cash (the “Merger Consideration”). Completion of the Merger is subject to (i) approval of the Merger by the shareholders of the Company, (ii) applicable regulatory approvals, including the termination or expiration of the applicable waiting period (and any extensions thereof) under the U.S. Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), and (iii) other customary closing conditions. On August 2, 2010, the Federal Trade Commission granted early termination of the waiting period under the HSR Act.

Effective June 30, 2010, we acquired all of the outstanding common stock of Keeton Services, Inc. and Griswold Management, Inc. (“Keeton”) pursuant to a Purchase and Sale Agreement (the “Keeton Purchase Agreement”). Subject to the terms and conditions of the Keeton Purchase Agreement, consideration was approximately $3.5 million, including $1.75 million in cash and $1.75 million in a 6% promissory note payable to the former owners. Keeton provides completion fluids to various customers.

On August 24, 2010, a holder of the Series C Preferred exercised 115,200 warrants with an exercise price of $1.95 on a cashless basis. As a result of the cashless exercise, the Company issued 32,307 shares of common stock.

vessel and rig pit cleaning. Equipment leasing revenue is derived from the rental of various pieces of oilfield equipment to offshore and land-based oil production rigs. Other services revenue is comprised of metal stress relieving, wellhead installation and offshore painting and blasting services.

The following table shows segment information (net of intercompany transactions) for the three months and nine months ended September 30, 2009 and 2008 (in thousands):

Three Months Ended September 30,	SeismicServices		Fluid andTransportationServices (1)			EnvironmentalServices		EquipmentLeasing			OtherServices		Corporate			Total
(in thousands)
2009
Operating revenues	$	8,731	$	6,325		$	6,736	$	5,515		$	1,052	$	—		$	28,359
Operating income (loss)		989		98			1,270		(557	)		88		(2,154	)		(266	)
Interest expense		16		67			14		83			—		511			691
Depreciation and amortization		231		880			511		1,595			74		74			3,365
Identifiable assets		17,657		29,345			15,806		59,154			2,045		12,207			136,214
Goodwill		2,006		—			2,251		4,357			—		—			8,614
Capital expenditures		26		(122	)		445		16			190		2			557
2008
Operating revenues	$	19,592	$	11,470		$	6,654	$	12,608		$	2,960	$	—		$	53,284
Operating income (loss)		4,582		2,722			708		2,241			833		(2,952	)		8,134
Interest expense		30		106			6		112			—		1,264			1,518
Depreciation and amortization		438		753			499		1,750			68		112			3,620
Identifiable assets		31,211		41,161			16,125		83,482			3,722		17,218			192,919
Goodwill		2,006		5,340			2,251		13,706			—		—			23,303
Capital expenditures		119		580			301		2,009			—		71			3,080
Nine Months Ended September 30,	SeismicServices		Fluid andTransportationServices (1)			EnvironmentalServices		EquipmentLeasing (2)			OtherServices		Corporate			Total
(in thousands)
2009
Operating revenues	$	30,754	$	19,241		$	22,333	$	19,938		$	3,598	$	—		$	95,864
Operating income (loss)		4,751		729			4,753		(776	)		160		(6,003	)		3,614
Interest expense		50		217			24		265			—		1,858			2,414
Depreciation and amortization		697		2,599			1,612		4,801			210		226			10,145
Identifiable assets		17,657		29,345			15,806		59,154			2,045		12,207			136,214
Goodwill		2,006		—			2,251		4,357			—		—			8,614
Capital expenditures		258		162			600		553			262		14			1,849
2008
Operating revenues	$	54,284	$	27,728		$	20,765	$	31,669		$	8,719	$	—		$	143,165
Operating income (loss)		10,522		4,397			2,734		3,308			2,017		(8,475	)		14,503
Interest expense		101		311			20		1,076			5		3,718			5,231
Depreciation and amortization		1,465		2,337			1,434		3,944			266		330			9,776
Identifiable assets		31,211		41,161			16,125		83,482			3,722		17,218			192,919
Goodwill		2,006		5,340			2,251		13,706			—		—			23,303
Capital expenditures		266		2,021			1,311		5,724			247		117			9,686

(1) The fluid services began with the acquisition of BEG in January 2008.

(2) The Equipment Leasing segment includes the provision for the settlement of the Siemens litigation in the amount of $2.4 million in the first quarter of 2008. Additionally, interest expense in that segment includes approximately $0.7 million of judicial interest related to the Siemens litigation in the same period.

NOTE 7. INCOME TAXES

We account for income taxes under the provisions of ASC 740, “Income Taxes” (“ASC 740”), which requires recognition of future tax benefits (temporary differences), subject to a valuation allowance based on a more-likely-than-not criteria that such asset will be realized. In determining whether it is more-likely-than-not that we will realize such tax asset, ASC 740 requires that all negative and positive evidence be considered (with more weight given to evidence that is “objective and verifiable”) in making the determination. We recorded income tax expense of $3.7 million and $0.9 million for the nine months ended September 30, 2008 and 2009, respectively.

On January 1, 2007, we adopted and implemented ASC 740 as it relates to uncertainties in income taxes. As a result of this implementation, management assessed its various income tax positions; this assessment resulted in no adjustment to the tax asset or liability. We will account for interest and penalties relating to uncertain tax positions in the current period income statement as part of the provision for income taxes, as necessary. The 2004, 2005, 2006, 2007 and 2008 tax years remain subject to examination by various federal, state and foreign tax jurisdictions.

NOTE 8. RELATED PARTY TRANSACTIONS

The prior term loan agreement and senior credit facility restricted the payment of cash dividends. Consequently, a portion of the 9% dividend obligation related to the Series C Preferred was satisfied through the issuance of PIK dividends. The PIK dividends were paid through the issuance of additional shares of Series C Preferred. These additional shares of preferred stock did not have warrants attached to them. During the year ended December 31, 2007, 256 shares of Series C Preferred were issued as PIK dividends at par. Effective April 29, 2007, the loan and security agreement governing the term loan was amended to remove the restriction on cash dividend payments on the Series C Preferred, provided we had sufficient availability under our Revolver and were in compliance with all other covenants. Consequently, the accrued dividends since April 2007 have been paid in cash, $0.1 million and $0.4 million, and $0.0 million and $0.4 million for the three and nine month periods ended September 30, 2008 and 2009, respectively.

In connection with the purchase of Preheat in February 2006, we issued the Preheat Notes. The Preheat Notes consist of three separate notes with $2.7 million maturing in February 2008 and $1.3 million maturing in February 2009. The Preheat Retention Note was tied to the retention of certain employees who joined the Company at the time of the acquisition of Preheat. Upon the maturity of the Preheat Retention Note, $0.15 million was paid to employees who had completed three years of uninterrupted service with the Company in accordance with an agreement executed in connection with the Preheat Retention Note. At December 31, 2008 and September 30, 2009, the Preheat Notes had a balance of $4.0 million and $3.85 million, respectively. In February 2008, we terminated the employment of one of the Preheat stockholders for cause, and the other Preheat stockholder subsequently resigned. The terms of the Preheat Notes provide that a termination for cause or resignation of either of the Preheat stockholders’ employment results in the cancellation of the promissory notes, other than those payments due to certain employees under the Preheat Retention Note. The Preheat stockholders have contested our assertion and filed a lawsuit against the Company. As mentioned in Note 4, we received a favorable judgment in Federal court on June 23, 2009 dismissing the federal law claims related to securities transactions. The possibility remains that some of the state law claims will be brought again in state court. Consequently, the Preheat Notes remain recorded as a liability in the financial statements pending resolution of the matter.

In connection with the acquisition of Holston in March 2007, we issued the Holston Notes. The Holston Notes consist of three separate notes with $1.0 million maturing in February 2008, $2.0 million maturing in February 2009 and $2.0 million maturing in February 2010. The Holston Notes maturing in 2009 and 2010 are convertible into shares of our common stock at a price of $9.24 per share. Based upon the stock valuation at the time of issuance, no beneficial conversion feature existed. At December 31, 2008 and September 30, 2009, the Holston Notes had a balance of $4.0 million and $2.0 million, respectively. In conjunction with the acquisition of Holston, we acquired a receivable from an entity owned by the former shareholders of Holston who are now our employees. This receivable had a balance at December 31, 2008 and September 30, 2009 in the amount of $0.2 million and $0.1 million, respectively.

In connection with the acquisition of certain assets of Cypress in February 2007, we issued the Cypress Note to the former owner who is now our employee. The Cypress Note is payable over three years with $1.0 million maturing in February 2008, $1.0 million maturing in February 2009 and $1.0 million maturing in February 2010. In November 2008, as an accommodation to the holder of the note, we paid the $1.0 million due in February 2009 in exchange for a discounted payment by $0.1 million. This discount was

reflected as a gain on early extinguishment of debt in the financial statements in 2008. At December 31, 2008 and September 30, 2009, the Cypress Note had a balance of $1.0 million.

In connection with the acquisition of certain assets of BOI in June 2007, we issued the Bailey Note to the former owner who is now our employee. The Bailey Note is payable on or before May 31, 2010. At December 31, 2008 and September 30, 2009, the Bailey Note had a balance of $0.5 million.

In connection with the acquisition of certain assets of BEG in January 2008, we issued the BEG Notes to certain shareholders of BEG, two of whom are now our employees. The BEG Notes are payable over three years with $1.3 million maturing in January 2009, $1.3 million maturing in January 2010 and $1.4 million maturing in January 2011 and are convertible into shares of our common stock at a price of $3.70 per share under certain circumstances. Based upon the stock valuation at the time of the issuance, no beneficial conversion feature exists. At December 31, 2008 and September 30, 2009, the BEG Notes had a balance of $4.0 million and $2.7 million, respectively.

In connection with the acquisition of Industrial Lift in April 2008, we issued the ILT Notes to a shareholder of Industrial Lift who is now our employee. The ILT Notes are payable over three years with $2.0 million maturing in April 2009, $1.0 million maturing in April 2010 and $0.5 million maturing in April 2011. The ILT Notes bear interest at a rate of 5% per annum payable in arrears and are convertible into shares of our common stock at a price of $10.50 per share under certain circumstances. Based upon the stock valuation at the time of the issuance, no beneficial conversion feature exists. An additional note in the amount of $0.5 million, which is non-convertible and non-interest bearing, matures in April 2011. An agreement was reached with the former shareholder of Industrial Lift whereby $0.5 million of the scheduled principal payment due in April 2009 was paid in cash and $0.3 million of the obligation was satisfied through the issuance of 233,333 shares of our common stock valued at $0.3 million. Additionally, $0.4 million was deposited into an irrevocable trust with a maturity date in April 2010. At December 31, 2008 and September 30, 2009, the ILT Notes had a balance of $4.0 million and $3.2 million, respectively.

NOTE 9. SUBSEQUENT EVENT

On November 13, 2009, we entered into the Fourth Amendment and Waiver to Loan Agreement (the “Amendment”) to the Senior Credit Facility. The Amendment grants a waiver of the fixed charge coverage ratio covenant violation at September 30, 2009 and each and every Event of Default (as defined in the Senior Credit Facility) arising solely from the violation. In addition, the Amendment includes the following additional modifications to the Senior Credit Facility: (i) the interest rate was adjusted to a rate equal to the greater of the applicable one month LIBOR rate or 1.0% to be set at the beginning of each calendar month plus an additional margin of 4.50% with respect to the Term Loan and an additional margin of 4.00% with respect to the Revolver; (ii) the total commitment under the Senior Credit Facility was adjusted to $56.0 million, reflecting principal payments made since the Term Loan’s inception and reducing the limit on the Revolver to $20.0 million; (iii) the fixed charge coverage ratio on the Senior Credit Facility was modified to reflect a requirement of .90 to 1.00 for the twelve month period ending December 31, 2009 and June 30, 2010, 1.00 to 1.00 for the twelve month periods ending March 31, 2010, September 30, 2010, and December 31, 2010, and 1.10 to 1.00 for the twelve month periods ending March 31, 2011, June 30, 2011, September 30, 2011, and December 31, 2011; and (iv) the leverage ratio was modified to reflect a requirement of 3.00 to 1.00 for the twelve month periods ending December 31, 2009, March 31, 2010, June 30, 2010 and September 30, 2010 and 2.50 to 1.00 for each twelve month period ending on March 31st, June 30th, September 30th or December 31st thereafter.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s Discussion and Analysis of Financial Condition and Results of Operations contains certain “forward looking statements” within the meaning of Section 27A of the Securities Act of 1933 (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”), which reflect management’s best judgment based on factors currently known. Actual results could differ materially from those anticipated in these “forward looking statements” as a result of a number of factors, including but not limited to those discussed under the heading “Forward-Looking Statements.” “Forward looking statements” provided by us pursuant to the safe harbor established by the federal securities laws should be evaluated in the context of these factors.

This discussion should be read in conjunction with the financial statements and the accompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K/A, for the year ended December 31, ~~2008~~2009 filed with the Securities and Exchange Commission on ~~March~~August 1326, ~~2009~~2010.

RECENT DEVELOPMENTS

On November 13, 2009, we entered into the Fourth Amendment and Waiver to Loan Agreement (the “Amendment”) to the Senior Credit Facility. The Amendment grants a waiver of the fixed charge coverage ratio covenant violation at September 30, 2009 and each and every Event of Default (as defined in the Senior Credit Facility) arising solely from the violation. In addition, the Amendment includes the following additional modifications to the Senior Credit Facility: (i) the interest rate was adjusted to a rate equal to the greater of the applicable one month LIBOR rate or 1.0% to be set at the beginning of each calendar month plus an additional margin of 4.50% with respect to the Term Loan and an additional margin of 4.00% with respect to the Revolver; (ii) the total commitment under the Senior Credit Facility was adjusted to $56.0 million, reflecting principal payments made since the Term Loan’s inception and reducing the limit on the Revolver to $20.0 million; (iii) the fixed charge coverage ratio on the Senior Credit Facility was modified to reflect a requirement of .90 to 1.00 for the twelve month period ending December 31, 2009 and June 30, 2010, 1.00 to 1.00 for the twelve month periods ending March 31, 2010, September 30, 2010, and December 31, 2010, and 1.10 to 1.00 for the twelve month periods ending March 31, 2011, June 30, 2011, September 30, 2011, and December 31, 2011; and (iv) the leverage ratio was modified to reflect a requirement of 3.00 to 1.00 for the twelve month periods ending December 31, 2009, March 31, 2010, June 30, 2010 and September 30, 2010 and 2.50 to 1.00 for each twelve month periods ending on March 31st, June 30th, September 30th or December 31st thereafter.

FORWARD-LOOKING STATEMENTS

Certain of the statements contained in all parts of this document (including the portion, if any, to which this Form 10-Q is attached), including, but not limited to, those relating to our acquisition plans, the effect of changes in strategy and business discipline, future tax matters, future general and administrative expenses, future growth and expansion, expansion of our operations, review of acquisitions, expansion and improvement of our capabilities, integration of new technology into operations, credit facilities, redetermination of our borrowing base, attraction of new members to the management team, future compensation programs, new alliances, future capital expenditures (or funding thereof) and working capital, sufficiency of future working capital, borrowings and capital resources and liquidity, projected rates of return, timely conversion of backlog into revenue, retained earnings and dividend policies, projected cash flows from operations, future, outcome, effects or timing of any legal proceedings or contingencies, the impact of any change in accounting policies on our financial statements, realization of post-closing price adjustments with respect to the recent acquisitions, management’s assessment of internal control over financial reporting, the identification of material weaknesses in internal control over financial reporting and any other statements regarding future operations, financial results, opportunities, growth, business plans and strategy and other statements that are not historical facts are forward looking statements. These forward-looking statements reflect our current view of future events and financial performance. When used in this document, the words “budgeted,” “anticipate,” “estimate,” “expect,” “may,” “project,” “believe,” “intend,” “plan,” “potential,” “forecast,” “might,” “predict,” “should” and similar expressions are intended to be among the statements that identify forward-looking statements. These forward-looking statements speak only as of their dates and should not be unduly relied upon. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. Such statements involve risks and uncertainties, including, but not limited to, those set forth under ITEM 1A. “RISK FACTORS” and other factors detailed in our Form 10-K for the year ended December 31, 2009 filed on March 31, 2010 and our other filings with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those indicated. All subsequent written and oral forward-looking statements attributable to us or to persons acting on our behalf are expressly qualified in their entirety by reference to these risks and uncertainties.

accounting policies on our financial statements, realization of post-closing price adjustments with respect to the recent acquisitions, management’s assessment of internal control over financial reporting, the identification of material weaknesses in internal control over financial reporting and any other statements regarding future operations, financial results, opportunities, growth, business plans and strategy and other statements that are not historical facts are forward looking statements. These forward-looking statements reflect our current view of future events and financial performance. When used in this document, the words “budgeted,” “anticipate,” “estimate,” “expect,” “may,” “project,” “believe,” “intend,” “plan,” “potential,” “forecast,” “might,” “predict,” “should” and similar expressions are intended to be among the statements that identify forward-looking statements. These forward-looking statements speak only as of their dates and should not be unduly relied upon. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. Such statements involve risks and uncertainties, including, but not limited to, those set forth under ITEM 1A. “RISK FACTORS” and other factors detailed in our Form 10-K for the year ended December 31, 2008 filed on March 13, 2009 and our other filings with the SEC. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those indicated. All subsequent written and oral forward-looking statements attributable to us or to persons acting on our behalf are expressly qualified in their entirety by reference to these risks and uncertainties.

GENERAL

We were founded in 1987, as OMNI Drilling Corporation, to provide drilling services to the geophysical industry. In July 1996, OMNI Geophysical, L.L.C. acquired substantially all of the assets of OMNI Geophysical Corporation, the successor to the business of OMNI Drilling Corporation. OMNI Energy Services Corp. (“OMNI”) was formed as a Louisiana corporation on September 11, 1997 to acquire all of the outstanding common units of OMNI Geophysical, L.L.C.

We are an integrated oilfield service company specializing in providing a range of (i) onshore seismic drilling, operational support, permitting, and survey services,; (ii) ~~dockside~~dock-side and offshore hazardous and non-hazardous oilfield waste management and environmental cleaning services, including tank and vessel cleaning and safe vessel entry; drilling ~~for~~fluid transportation ~~oil~~ and ~~gas~~disposal ~~companies~~services; other ~~operating~~specialized ~~primarily~~services insuch ~~the~~as ~~Gulf~~metal ofstress ~~Mexico~~relieving, ~~(iii) drilling~~environmental ~~fluid~~pit ~~transportation~~cleaning, wellhead preheating and ~~disposal~~wellhead ~~services,~~installation and (iviii) ~~a large fleet of~~ oilfield equipment rental, for oil and gas companies operating in the Gulf of Mexico, the Rocky Mountain region and ~~the~~ prolific shale regions in the South Central United States, and ~~(v) other~~the ~~specialized~~Appalachian ~~services~~Region. ~~such~~At ~~as metal stress relieving~~March 31, ~~offshore cleaning~~2010, ~~and~~we ~~wellhead~~operated ~~reheating and installation. We operate~~ in ~~five~~three business segments: —Seismic Services ~~(which includes seismic drilling~~, ~~permitting and survey services),~~ Environmental ~~Services, Equipment Leasing, Fluid~~ and ~~Transportation Services and~~ Other Services ~~(which includes metal stress relieving~~, ~~offshore cleaning~~ and ~~blasting~~Equipment ~~and wellhead installations)~~Leasing. For information about the revenues, operating income (loss) and other financial information relating to the segments, see Note 67 to our Consolidated Financial Statements.

~~EXECUTIVE~~17 ~~OVERVIEW~~

In the immediate past, we have been very active in acquiring companies which we believe are well aligned with our Company philosophy. The companies acquired have been complementary to our core business segments. We plan to diversify into other service lines and other service areas through additional acquisitions as opportunities arise that we believe fit into our overall business strategy. Additionally, we have begun an organic growth initiative to expand into other energy production areas such as geothermal energy as well as geographic migration into the Marcellus Shale region of the northeastern United States.

We continue to maintain a large and visible presence along the coast of Louisiana to service our customers in the offshore exploration and production markets. While the offshore rig counts in the Gulf of Mexico have fallen, we feel that there is still adequate activity in the area to allow us to remain profitable in that region.

We anticipate that the Rocky Mountain region will continue to be an active area in terms of natural gas exploration. During 2006, we opened an equipment leasing location in Rock Springs, Wyoming to allow us to establish a presence in the Rocky Mountain region. In conjunction with the acquisition of Holston, we were able to expand our visibility in the Rocky Mountains with the addition of an additional equipment leasing location in Vernal, Utah. While the rig count has declined during the past two quarters, we are still active in the region and consider the geographical area to be a good long-term marketing opportunity for our company.

The Haynesville Shale region in East Texas and Northern Louisiana also appears to be an active area in terms of oil and gas exploration and production. Our acquisition of Rig Tools in November 2006 and Industrial Lift in April 2008 allowed us to position ourselves in some of the more prolific shale regions to take advantage of the anticipated growth in those geographical areas. It is our intention to continue to expand into areas that we feel are beneficial to the growth and well-being of the Company.

~~The~~EXECUTIVE ~~Marcellus~~OVERVIEW Shale region in the northeastern United States is perhaps the most significant active shale play in the country and we estimate that less than 5% of the terrain has had 3D seismic data acquired creating a significant potential demand for our Seismic Services segment. During the quarter, we were awarded our first seismic job in the region and anticipate additional opportunities to grow in that segment as well as our other service segments.

Our business is driven by the supply and demand of hydrocarbon commodities in the United States and, to a certain extent, the international markets. Virtually all of our customers are involved in the exploration and/or production of oil and natural gas in the continental United States and the coastal waters of the Gulf of Mexico. Not surprisingly, a higher demand for oil and gas results in a higher demand for our equipment and services. We experienced a slight reduction in Seismic Services in the first quarter of 2010 related to weather and permitting issues and a general slowdown in the exploration activity in the market areas in which we operate. As the economy has shown signs of recovery and the land-based rig count has increased, we have seen an increase in opportunities in the shale plays in the areas in which we operate. Increased activity in the Haynesville Shale area has led to increased demand for items in our equipment rental fleet. Additionally, the increase in rig count has expanded our opportunities in the environmental services sector of our business.

In the past, we have been very active in acquiring companies which we believe are well aligned with our Company philosophy. We plan to expand our presence in the environmental services industry in the markets in which we serve through organic growth and through additional acquisitions as such opportunities arise that we believe fit into our overall business strategy.

We continue to maintain a large and visible presence along the coast of Louisiana to service our customers in the offshore exploration and production markets. While the offshore rig counts in the Gulf of Mexico have fallen in recent years and remain stagnant into 2010, we feel that there is still adequate activity in the area to allow us to remain profitable in that region.

Our acquisitions have allowed us to expand our operations into what currently appear to be more prolific areas of activity, such as the Rocky Mountains and prolific shale regions in the South Central United States. Additionally, we have expanded organically into the Marcellus Shale area in the northeast United States with our seismic services and equipment leasing operations.

We anticipate that the Haynesville, Eagle Ford and Marcellus Shale regions will continue to be a very active area in terms of natural gas exploration. Additionally, the Rocky Mountains have shown increased activity and we are currently expanding our equipment leasing operations into the Bakken Shale region in North Dakota.

Seismic Services.

The ~~principal~~ market offor our Seismic Services segment is ~~the~~South ~~marsh,~~Central ~~swamp,~~United ~~shallow~~States ~~water~~as ~~and~~well ~~contiguous~~as ~~dry~~the ~~land~~Appalachian ~~areas~~Region ~~along~~in the ~~Gulf~~Northeast ~~of Mexico (the~~United ~~“Transition~~States. ~~Zone”)~~Additionally, ~~primarily in Louisiana and Texas, where~~ we believe we are ~~the~~a leading provider of seismic drilling support services. Inin ~~addition~~the marsh, weswamp, ~~have~~shallow ~~seismic~~water ~~services~~and ~~operations~~contiguous indry ~~the~~land ~~mountainous~~areas ~~regions~~along the Gulf of Mexico (the ~~Western~~“Transition ~~United~~Zone”), primarily in Louisiana and ~~States~~Texas.

We own and operate a fleet of specialized seismic drilling and transportation equipment for use in the Transition Zone. We believe we are the only ~~domestic~~ company that currently can both provide an integrated range of seismic drilling, permitting, and survey services in all of the varied terrain of the Transition Zone and simultaneously support operations for multiple, large-scale seismic projects. ~~With the acquisition of all of the assets of AirJac Drilling, a division of Veritas Land DGC, we became the largest domestic provider of seismic drilling services to geophysical companies.~~

~~Environmental~~In March 2007, we acquired certain assets of Cypress Consulting Services, Inc. d/b/a Cypress Energy Services (“Cypress”), thereby expanding our fleet of seismic drilling equipment and allowing us to better serve the needs of our seismic drilling customers. The entirety of the operations related to the assets purchased from Cypress are included in our Seismic Services segment.

WeEnvironmental ~~provide dock-side~~ and ~~offshore~~Other hazardous and non-hazardous oilfield waste management and environmental cleaning services, including drilling rig, tank and vessel cleaning, safe vessel entry, naturally occurring radioactive material (“NORM”) decontamination, platform abandonment services, pipeline flushing, gas dehydration, and hydro blastingServices. Demand for our dock-side vessel and tank cleaning and non-hazardous waste treatment businesses are primarily driven by drilling and well-site abandonment activity in the shallow waters of the Gulf of Mexico, as reflected by the drilling rig count. Much of the cleaning and waste treatment is from residual waste created in the drilling process.

InWe ~~March~~provide ~~2007,~~specialized weenvironmental ~~completed~~cleaning ~~the~~and ~~acquisition~~maintenance ofequipment ~~Holston.~~and ~~This~~trained ~~acquisition~~personnel ~~provided~~to usoil ~~with~~and ~~additional~~gas ~~opportunities~~companies tooperating ~~expand~~in ~~our~~the Gulf ~~Environmental~~Coast ~~Services segment~~region ~~with~~of ~~corrosion~~the ~~proofing~~United States. Our services include dock-side and offshore ~~cleaning~~hazardous ~~capabilities.~~and ~~Additionally,~~non-hazardous weoilfield ~~provide~~waste ~~NORM~~management ~~surveys,~~and environmental cleaning services, including drilling rig, tank and ~~waste~~vessel ~~disposal;~~cleaning (tank degassing and demolition; and rig pit cleaning;), ~~oilfield~~safe ~~waste~~vessel ~~disposal;~~entry, naturally occurring radioactive material (“NORM”) decontamination and surveys, platform abandonment services, pipeline flushing, gas dehydration, hydro blasting;, ~~dockside~~and offshore sandblasting and painting. We also assist production operators in the maintenance and replacement of anodes, mist extractors, valves, glycol systems, chemical electric units and fire tubes. Demand for environmental services is directly impacted by offshore drilling and production activity in the Gulf of Mexico. Our dock side services are dependent upon the movement of vessels from offshore production platforms or drilling rigs which operate non-stop throughout the year, and demand for our dock-side vessel and tank cleaning; and ~~offshore~~non-hazardous ~~sandblasting~~waste treatment businesses are primarily driven by drilling and ~~painting~~well-site abandonment activity in the waters of the Gulf of Mexico, as reflected by the drilling rig count. Much of the cleaning and waste treatment is from residual waste created in the drilling process.

In March 2007, we acquired BMJ Industrial Investments, L.L.C. and its wholly-owned subsidiary Charles Holston, Inc. (collectively “Holston”). This acquisition provided us with additional opportunities to expand our Environmental and Other Services segment with corrosion proofing and offshore cleaning capabilities. Through Holston we also expanded our transportation services to include vacuum truck, winch truck, roll-off truck and flat bed services supporting both drilling and production. Holston also offers transportation of non-hazardous by-products, such as saltwater and spent drilling fluids. Holston originally operated two saltwater disposal wells for the disposal of non-hazardous by-products.

In June 2007, we acquired certain assets of Bailey Operating, Inc. (“BOI”), which geographically extended our core businesses into the Barnett Shale region in North Texas. These assets included an additional saltwater disposal well for the disposal of non-hazardous by-products. Not only did we acquire an exceptional facility for the disposal of non-hazardous oilfield waste by-products, the acquisition also established a platform for further geographic expansion of our core businesses. We have expanded our Environmental and Other Services and Equipment Leasing operations into the Barnett Shale region. We have also expanded our operations into the Haynesville Shale and Fayetteville Shale areas.

In January 2008, we acquired the assets of B.E.G. Liquid Mud Services Corp. (“BEG”), which was an extension of our fluid transportation services and our land-based equipment leasing operations. It allows us to better serve our customers by offering drilling support packages including the supply of drilling fluids, chemicals, storage, mixing and fluid pumping services as well as fluid trucking, recycling, tank cleaning and disposal services. Through Holston, we currently handle the transportation of oilfield drilling and production fluids in Louisiana. The acquisition of BEG strategically positions us for further geographic expansion of these services and also extends our transportation and land-based equipment leasing operations into the southern regions of the Barnett Shale and into East Texas. Additionally, we believe we will be able to capitalize on our existing customer relationships to geographically expand BEG’s fluid service distribution facilities into other prolific onshore regions of the United States.

The acquisition of Preheat, Inc. (“Preheat”) in February 2006 allowed us to offer additional services, including wellhead installation services and metal stress relieving services, to our customers in the Gulf of Mexico and southern United States.

With our acquisitions of Preheat, Rig Tools, Holston, and Industrial Lift we have expanded the list of equipment and services that we offer to customers operating in the Gulf of Mexico and Rocky Mountain regions and the prolific Barnett, Haynesville, Fayetteville and Marcellus Shale regions. Our Equipment Leasing segment has customer lists including virtually all of the major and independent oil and gas companies operating in the Gulf of Mexico and the Rocky Mountains and the prolific shale plays in the United States.

Equipment Leasing.

Through our subsidiaries Preheat, Rig Tools and Holston, we provide rental equipment for various oilfield and commercial applications including pressure washers, steam cleaners, water, mud and disposal pumps; mud, fuel and frac tanks; air compressors; wireline units; generators; high pressure washers; light towers; tubing; and handling tools.

~~The~~Rental ~~April~~equipment ~~2008~~is ~~acquisition~~charged ofon ~~Industrial~~a ~~Lift~~daily ~~allowed~~basis. usOur ability to ~~further~~successfully ~~expand~~secure ~~the~~and ~~line~~maintain offuture ~~products~~rental ~~that~~and weservice ~~provide~~opportunities with ~~for~~Preheat ~~lease~~customers ~~into~~is ~~specialized~~dependent ~~lifting~~upon ~~units~~our ~~such~~ability asto ~~industrial~~continue ~~forklifts~~to ~~and~~provide ~~manlifts.~~high-quality, ~~Industrial~~dependable ~~Lift~~rental ~~has~~equipment ~~operating~~and ~~facilities~~reliable ~~in Broussard,~~services ~~Louisiana~~to ~~and~~these ~~Lincoln,~~customers ~~Texas~~at a competitive price.

~~Fluid~~The April 2008 acquisition of Industrial Lift Truck and ~~Transportation~~Equipment ~~Services~~Co., Inc. (“Industrial Lift”) allowed us to further expand the line of products that we provide for lease into specialized lifting units such as industrial forklifts and manlifts. Industrial Lift has operating facilities in Broussard, Louisiana and Lincoln, Texas.

Through Holston, we offer transportation of non-hazardous byproducts, such as saltwater and spent drilling fluids. Holston also operates three saltwater disposal wells for the disposal of non-hazardous byproducts.

In June 2007, we acquired certain assets of Bailey Operating, Inc., which geographically extended our core businesses into the Barnett Shale region in North Texas. These assets included an additional saltwater disposal well for the disposal of non-hazardous byproducts. Not only did we acquire an exceptional facility for the disposal of non-hazardous oilfield waste by-products, the acquisition also established a platform for further geographic expansion of our core businesses. We have expanded our fluid and transportation services and equipment leasing operations into the Barnett Shale region. We have also expanded our operations into the Haynesville Shale and Fayetteville Shale areas.

In January 2008, we acquired the assets of B.E.G. Liquid Mud Services Corp., which was an extension of our fluid and transportation services and our land-based equipment leasing operations. It allows us to better serve our customers by offering a drilling support package including the supply of drilling fluids, chemicals, storage, mixing and fluid pumping services as well as fluid trucking, recycling, tank cleaning and disposal services. Through Holston, we currently handle the transportation of oilfield drilling and production fluids in Louisiana. Our land-based equipment leasing operation through Rig Tools has been primarily focused on drilling equipment rental in Louisiana and Central Texas. The acquisition of BEG strategically positions us for further geographic expansion of these services and also extends our transportation and land-based equipment leasing operations into the southern regions of the Barnett Shale and into East Texas. Additionally, we believe we will be able to capitalize on our existing customer relationships to geographically expand BEG’s fluid service distribution facilities into other prolific onshore regions of the United States.

Other Services.

The acquisition of Preheat allowed us to offer additional services to our customers including wellhead installation, metal stress relieving services and environmental pit cleaning.

All of our operations are subject to seasonal variations in weather conditions and available daylight hours. Since our drilling and environmental activities take place outdoors, on average we experience lower production in winter months than in summer months, due to an increase in rain, fog, and cold conditions and a decrease in daylight hours. These winter conditions also generally result in fewer hours worked per day and fewer holes drilled or surveyed per day during that season.

Critical Accounting Policies and Estimates

The preparation of our consolidated financial statements in conformity with U.S. GAAP requires the use of estimates and assumptions that affect the reported amount of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, and provide a basis for making judgments about the carrying value of assets and liabilities that are not readily available through open market quotes. Estimates and assumptions are reviewed periodically, and actual results may differ from those estimates under different assumptions or conditions. We must use our judgment related to uncertainties in order to make these estimates and assumptions.

For a description of our critical accounting policies and estimates as well as certain sensitivity disclosures related to those estimates, see our Annual Report on Form 10-K for the year ended December 31, ~~2008~~2009. Our critical accounting policies and estimates have not changed materially during the ~~nine~~quarter ~~months~~ ended ~~September~~March 3031, ~~2009~~2010.

RESULTS OF OPERATIONS

	Three Months EndedSeptember 30,						Nine Months EndedSeptember 30,
	Three Months EndedMarch 31,
	2008			2009			2008			2009
	2009			2010
	(in thousands, except per share amounts)
	(in thousands)
Operating revenue
	(Restated)
Services	$	40,676		$	22,844		$	111,496		$	75,926
Operating revenue:
Rentals		12,608			5,515			31,669			19,938
Services	$	25,981		$	20,129
Total operating revenue		53,284			28,359			143,165			95,864
Rentals		8,923			6,716
Operating expenses:
Total operating revenue		34,904			26,845
Direct costs (exclusive of depreciation and amortization shown separately below)
Operating expenses:
Services		27,856			17,206			79,524			53,702
Direct costs (exclusive of depreciation and amortization shown separately below)
Rentals		6,392			2,883			15,945			10,459
Services		18,189			16,099
Depreciation and amortization		3,620			3,365			9,776			10,145
Rentals		4,458			3,438
General and administrative expenses		7,282			5,007			23,417			17,707
Depreciation and amortization		3,337			3,412
Total operating expenses		45,150			28,461			128,662			92,013
General and administrative expenses		7,371			4,623
Impairment of fixed assets		—			164			—			237
Total operating expenses		33,355			27,572
Operating income (loss)		81,~~134~~549			(~~266~~727	)		~~14,503~~			~~3,614~~
Interest expense		(~~1,518~~959	)		(~~691~~1,156	)		~~(5,231~~	)		~~(2,414~~	)
Other expense, net		65			18			(137	)		16
Other income, net		6			20
Income (loss) before income tax expense		6,681			(939	)		9,135			1,216
Income (loss) before income taxes		596			(1,863	)
Provision for income tax (expense) benefit		(2,572	)		94			(3,688	)		(896	)
(Provision) benefit for income taxes		(784	)		954
Net income (loss)		4,109			(845	)		5,447			320
Net loss		(188	)		(909	)
Dividends on preferred stock		(~~123~~120	)		(~~122~~120	)		~~(367~~	)		~~(363~~	)
Net income (loss) available to common stockholders	$	3,986		$	(967	)	$	5,080		$	(43	)
Net loss available to common stockholders	$	(308	)	$	(1,029	)

22THREE MONTHS ENDED MARCH 31, 2010 COMPARED TO THREE MONTHS ENDED MARCH 31, 2009

Operating revenues decreased $8.1 million, from $34.9 million for the three months ended March 31, 2009 to $26.8 million for the three months ended March 31, 2010. Operating revenues related to services decreased $5.9 million. Our Seismic Services segment and our Environmental and Other Services segment accounted for $5.1 million and $0.8 million of the decrease, respectively. Operating revenues related to our Equipment Leasing segment decreased by $2.2 million. The decrease in revenues in our Seismic Services segment was attributable to significant weather delays in the northeast United States and contraction in capital spending by our customers. The Environmental and Other Services and Equipment Leasing segments are directly impacted by the number of rigs operating in the United States and the Gulf of Mexico. The rig counts were reduced compared to the number of rigs operating during the first quarter of 2009. Additionally, with the compression in drilling activity, we have felt considerable pricing pressure for our equipment and services. Our Environmental and Other Services segment was impacted to a lesser degree because a portion of the work that we perform is driven by the production process, as opposed to the exploration and drilling process, and the number of active facilities has remained stable. During the first quarter of 2010, we also expanded our environmental operations into additional markets where we feel organic growth opportunities exist.

Direct costs related to services decreased $2.1 million, from $18.2 million for the three months ended March 31, 2009 to $16.1 million for the three months ended March 31, 2010. Direct costs for our seismic services segment decreased $2.8 million. The decrease was in response to lower activity levels as described above and was offset by increases in our environmental and other services segment of $0.7 million. Direct costs related to rentals decreased $1.1 million, from $4.5 million for the three months ended March 31, 2009 to $3.4 million for the three months ended March 31, 2010. Of the total decrease in direct costs, $1.6 million relates to payroll costs and $1.3 million relates to third-party contract services.

Depreciation and amortization costs increased $0.1 million from $3.3 million for the three month period ended March 31, 2009 to $3.4 million for the three month period ended March 31, 2010. Depreciation expense increased $0.1 million due to the increase in revenue-producing assets. Amortization expense remained constant between the two periods.

~~THREE~~General ~~MONTHS~~and ~~ENDED~~administrative ~~SEPTEMBER~~costs 30decreased $2.8 million, ~~2009~~from ~~COMPARED~~$7.4 TOmillion ~~THREE~~during ~~MONTHS~~the ~~ENDED~~three month ~~SEPTEMBER~~period 30ended March 31, ~~2008~~2009 to $4.6 million during the same three month period of 2010 primarily as a result of decreased payroll costs.

~~Operating~~Interest ~~revenues~~expense ~~decreased~~increased approximately $240.92 million, from $531.30 million for the three ~~months~~month period ended ~~September~~March 3031, ~~2008~~2009, to $281.4 2 million for the three ~~months~~ month period ended ~~September~~March 3031, ~~2009~~2010. ~~Operating~~Interest ~~revenues~~expense ~~related~~includes ~~to services decreased~~ $170.83 million. ~~Our seismic services segment, other services segment,~~ and ~~fluid and transportation services segment accounted for~~ $100.94 million, ~~$1.9 million and $5.1 million of the decrease~~respectively, respectively. The decrease in revenues was due to the erosion of production and drilling activity of our customers in the regions in which we operate. Seismic services are driven by the front-end activity in exploration for ~~hydrocarbons.~~ ~~The other services and fluid and transportation services are directly impacted by~~ the ~~number~~three ofmonth ~~rigs~~periods ~~operating~~ended inMarch 31, ~~the~~2009 ~~United States~~ and ~~the~~2010 ~~Gulf~~related ~~of Mexico. The rig counts were off sharply compared~~ to ~~the~~amortization ~~number~~ of ~~rigs~~deferred ~~operating~~loan ~~during the same period of 2008~~costs. ~~These decreases were offset, in part, by increases in our environmental services segment of $0.1 million.~~ The increase in ~~environmental~~interest ~~services~~expense ~~was~~is ~~principally~~related ~~attributable~~ to ~~specialized~~increase ~~cleaning projects on client facilities~~ in ~~the~~interest ~~Gulf~~rates ofand ~~Mexico.~~charges ~~Operating revenues~~ related to ~~our equipment leasing segment, including~~ the ~~Industrial~~modification ~~Lift~~of ~~acquisition effective April 2008, decreased by $7.1 million. This reduction in equipment leasing activity is attributable to the reduction in rigs operated by~~ our ~~customers~~subordinated ~~in the areas we serve~~debt.

~~Direct~~Income ~~costs~~tax ~~related~~expense todecreased ~~services~~by ~~decreased~~approximately $101.7 million, from ~~$27.9 million~~a ~~for~~tax ~~the~~expense ~~three~~of ~~months ended September 30, 2008 to~~ $170.28 million for the ~~three~~period ~~months~~ ended ~~September~~March 3031, 2009~~. Direct costs for our seismic services segment~~, ~~environmental services segment, other services segment, and fluid and~~ ~~transportation~~to ~~services~~a ~~segment~~benefit ~~enhanced~~of ~~by the BEG acquisition accounted for~~ $61.~~6 million, $~~0.4 million, ~~$1.2~~for ~~million~~the ~~and~~three ~~$2.5~~month ~~million~~period ofended ~~the decrease~~March 31, ~~respectively~~2010. The ~~decreases~~decrease ~~were~~is inattributable ~~response~~ to ~~lower~~a ~~activity~~loss ~~levels~~before asincome ~~described~~taxes ~~above. Direct costs related to rentals decreased $3.5 million, from $6.4 million~~ for the ~~three~~current ~~months~~quarter ~~ended~~compared ~~September 30,~~to ~~2008~~income tobefore ~~$2.9~~income ~~million~~taxes for the ~~three~~same ~~months~~period ~~ended~~in ~~September 30,~~ 2009. OfThe ~~the total decrease in direct costs, $4.7 million relates to~~effective ~~repairs~~tax ~~and~~rate ~~maintenance~~for ~~and~~the ~~cost~~2010 ofquarter ~~parts~~is ~~sold, $~~51.2%.4 ~~million~~The ~~relates~~rate tois ~~explosives~~higher ~~and~~than ~~down-hole~~the ~~supplies,~~statutory ~~$2.9~~federal ~~million~~rate ~~relates~~because toof ~~payroll~~the ~~costs,~~addition ~~$1.2~~of ~~million~~state ~~relates~~income totaxes ~~fuel~~ and ~~oil,~~permanent ~~$1.4~~differences ~~million~~encountered ~~relates~~in tothe ~~third-party~~course ~~contract~~of ~~services,~~the ~~$0.6 million~~Company’s ~~relates~~ day-to-day ~~insurance and $0~~operations.4 ~~million relates to property damages.~~

Depreciation and amortization costs decreased $0.2 million from $3.6 million for the three month period ended September 30, 2008 to $3.4 million for the three month period ended September 30, 2009. Depreciation expense increased $0.1 million due to the reallocation of the purchase price of Preheat and Rig Tools in 2008. Amortization expense decreased $0.3 million due to the impairment of intangibles recorded at December 31, 2008.

General and administrative costs decreased $2.3 million, from $7.3 million during the three month period ended September 30, 2008 to $5.0 million during the same three month period of 2009. Payroll and related costs decreased $1.3 million, professional services and related costs decreased $0.3 million, fuel and oil decreased $0.2 million as did business promotions.

Interest expense decreased approximately $0.8 million from $1.5 million for the three month period ended September 30, 2008, to $0.7 million for the three month period ended September 30, 2009. The decrease in interest expense was attributable to decreased interest rates on variable interest debt between the periods along with a lower level of debt between the periods. Also, we reduced interest expense by approximately $0.2 million through the reduction of a previous accrual related to a sales tax assessment. Interest expense includes $0.4 million and $0.3 million for the three month periods ended September 30, 2008 and 2009, respectively, related to amortization of deferred loan costs.

Income tax expense decreased by approximately $2.7 million from $2.6 million for the period ended September 30, 2008, to ($0.1) million for the three month period ended September 30, 2009. The decrease is attributable to reduced income before taxes for the current quarter compared to the same period in 2008. The effective tax rate for the 2009 quarter is 10.0%. The rate is different than the statutory federal rate because of the addition of state income taxes and permanent differences encountered in the course of the Company’s day-to-day operations.

NINE MONTHS ENDED SEPTEMBER 30, 2009 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 2008

Operating revenues decreased $47.3 million, from $143.2 million for the nine months ended September 30, 2008 to $95.9 million for the nine months ended September 30, 2009. Operating revenues related to services decreased $35.5 million. Our seismic services segment, other services segment, and fluid and transportation services segment accounted for $23.5 million, $5.1 million and $8.5 million of the decrease, respectively. The decrease in revenues was due to the erosion of production and drilling activity of our customers in the regions in which we operate. Seismic services are driven by the front-end activity in exploration for hydrocarbons. The other services and fluid and transportation services are directly impacted by the number of rigs operating in the United States and the Gulf of Mexico. The rig counts were off sharply compared to the number of rigs operating during the first nine months of 2008. These decreases were offset by increases in our environmental services segment of $1.6 million. The increase in environmental services was principally attributable to specialized cleaning projects on client facilities in the Gulf of Mexico. Operating revenues related to our equipment leasing segment, after taking into account the Industrial Lift acquisition effective April 2008, decreased by $11.8 million. This reduction in equipment leasing activity is attributable to the reduction in rigs operated by our customers in the areas we serve.

Direct costs related to services decreased $25.8 million, from $79.5 million for the nine months ended September 30, 2008 to $53.7 million for the nine months ended September 30, 2009. Direct costs for our seismic services segment, other services segment, fluid and transportation services segment enhanced by the BEG acquisition, and environmental services segment accounted for $17.4 million, $3.2 million, $4.8 million and $0.4 million of the decrease, respectively. The decreases were in response to lower activity levels as described above. Direct costs related to rentals decreased $5.4 million, from $15.9 million for the nine months ended September 30, 2008 to $10.5 million for the nine months ended September 30, 2009. Of the total decrease in direct costs, $8.9 million relates to repairs and maintenance and cost of parts sold, $4.9 million relates to third-party contract services, $5.8 million relates to explosives and down-hole supplies, $6.1 million relates to payroll costs, $3.0 million relates to fuel and oil and $1.4 million relates to insurance.

Depreciation and amortization costs increased $0.3 million from $9.8 million for the nine month period ended September 30, 2008 to $10.1 million for the nine month period ended September 30, 2009. Depreciation expense increased $2.2 million due partially to the increase in revenue-producing assets from the acquisitions of BEG in January 2008 and Industrial Lift in April 2008 and partially to the reallocation of the purchase price of Preheat and Rig Tools. Amortization expense decreased $1.8 million due to the impairment of intangibles recorded at December 31, 2008.

General and administrative costs decreased $5.7 million, from $23.4 million during the nine month period ended September 30, 2008 to $17.7 million during the same nine month period of 2009. $2.4 million of the decrease relates to the Siemens litigation settlement recorded in the first quarter of 2008, $1.7 million relates to professional services and related costs and $1.3 million relates to payroll and related costs.

Interest expense decreased approximately $2.8 million from $5.2 million for the nine month period ended September 30, 2008, to $2.4 million for the nine month period ended September 30, 2009. The decrease in interest expense was attributable to decreased interest rates on variable interest debt between the periods along with a lower level of debt between the periods. Also, we reduced interest expense by approximately $0.5 million through the reduction of a previous accrual related to a sales tax assessment. Interest expense includes $1.1 million and $0.9 million, for the nine month periods ended September 30, 2008 and 2009, respectively, related to amortization of deferred loan costs.

Income tax expense decreased by approximately $2.8 million from $3.7 million for the period ended September 30, 2008, to $0.9 million for the nine month period ended September 30, 2009. The decrease is attributable to a reduction of income before income taxes for the first nine months of 2009 compared to the same period in 2008. The effective tax rate for the 2009 quarter is 73.7%. The rate is higher than the statutory federal rate because of the addition of state income taxes and permanent differences encountered in the course of the Company’s day-to-day operations.

LIQUIDITY AND CAPITAL RESOURCES

Effective as of April 24, 2008, we completed a modified $90.0 million credit facility (“Senior Credit Facility”), including a $50.0 million term loan, a $25.0 million working capital revolving line of credit, and a $15.0 million delayed draw term loan available to fund future acquisitions. With the proceeds from the Senior Credit Facility, we (i) repaid approximately $28.7 million of outstanding principal balance under our previous term loan; (ii) repaid approximately $2.1 million of outstanding principal balance under our previous capital expenditure loan; (iii) repaid the balance on the previous line of credit; and (iv) closed the acquisition of Industrial Lift. The balance of the proceeds available under the Senior Credit Facility was used to pay fees and expenses of the aforementioned transaction and to provide additional working capital.

OnDuring ~~August 28,~~March ~~2008~~2010, ~~the~~we ~~Senior~~entered ~~Credit~~into ~~Facility~~an ~~was~~amendment ~~amended~~and waiver to ~~remove~~our ~~the~~Senior ~~$15~~Credit Facility.0 ~~million~~The ~~delayed~~waiver provided ~~draw~~relief ~~term~~from ~~loan.~~violations Asrelated anto ~~accommodation~~the ~~to our~~timely ~~lender,~~filing weof ~~agreed~~certain toreports ~~remove~~with the ~~delayed~~lender. ~~draw~~Additionally, ~~portion~~the ofamendment adjusted the ~~facility~~required incovenants ~~order~~related to ~~make~~our ~~syndication~~leverage ofratio for the ~~Senior~~remainder ~~Credit~~of ~~Facility~~the ~~more~~term ~~manageable~~of the loan. As ~~disclosed~~a ~~in “Recent Developments” above~~result, ~~effective November~~at March 1331, ~~2009~~2010, we ~~further amended~~were ~~our~~in compliance with all covenants under the Senior Credit Facility.

At ~~September~~March 3031, ~~2009~~2010, we had approximately $21.68 million in cash ~~and restricted cash~~ compared to $31.09 million in cash ~~and restricted cash~~ at December 31, ~~2008~~2009, and working capital of $09.76 million at ~~September~~March 3031, ~~2009~~2010, compared to $48.01 million at December 31, ~~2008~~2009. ~~The~~At ~~decrease in working capital from December~~March 31, ~~2008~~2010 toand ~~September~~December 3031, 2009, iswe ~~primarily~~had ~~due~~$9.5 tomillion aand ~~reduction~~$7.6 inmillion ~~trade~~available ~~accounts~~for ~~receivable~~future ~~and~~borrowings aunder ~~reduction~~our ofrevolving ~~supply~~line ~~inventory~~of ~~levels~~credit. Cash provided by operating activities was $233.17 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2009~~2010 compared to $2110.9 7 million for the same period in ~~2008~~2009 due, ~~in part,~~ to ~~an increase in non-cash charges related to reserves for uncollectible accounts,~~ a ~~reduction~~decrease in ~~accounts~~net ~~receivable~~income and ~~accounts payable and accrued expenses and~~ non-cash adjustments to deferred income taxes as well as trade receivables and payables. Cash used in investing activities was $0.92 million for the ~~nine~~three months ended ~~September~~ March 3031, ~~2009~~2010 compared to $~~30.~~0.1 million provided by investing activities during the same period in ~~2008~~2009. The difference is due to athe ~~$7.8~~decrease ~~million reduction~~ in ~~capital expenditures~~restricted cash in 2009 ~~and~~partially ~~the~~offset ~~fact~~by ~~that 2008 included $7.1 million applied to~~ the ~~acquisition~~reduction ofin ~~BEG~~capital ~~and~~expenditures ~~$13.8~~in ~~million to the acquisition of Industrial Lift~~2010. Cash used in financing activities was $223.16 million for the ~~nine~~three months ended ~~September~~ March 3031, ~~2009~~2010 compared to $311.3 million for the same period in ~~2008~~2009 due primarily to anthe ~~increase~~pay indown ~~payments~~of ~~reducing~~ the revolving line of credit ~~and~~during ~~long-term~~the ~~debt~~three months ended March 31, 2009.

24Historically, our capital requirements have primarily related to the purchase or fabrication of new drilling equipment and related support equipment, expansion of our rental and transportation fleets and new business acquisitions. Thus far in 2010, we have expended approximately $0.4 million on unfinanced equipment and other fixed assets. For the remainder of 2010, we expect to explore strategic business opportunities and closely monitor our operational needs for capital expenditures.

~~Table~~We believe that our internally generated cash flow from operations is sufficient to finance our cash requirements for current and future operations, budgeted capital expenditures and debt service for 2010. As we have historically done, we may, from time to time, access available funds under our Senior Credit Facility to supplement our liquidity to meet our cash requirements for day to day operations and times of ~~Contents~~peak needs throughout the year. Our planned capital expenditures as well as any acquisitions we choose to pursue, are expected to be financed through a combination of cash on hand, cash flow from operations and borrowings under our Senior Credit Facility.

Historically, our capital requirements have primarily related to the purchase or fabrication of new drilling equipment and related support equipment, expansion of our rental and transportation fleets and new business acquisitions. Thus far in 2009, we have expended approximately $1.8 million on equipment and other fixed assets. For the remainder of 2009, we expect to explore strategic business opportunities and closely monitor our operational needs for capital expenditures.

We believe that our internally generated cash flow from operations is sufficient to finance our cash requirements for current and future operations, budgeted capital expenditures and debt service. As we have historically done, we may, from time to time, access available funds under our Senior Credit Facility to supplement our liquidity to meet our cash requirements for day to day operations and times of peak needs throughout the year. Our planned capital expenditures as well as any acquisitions we choose to pursue, are expected to be financed through a combination of cash on hand, cash flow from operations and borrowings under our Senior Credit Facility.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no significant changes in our market risks since the year ended December 31, ~~2008~~2009. For more information, please read the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, ~~2008~~2009 filed with the ~~SEC~~Securities and Exchange Commission on March 1331, ~~2009~~2010.

ITEM 4.

CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit to the Securities and Exchange Commission (“SEC”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms. Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure.

In21 accordance with Exchange Act Rules 13a-15 and 15d-15, we carried out an evaluation, under the supervision and with the participation of management, including our CEO and CFO, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of the end of the period covered by this report. Based upon that evaluation, our CEO and CFO have concluded that our disclosure controls and procedures were effective as of September 30, 2009.

ThereTable have not been any changes in the Company’s internal control over financial reporting during the third quarter of 2009 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. Contents

As of the end of March 31, 2010, management performed, with the participation of our CEO and our CFO, an evaluation of the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designated to ensure that information is accumulated and communicated to our management, including our CEO and our CFO, to allow timely decisions regarding required disclosures. Based on the evaluation and the identification of the material weaknesses in internal control over financial reporting as disclosed in our Annual Report on Form 10-K/A for the year ended December 31, 2009, management concluded that, as of March 31, 2010, our disclosure controls and procedures were not effective.

Because of the material weaknesses identified in our evaluation of internal control over financial reporting for the year ended December 31, 2009, we performed additional substantive procedures so that our consolidated financial statements as of and for the quarter ended March 31, 2010, are presented in accordance with generally accepted accounting principles in the United States of America (“GAAP”).

We believe that, because we performed the substantial additional procedures referenced above, the consolidated financial statements for the periods included in this Quarterly Report are fairly presented in all material respects in accordance with GAAP.

Management is committed to achieving effective internal control over financial reporting. Our remediation efforts are described in Item 9A in our Annual Report on Form 10-K/A for the year ended December 31, 2009 filed with the SEC on August 26, 2010. While these efforts continue, we will rely on additional substantive procedures and other measures as needed to assist us with meeting the objectives otherwise fulfilled by an effective control environment.

PART II — OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

On May 1, 2008, the former owners of Preheat, Inc., which we acquired in February 2006, filed a lawsuit in federal court (the “Federal Suit”) in the United States District Court for the Western District of Louisiana in Lafayette, Louisiana, against us, our directors, our current Chief Executive Officer, our current Senior Vice President/Chief Financial Officer, one of our investment advisors, and a principal of the investment advisor. The ~~lawsuit~~Federal Suit sought, among other things, (i) a declaratory judgment that the Preheat purchase agreement executed in December 2005 is null because of alleged inducement to enter into the purchase agreement by criminal or fraudulent conduct, securities fraud and bad faith breach of the purchase agreement and that one of the former owner’s ERISA rights be clarified, (ii) injunctive relief to halt alleged securities disclosure violations by us and to remove three board members, and (iii) damages resulting from the nullification of the Preheat purchase agreement. On ~~June 23,~~The ~~2009~~Federal Suit has been dismissed. Subsequent to this dismissal, the former owners of Preheat filed a ~~judgment~~lawsuit in ~~our~~the 16th ~~favor~~Judicial ~~was~~District ~~received~~Court, ~~which~~Parish ~~dismissed~~of Iberia, ~~with~~situated in ~~prejudice~~New Iberia, ~~all~~Louisiana. ~~federal~~This ~~law~~lawsuit ~~claims~~sought ~~alleging~~essentially ~~securities~~the ~~law~~same ~~violations~~relief ~~against~~as usrequested ~~and~~in ~~other~~the Federal Suit, named ~~parties~~many ~~and~~of ~~dismissed,~~the ~~without~~same ~~prejudice~~defendants as the Federal Suit, ~~all~~and ~~state~~contained ~~law~~many ~~claims~~of the same allegations as the Federal Suit. ~~The~~We, together with the ~~possibility~~other ~~remains~~defendants, ~~that~~filed ~~some~~a ofmotion to dismiss the ~~state~~suit ~~law~~based ~~claims~~upon ~~will~~the befact ~~brought~~that ~~again~~it was filed in ~~state~~the ~~court~~wrong venue. A ruling was issued dismissing the case on that basis, and a judgment reflecting that ruling has been submitted to the trial judge for signature. At this point, we are unable to assess the ultimate impact of ~~the~~this ~~state court~~ litigation on our financial position, results of operations or cash flows. We, together with the other defendants, have filed a motion to dismiss the lawsuit and that motion remains pending with the court. We believe the claims against us are without merit and weare ~~will continue to~~ vigorously ~~contest~~contesting the legal action.

25Six purported class action lawsuits have been filed in connection with the Merger in state courts in Lafayette Parish, Louisiana, and two purported class actions were filed in connection with the Merger in the federal district court for the Western District of Louisiana. Each court action named the Company and its directors as defendants, and the state court actions also named Wellspring, Parent and Acquisition. One of the federal actions filed named Parent and Acquisition as defendants. The state court complaints allege, among other things, that the director defendants have breached their fiduciary duties to shareholders of the Company by entering into the Merger Agreement, failing to disclose certain information with respect to the Company and failing to maximize shareholder value. The Wellspring entities are claimed to have aided and abetted the alleged fiduciary duty breaches by the directors of the Company. The federal court complaints make substantially the same claims as the state court complaints, but also allege violations of federal law relating to the Company’s proxy statement disclosures. One or more of the complaints seek injunctions against the Merger, rescission of the Merger if it is consummated, imposition of a constructive trust, damages, attorneys’ fees, expenses and other relief. The complaints request class action certification and rulings that the named complainants are representatives of the class. No class has been certified at present. Plaintiffs in certain of the state actions and both federal actions have moved for expedited discovery. The defendants have filed the appropriate motions in the state proceedings to consolidate them into a single proceeding and further to stay such state actions pending the federal court’s consideration of the federal suit. A hearing is set for August 30, 2010, as to the motions filed in state court. Moreover, the defendants are contesting discovery requests made by some of the state plaintiffs. The defendants have also filed a motion in the federal court requesting consolidation of the federal actions, a state of all proceedings until lead plaintiffs and plaintiffs’ counsel are appointed and defendants’ motion to dismiss is resolved, and requesting that outstanding discovery requests be quashed. No hearing date has yet been set regarding this motion. The Company believes that all of the lawsuits that have been filed and the allegations contained therein are without merit, and it, along with the directors of the Company, intends to vigorously defend the lawsuits.

ITEM 1A.

RISK FACTORS

There have been no material changes from our risk factors set forth under Part I, Item 1A. “Risk Factors” in our ~~2008~~2009 Form 10-K/A filed with the SEC on August 26, 2010. In addition to the other information set forth in this report, you should carefully consider these risk factors which could materially affect our business, financial condition or future results. The risks described in our ~~2008~~2009 Form 10-K and our subsequent filings with the Securities and Exchange Commission are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.

ITEM 2.

UNREGISTERED SALES OF SECURITIES AND USE OF PROCEEDS

~~None~~See the Company’s Current Reports on Form 8-K filed with the SEC on January 19, 2010, January 28, 2010, February 3, 2010 and August 26, 2010.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. ~~SUBMISSION~~REMOVED OFAND ~~MATTERS TO A VOTE OF SECURITY HOLDERS~~RESERVED

None.

ITEM 5.

OTHER INFORMATION

None.

ITEM 6.

EXHIBITS


Exhibit No.		Description of Exhibits

31.1		Section 302 Certification of Chief Executive Officer

31.2		Section 302 Certification of Chief Financial Officer

32.1		Section 906 Certification of Chief Executive Officer

32.2		Section 906 Certification of Chief Financial Officer

2624

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on our behalf by the undersigned thereunto duly authorized.

	OMNI ENERGY SERVICES CORP.
Dated: November 13, 2009	/s/ Brian J. Recatto
Dated: September 1, 2010		/S/ BRIAN J. RECATTO
	~~Brian J. Recatto~~	Brian J. Recatto
	~~President and Chief Executive Officer~~	President and Chief Executive Officer
	~~(Principal Executive Officer)~~	(Principal Executive Officer)
Dated: November 13, 2009	/s/ Ronald D. Mogel
Dated: September 1, 2010		/S/ RONALD D. MOGEL
	~~Ronald D. Mogel~~	Ronald D. Mogel
	~~Senior Vice President and Chief Financial Officer~~	Senior Vice President and Chief Financial Officer
	~~(Principal Financial Officer)~~	(Principal Financial Officer)

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ThereTable have not been any changes in the Company’s internal control over financial reporting during the third quarter of 2009 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. Contents

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