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Proc-Type: 2001,MIC-CLEAR
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<SEC-DOCUMENT>0000910680-07-000891.txt : 20070927
<SEC-HEADER>0000910680-07-000891.hdr.sgml : 20070927
<ACCEPTANCE-DATETIME>20070927171923
ACCESSION NUMBER:		0000910680-07-000891
CONFORMED SUBMISSION TYPE:	10KSB
PUBLIC DOCUMENT COUNT:		9
CONFORMED PERIOD OF REPORT:	20070630
FILED AS OF DATE:		20070927
DATE AS OF CHANGE:		20070927

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			DRYCLEAN USA INC
		CENTRAL INDEX KEY:			0000065312
		STANDARD INDUSTRIAL CLASSIFICATION:	TELEPHONE & TELEGRAPH APPARATUS [3661]
		IRS NUMBER:				112014231
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			0630

	FILING VALUES:
		FORM TYPE:		10KSB
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-14757
		FILM NUMBER:		071140047

	BUSINESS ADDRESS:	
		STREET 1:		290 NE 68 STREET
		CITY:			MIAMI
		STATE:			FL
		ZIP:			33138
		BUSINESS PHONE:		3057544551

	MAIL ADDRESS:	
		STREET 1:		290 NE 68 STREET
		CITY:			MIAMI
		STATE:			FL
		ZIP:			33138

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	METRO TEL CORP
		DATE OF NAME CHANGE:	19920703
</SEC-HEADER>
<DOCUMENT>
<TYPE>10KSB
<SEQUENCE>1
<FILENAME>f10ksb063007_a.htm
<DESCRIPTION>FORM 10-KSB
<TEXT>
<html>
    <head>
        <title></title>
    </head>

    <body>
        <!-- MARKER FORMAT-SHEET="Head Major Center Bold" FSL="Default" --><a name="A001"></a>

        <h1 align="center"><font face="Times New Roman, Times, Serif" size="2">UNITED STATES<br>
        SECURITIES AND EXCHANGE COMMISSION<br>
        Washington, D.C. 20549</font></h1>
        <!-- MARKER FORMAT-SHEET="Head Major Center Bold" FSL="Default" --><a name="A004"></a>

        <h1 align="center"><font face="Times New Roman, Times, Serif" size="2">FORM
        10-KSB</font></h1>
        <!-- MARKER FORMAT-SHEET="Para (List) Flush" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2"><b><img src="ballotx.jpg"></b>&nbsp;&nbsp;&nbsp;&nbsp;
        <b>ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
        1934</b></font></p>
        <!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->

        <p><font face="Times New Roman, Times, Serif" size="2">For the fiscal year ended June 30,
        2007</font></p>
        <!-- MARKER FORMAT-SHEET="Para (List) Flush" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2"><img src="ballot.jpg">&nbsp;&nbsp;&nbsp;&nbsp;
        <b>TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
        1934</b></font></p>
        <!-- MARKER FORMAT-SHEET="Head Left" FSL="Default" -->

        <p align="left"><font face="Times New Roman, Times, Serif" size="2">Commission file number
        1-14757</font></p>

        <table cellspacing="0" cellpadding="0" width="100%" align="center">
            <tr valign="bottom">
                <th align="center">
                </th>

                <th align="center">
                </th>

                <th align="center">
                </th>
            </tr>

            <tr valign="bottom">
                <td align="center" width="33%">
                    <font face="Times New Roman" size="2">&nbsp;</font>
                    <hr color="black" size="1">
                </td>

                <td align="center" width="34%">
                    <font face="Times New Roman" size="2">DRYCLEAN USA, Inc.</font>
                    <hr color="black" size="1">
                </td>

                <td align="center" width="33%">
                    <font face="Times New Roman" size="2">&nbsp;</font>
                    <hr color="black" size="1">
                </td>
            </tr>

            <tr>
                <td align="center">
                </td>

                <td align="center" colspan="3">
                </td>

                <td align="center">
                </td>
            </tr>

            <tr valign="bottom">
                <td align="center"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="center"><font face="Times New Roman" size="2">(Name of small business
                issuer in its charter)</font></td>

                <td align="center"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="center"><font face="Times New Roman" size="2"><br>
                Delaware</font></td>

                <td align="center"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="center"><font face="Times New Roman" size="2">11-2014231</font></td>
            </tr>

            <tr>
                <td align="center">
                    <hr color="#000000" noshade size="1">
                </td>

                <td align="center">
                </td>

                <td align="center">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom">
                <td align="center"><font face="Times New Roman" size="2">(State or other
                jurisdiction of</font></td>

                <td align="center"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="center"><font face="Times New Roman" size="2">(I.R.S.
                Employer</font></td>
            </tr>

            <tr valign="bottom">
                <td align="center"><font face="Times New Roman" size="2">incorporation or
                organization)</font></td>

                <td align="center"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="center"><font face="Times New Roman" size="2">Identification
                No.)</font></td>
            </tr>

            <tr valign="bottom">
                <td align="center"><font face="Times New Roman" size="2"><br>
                290 N.E. 68th Street, Miami, Florida</font></td>

                <td align="center"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="center"><font face="Times New Roman" size="2">33138</font></td>
            </tr>

            <tr>
                <td align="center">
                    <hr color="#000000" noshade size="1">
                </td>

                <td align="center">
                </td>

                <td align="center">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom">
                <td align="center"><font face="Times New Roman" size="2">(Address of principal
                executive offices)</font></td>

                <td align="center"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="center"><font face="Times New Roman" size="2">(Zip Code)</font></td>
            </tr>
        </table>
        <!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->

        <p><font face="Times New Roman, Times, Serif" size="2">Issuer&rsquo;s telephone number,
        including area code: 305-754-4551</font></p>
        <!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->

        <p><font face="Times New Roman, Times, Serif" size="2">Securities registered under Section
        12(b) of the Exchange Act: Common Stock, $.025 par value</font></p>
        <!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->

        <p><font face="Times New Roman, Times, Serif" size="2">Securities registered under Section
        12(g) of the Exchange Act: None</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Check
        whether the issuer is not required to file reports pursuant to Section 13 or 15(d) of the
        Exchange Act. <img src="ballot.jpg"></font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Check
        whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the
        Exchange Act during the past 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. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Yes <img src="ballotx.jpg">
        &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No <img src="ballot.jpg"></font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Check
        if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B
        contained in this form, and no disclosure will be contained, to the best of
        registrant&rsquo;s knowledge, in definitive proxy or information statements incorporated by
        reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [
        ]</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate
        by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
        Exchange Act). &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Yes <img src="ballot.jpg">
        &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No <img src="ballotx.jpg"></font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        Company&rsquo;s revenues from continuing operations for its fiscal year ended June 30, 2007
        were $22,748,527.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        aggregate market value as at September 21, 2007 of the Common Stock of the issuer, its only
        class of voting stock, held by non-affiliates was approximately $4,011,000 based on the
        closing price of the Company&rsquo;s Common Stock on the American Stock Exchange on that
        date. Such market value excludes shares owned by all executive officers and directors (and
        their spouses). This should not be construed as indicating that all such persons are
        affiliates.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        number of shares outstanding of the issuer&rsquo;s Common Stock as at September 21, 2007
        was 7,034,307.</font></p>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">DOCUMENTS
        INCORPORATED BY REFERENCE</font></p>
        <!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->

        <p><font face="Times New Roman, Times, Serif" size="2">Portions of the issuer&rsquo;s Proxy
        Statement relating to its 2007 Annual Meeting of Stockholders are incorporated by reference
        into Items 10, 11, 12 and 14 in Part&nbsp;III of this Report.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->

        <p><font face="Times New Roman, Times, Serif" size="2">Transitional Small Business
        Disclosure Format&nbsp;&nbsp;&nbsp;&nbsp; Yes <img src="ballot.jpg"> &nbsp;&nbsp;&nbsp;No
        <img src="ballotx.jpg"></font></p>

        <div style="PAGE-BREAK-AFTER: always">
        </div>
        <!-- MARKER PAGE="; page: 1" -->
        <hr color="gray" noshade size="5">
        <!-- MARKER FORMAT-SHEET="Head Major Center Bold" FSL="Default" -->

        <h1 align="center"><font face="Times New Roman, Times, Serif" size="2">TABLE OF
        CONTENTS</font></h1>

        <table cellspacing="0" cellpadding="0" width="100%" align="center" border="0">
            <tr valign="bottom">
                <th>
                </th>

                <th>
                </th>

                <th>
                </th>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left" width="10%"><font face="Times New Roman" size="2"><br>
                Item 1.</font></td>

                <td align="left" width="80%">
                <a href="#f10ksb063007-Item1"><font face="Times New Roman" size="2">Description of
                Business</font></a></td>

                <td align="right" width="10%"><font face="Times New Roman" size="2">3&nbsp;</font>
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2"><br>
                Item 2.</font></td>

                <td align="left">
                <a href="#f10ksb063007-Item2"><font face="Times New Roman" size="2">Description of
                Properties</font></a></td>

                <td align="right"><font face="Times New Roman" size="2">10&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2"><br>
                Item 3.</font></td>

                <td align="left">
                <a href="#f10ksb063007-Item3"><font face="Times New Roman" size="2">Legal
                Proceedings</font></a></td>

                <td align="right"><font face="Times New Roman" size="2">10&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2"><br>
                Item 4.</font></td>

                <td align="left">
                <a href="#f10ksb063007-Item4"><font face="Times New Roman" size="2">Submission of
                Matters to a Vote of Security Holders</font></a></td>

                <td align="right"><font face="Times New Roman" size="2">10&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2"><br>
                Item 5.</font></td>

                <td align="left">
                <a href="#f10ksb063007-Item5"><font face="Times New Roman" size="2">Market for the
                Common Equity and Related Stockholder Matters</font></a></td>

                <td align="right"><font face="Times New Roman" size="2">11&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2"><br>
                Item 6.</font></td>

                <td align="left">
                <a href="#f10ksb063007-Item6"><font face="Times New Roman" size="2">Management's
                Discussion and Analysis or Plan of Operation</font></a></td>

                <td align="right"><font face="Times New Roman" size="2">12&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2"><br>
                Item 7.</font></td>

                <td align="left">
                <a href="#f10ksb063007-Item7"><font face="Times New Roman" size="2">Financial
                Statements</font></a></td>

                <td align="right"><font face="Times New Roman" size="2">18&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2"><br>
                Item 8.</font></td>

                <td align="left">
                <a href="#f10ksb063007-Item8"><font face="Times New Roman" size="2">Changes In and
                Disagreements With Accountants on Accounting and Financial
                Disclosure</font></a></td>

                <td align="right"><font face="Times New Roman" size="2">38&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2"><br>
                Item 8A.</font></td>

                <td align="left">
                <a href="#f10ksb063007-Item8A"><font face="Times New Roman" size="2">Controls and
                Procedures</font></a></td>

                <td align="right"><font face="Times New Roman" size="2">38&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2"><br>
                Item 8B.</font></td>

                <td align="left">
                <a href="#f10ksb063007-Item8B"><font face="Times New Roman" size="2">Other
                Information</font></a></td>

                <td align="right"><font face="Times New Roman" size="2">38&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2"><br>
                Item 9.</font></td>

                <td align="left">
                <a href="#f10ksb063007-Item9"><font face="Times New Roman" size="2">Directors,
                Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of
                the Exchange Act</font></a></td>

                <td align="right"><font face="Times New Roman" size="2">38&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2"><br>
                Item 10.</font></td>

                <td align="left">
                <a href="#f10ksb063007-Item10"><font face="Times New Roman" size="2">Executive
                Compensation</font></a></td>

                <td align="right"><font face="Times New Roman" size="2">39&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2"><br>
                Item 11.</font></td>

                <td align="left">
                <a href="#f10ksb063007-Item11"><font face="Times New Roman" size="2">Security
                Ownership of Certain Beneficial Owners and Management and Related Stockholder
                Matters</font></a></td>

                <td align="right"><font face="Times New Roman" size="2">40&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2"><br>
                Item 12.</font></td>

                <td align="left">
                <a href="#f10ksb063007-Item12"><font face="Times New Roman" size="2">Certain
                Relationships and Related Transactions</font></a></td>

                <td align="right"><font face="Times New Roman" size="2">40&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2"><br>
                Item 13.</font></td>

                <td align="left">
                <a href="#f10ksb063007-Item13"><font face="Times New Roman" size="2">Exhibits</font></a></td>

                <td align="right"><font face="Times New Roman" size="2">41&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2"><br>
                Item 14.</font></td>

                <td align="left">
                <a href="#f10ksb063007-Item14"><font face="Times New Roman" size="2">Principal
                Accountant Fees and Services</font></a></td>

                <td align="right"><font face="Times New Roman" size="2">43&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2"><br>
                <a href="#f10ksb063007-Signatures">Signatures</a> &nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">44&nbsp;</font> </td>
            </tr>
        </table>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">2</font></p>

        <div style="PAGE-BREAK-AFTER: always">
        </div>
        <!-- MARKER PAGE="; page: 2" -->
        <hr color="gray" noshade size="5">
        <!-- MARKER FORMAT-SHEET="Head Major Center Bold" FSL="Default" -->

        <h1 align="center"><font face="Times New Roman, Times, Serif" size="2">FORWARD LOOKING
        STATEMENTS</font></h1>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
        <i>Certain statements in this Report are &ldquo;forward-looking statements&rdquo; within
        the meaning of the Private Securities Litigation Reform Act of 1995. When used in this
        Report, words such as &ldquo;may,&rdquo; &ldquo;should,&rdquo; &ldquo;seek,&rdquo;
        &ldquo;believe,&rdquo; &ldquo;expect,&rdquo; anticipate,&rdquo; &ldquo;estimate,&rdquo;
        &ldquo;project,&rdquo; &ldquo;intend,&rdquo; &ldquo;strategy&rdquo; and similar expressions
        are intended to identify forward-looking statements regarding events, conditions and
        financial trends that may affect the Company&rsquo;s future plans, operations, business
        strategies, operating results and financial position. Forward-looking statements are
        subject to a number of known and unknown risks and uncertainties that may cause actual
        results, trends, performance or achievements of the Company, or industry trends and
        results, to differ materially from the future results, trends, performance or achievements
        expressed or implied by such forward-looking statements. These risks and uncertainties
        include, among others: general economic and business conditions in the United States and
        other countries in which the Company&rsquo;s customers and suppliers are located; industry
        conditions and trends; technology changes; competition and other factors which may affect
        prices which the Company may charge for its products and its profit margins; the
        availability and cost of the inventory purchased by the Company; relative values of the
        United States currency to currencies in the countries in which the Company&rsquo;s
        customers, suppliers and competitors are located; changes in, or the failure to comply
        with, government regulation, principally environmental regulations; and the Company&rsquo;s
        ability to successfully introduce, market and sell at acceptable profit margins its
        Green-Jet&reg; dry-wetcleaning machine and Multi-Jet</i>&reg; <i>dry cleaning machine; the
        Company&rsquo;s ability to implement changes in its business strategies and development
        plans; and the availability, terms and deployment of debt and equity capital if needed for
        expansion. These and certain other factors are discussed in this Report and from time to
        time in other Company reports filed with the Securities and Exchange Commission. The
        Company does not assume an obligation to update the factors discussed in this Report or
        such other reports.</i></font></p>
        <!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" -->

        <h1 align="left"><font face="Times New Roman, Times, Serif" size="2">PART I</font></h1>
        <!-- MARKER FORMAT-SHEET="Para Large Hang BU" FSL="Project" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%">
                <font face="Times New Roman, Times, Serif" size="2"><b><a name="f10ksb063007-Item1">
                Item 1.</a></b></font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%">
                <font face="Times New Roman, Times, Serif" size="2"><b><u>Description of
                Business.</u></b></font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" -->

        <h1 align="left"><font face="Times New Roman, Times, Serif" size="2">General</font></h1>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        Company was incorporated under the laws of the State of Delaware on June 30, 1963 under the
        name Metro-Tel Corp. and changed its name to DRYCLEAN USA, Inc. on November 7, 1999. Since
        November 1, 1998, when Steiner-Atlantic Corp. (&ldquo;Steiner&rdquo;) was merged with and
        into, and therefore became, a wholly-owned subsidiary of the Company, the Company&rsquo;s
        principal business has been as a supplier of commercial and industrial laundry and dry
        cleaning equipment and steam boilers and related activities.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unless
        the context otherwise requires, as used in this Report, the &ldquo;Company&rdquo; includes
        DRYCLEAN USA, Inc. and its subsidiaries.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        Company, through Steiner, sells commercial and industrial laundry and dry cleaning
        equipment, and steam boilers in the United States, the Caribbean and Latin American
        markets. This aspect of the Company&rsquo;s business services includes:</font></p>
        <!-- MARKER FORMAT-SHEET="Para Hang Level 1" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="5%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="5%"><font face="Times New Roman, Times, Serif" size="2">&bull;</font>
                </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%">
                <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;distributing
                commercial and industrial laundry and dry cleaning machines and steam boilers
                manufactured by others;</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang Level 1" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="5%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="5%"><font face="Times New Roman, Times, Serif" size="2">&bull;</font>
                </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%">
                <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;selling the
                Company's own proprietary lines of laundry and dry cleaning machines under its
                Aero-Tech(R), Multi-Jet(R) and Green-Jet(R) brand names;</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">3</font></p>

        <div style="PAGE-BREAK-AFTER: always">
        </div>
        <!-- MARKER PAGE="; page: 3" -->
        <hr color="gray" noshade size="5">
        <!-- MARKER FORMAT-SHEET="Para Hang Level 1" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="5%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="5%"><font face="Times New Roman, Times, Serif" size="2">&bull;</font>
                </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;designing
                and planning &ldquo;turn-key&rdquo; laundry and/or dry cleaning systems to meet the
                layout, volume and budget needs of a variety of institutional and retail customers;
                &nbsp;</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang Level 1" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="5%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="5%"><font face="Times New Roman, Times, Serif" size="2">&bull;</font>
                </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;supplying
                replacement equipment and parts to its customers;</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang Level 1" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="5%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="5%"><font face="Times New Roman, Times, Serif" size="2">&bull;</font>
                </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;providing
                warranty and preventive maintenance through factory-trained technicians; and</font>
                </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang Level 1" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="5%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="5%"><font face="Times New Roman, Times, Serif" size="2">&bull;</font>
                </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;selling
                process steam systems and boilers.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        Company&rsquo;s wholly-owned indirect subsidiary, Steiner-Atlantic Brokerage Corp.
        (&ldquo;Steiner Brokerage&rdquo;), acts as a business broker to assist others seeking to
        buy or sell existing dry cleaning stores and coin laundry businesses. Some of the
        Company&rsquo;s existing customers have become Steiner Brokerage clients, utilizing the
        Company&rsquo;s staff and ability to assist them in the sale of their businesses and
        associated real property.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        Company, through its DRYCLEAN USA LICENSE CORP. wholly-owned indirect subsidiary, owns the
        worldwide rights to the name DRYCLEAN USA&reg;, along with existing franchise and license
        agreements. DRYCLEAN USA&reg; is one of the largest franchise and license operations in the
        dry cleaning industry, currently consisting of over 400 franchised and licensed locations
        in the United States, the Caribbean and Latin America.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Through
        DRYCLEAN USA Development Corp. (&ldquo;DRYCLEAN USA Development&rdquo;), a wholly-owned
        indirect subsidiary, the Company also develops new turn-key dry cleaning establishments for
        resale to third parties.</font></p>
        <!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" -->

        <h1 align="left"><font face="Times New Roman, Times, Serif" size="2">Available
        Information</font></h1>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        Company files Annual Reports on Form 10-KSB and Quarterly Reports on Form 10-QSB, files or
        furnishes Current Reports on Form 8-K, files or furnishes amendments to those reports, and
        files proxy and information statements with the Securities and Exchange Commission (the
        &ldquo;SEC&rdquo;). These reports and statements may be read and copied at the SEC&rsquo;s
        Public Reference Room at 100 F Street, N.E., Room 580, Washington, DC 20549. You may obtain
        information on the operation of the Public Reference Room by calling the SEC at
        1-800-SEC-0330. These reports and statements, as well as beneficial ownership reports filed
        by the Company&rsquo;s officers, directors and beneficial owners of more than 10% of the
        Company&rsquo;s common stock, may be obtained without charge through the Company&rsquo;s
        Internet site http://www.drycleanusa.com as soon as reasonably practicable after such
        materials are filed with, or furnished to, the SEC.</font></p>
        <!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" -->

        <h1 align="left"><font face="Times New Roman, Times, Serif" size="2">Product
        Lines</font></h1>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        Company sells a broad line of commercial and industrial laundry and dry cleaning equipment
        and steam boilers, as well as parts and accessories therefor.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        commercial and industrial laundry equipment distributed by the Company features washers and
        dryers, including coin-operated machines, boilers, water reuse and heat reclamation
        systems, flatwork ironers, automatic folders and feeders. The Company&rsquo;s dry cleaning
        equipment includes commercial dry cleaning machines manufactured by others under the
        Company&rsquo;s Aero-Tech&reg;, Multi-Jet&reg; and Green-Jet&reg; names, as well as garment
        presses, finishing equipment, sorting and storage conveyors and accessories distributed for
        others.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        Company&rsquo;s proprietary environmentally friendly Green-Jet&reg; dry-wetcleaning machine
        not only cleans garments efficiently, but also eliminates the use of perchloroethylene
        (Perc) in the dry</font></p>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">4</font></p>

        <div style="PAGE-BREAK-AFTER: always">
        </div>
        <!-- MARKER PAGE="; page: 4" -->
        <hr color="gray" noshade size="5">
        <!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->

        <p><font face="Times New Roman, Times, Serif" size="2">cleaning process, thereby
        eliminating the health and environmental concerns that Perc poses to customers and their
        landlords. It also alleviates flammability, odor and cost issues inherent in alternative
        solvents and cleaning processes. In May 2005, patents were granted to the Company from the
        United States to protect this innovative approach to garment cleaning. Patents from other
        countries are still pending. In August 2003, the Company introduced its Multi-Jet&reg; dry
        cleaning machine which uses a number of environmentally safe solvents.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        products sold by the Company are positioned and priced to appeal to customers in each of
        the high-end, mid-range and value priced markets. These products are offered under a wide
        range of price points to address the needs of a diverse customer base. Suggested prices for
        most of the Company&rsquo;s products range from approximately $5,000 to $100,000. The
        products supplied by the Company afford the Company&rsquo;s customers a &ldquo;one-stop
        shop&rdquo; for commercial and industrial laundry and dry cleaning machines, boilers and
        accessories. By providing &ldquo;one-stop&rdquo; shopping, the Company believes it is
        better able to attract and support potential customers who can choose from the
        Company&rsquo;s broad product line. Product and parts sales accounted for approximately 97%
        and 96% of revenues in fiscal 2007 and 2006, respectively.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        Company seeks to establish customer satisfaction by offering:</font></p>
        <!-- MARKER FORMAT-SHEET="Para Hang Level 1" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="5%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="5%"><font face="Times New Roman, Times, Serif" size="2">&bull;</font>
                </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;an
                on-site training and preventive maintenance program performed by factory trained
                technicians;</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang Level 1" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="5%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="5%"><font face="Times New Roman, Times, Serif" size="2">&bull;</font>
                </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;design
                and layout assistance;</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang Level 1" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="5%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="5%"><font face="Times New Roman, Times, Serif" size="2">&bull;</font>
                </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%">
                <font face="Times New Roman, Times, Serif" size="2">&nbsp;maintenance of a
                comprehensive parts and accessories inventory and same day or overnight
                availability;</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang Level 1" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="5%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="5%"><font face="Times New Roman, Times, Serif" size="2">&bull;</font>
                </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%">
                <font face="Times New Roman, Times, Serif" size="2">&nbsp;competitive pricing;
                and</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang Level 1" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="5%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="5%"><font face="Times New Roman, Times, Serif" size="2">&bull;</font>
                </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;a
                toll-free support line to resolve customer service problems.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
        addition, the Company, under the name DRYCLEAN USA&reg;, currently franchises and licenses
        over 400 retail drycleaning stores in the United States, the Caribbean and Latin America,
        making it one of the largest retail drycleaning license and franchise operations in the dry
        cleaning industry. During fiscal 2007 and 2006, the Company&rsquo;s license and franchise
        segment contributed approximately 1.2% and 1.7%, respectively, of the Company&rsquo;s
        revenues.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Through
        its Steiner Brokerage subsidiary, the Company acts as a business broker to assist others
        seeking to buy or sell existing dry cleaning and laundry businesses. Some of the
        Company&rsquo;s existing customers have become Steiner Brokerage clients, utilizing the
        Company&rsquo;s staff and ability to assist them in the sale of their businesses and
        associated real property. This business contributed less than 1% of the Company&rsquo;s
        revenues during each of fiscal 2007 and 2006.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        Company, through its DRYCLEAN USA Development subsidiary, develops new turn-key dry
        cleaning establishments for resale to third parties. During fiscal 2007, DRYCLEAN USA
        Development contributed less than 1% of the Company&rsquo;s revenues. It did not contribute
        any revenues in fiscal 2006.</font></p>
        <!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" --><a name="A017"></a>

        <h1 align="left"><font face="Times New Roman, Times, Serif" size="2">Sales, Marketing and
        Customer Support</font></h1>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        laundry and dry cleaning equipment products marketed by the Company are sold by it to its
        customers in the United States, the Caribbean and Latin America, as well as customers of
        its</font></p>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">5</font></p>

        <div style="PAGE-BREAK-AFTER: always">
        </div>
        <!-- MARKER PAGE="; page: 5" -->
        <hr color="gray" noshade size="5">
        <!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->

        <p><font face="Times New Roman, Times, Serif" size="2">DRYCLEAN USA licensing subsidiary.
        The Company employs sales executives to market its proprietary and distributed products,
        including its Aero-Tech&reg;, Multi-Jet&reg; and Green-Jet&reg; products, in the United
        States and in international markets. The Company supports product sales by advertising in
        trade publications, participating in trade shows and engaging in regional promotions and
        sales incentive programs. A substantial portion of equipment and parts sales orders are
        obtained by telephone, e-mail and fax inquiries originated by the customer or by
        representatives of the Company, and significant repeat sales are derived from existing
        customers.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        Company trains its sales and service employees to provide service and customer support. The
        Company uses specialized classroom training, instructional videos and vendor sponsored
        seminars to educate employees about product information. In addition, the Company&rsquo;s
        technical staff has prepared comprehensive training manuals, written in English and
        Spanish, relating to specific training procedures. The Company&rsquo;s technical personnel
        are continuously retrained as new technology is developed. The Company monitors service
        technicians&rsquo; continued educational experience and fulfillment of requirements in
        order to evaluate their competence. All of the Company&rsquo;s service technicians receive
        service bulletins, service technicians&rsquo; tips and continued training
        seminars.</font></p>
        <!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" -->

        <h1 align="left"><font face="Times New Roman, Times, Serif" size="2">Customers and
        Markets</font></h1>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        Company&rsquo;s customer base consists of approximately 750 customers in the United States,
        the Caribbean and Latin America, including independent and franchise dry cleaning stores
        and chains, hotels, motels, cruise lines, hospitals, nursing homes, government institutions
        and distributors. One customer accounted for approximately 11% of the Company&rsquo;s
        revenues during the year ended June 30, 2007. Another customer accounted for approximately
        17% of the Company&rsquo;s revenues during the year ended June 30, 2006.</font></p>
        <!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" --><a name="A020"></a>

        <h1 align="left"><font face="Times New Roman, Times, Serif" size="2">Foreign
        Sales</font></h1>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
        the years ended June 30, 2007 and 2006, export revenues, principally to the Caribbean and
        Latin America, aggregated approximately $3,684,000 and $2,739,000, respectively, of which
        approximately $3,548,000 and $2,533,000, respectively, related to commercial and industrial
        laundry and dry cleaning equipment.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
        of the Company&rsquo;s export sales require the customer to make payment in United States
        dollars. Accordingly, foreign sales may be affected by the strength of the United States
        dollar relative to the currencies of the countries in which their customers and competitors
        are located, as well as the strength of the economies of the countries in which the
        Company&rsquo;s customers are located.</font></p>
        <!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" --><a name="A021"></a>

        <h1 align="left"><font face="Times New Roman, Times, Serif" size="2">Sources of
        Supply</font></h1>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        Company purchases laundry and dry cleaning machines, boilers and the other products from a
        number of manufacturers. Two of its suppliers accounted for approximately 24% and 21% of
        the Company&rsquo;s purchases for the year ended June 30, 2007. One of these suppliers
        accounted for approximately 23% of the Company&rsquo;s purchases for the year ended June
        30, 2006. The Company&rsquo;s major suppliers are Pellerin Milnor Corporation, Chicago
        Dryer Company, FMB Group and Unipress Corporation. Historically, the Company has not
        experienced difficulty in purchasing products it distributes for others and believes it has
        good working relationships with its suppliers.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        supplier of a significant portion of the Company&rsquo;s laundry equipment and related
        spare parts is located near New Orleans. While its plant was only slightly damaged by
        Hurricane Katrina, its power and employee availability were disrupted, causing shipment
        delays during fiscal 2006.</font></p>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">6</font></p>

        <div style="PAGE-BREAK-AFTER: always">
        </div>
        <!-- MARKER PAGE="; page: 6" -->
        <hr color="gray" noshade size="5">
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        Company&rsquo;s proprietary Green-Jet&reg; dry-wetcleaning machines are currently
        manufactured exclusively for the Company by one manufacturer in the United States.
        Substantially all of the Company&rsquo;s dry cleaning equipment sold under the
        Aero-Tech&reg; and Multi-Jet&reg; labels is currently manufactured exclusively for the
        Company by two manufacturers in Italy.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        Company has established long-standing relationships with these manufacturers. The
        Company&rsquo;s management believes its supplier relationships for the products it
        distributes for others and its proprietary products provide the Company with a substantial
        competitive advantage, including exclusivity for certain products in certain areas and
        favorable prices and terms. Therefore, the loss of certain of these vendor relationships
        could adversely affect the Company&rsquo;s business.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        Company has a formal contract with only a few of its equipment suppliers and manufacturers
        and relies on its long-standing relationship with its other suppliers and manufacturers.
        The Company collaborates in the design of products and closely monitors the quality of its
        manufactured product. The Company must place its orders with its United States manufacturer
        of the Green-Jet&reg; dry-wetcleaning machine and with its Italian manufacturers of its
        Aero-Tech&reg; and Multi-Jet&reg; dry cleaning machines prior to the time the Company has
        received all of its orders and, in certain instances, places orders for products it
        distributes in advance of its receipt of sales orders. However, because of the
        Company&rsquo;s close working relationship with its suppliers and manufacturers, the
        Company can usually adjust orders rapidly and efficiently to reflect a change in customer
        demands. The Company believes that if, for any reason, its arrangements with the
        manufacturers of its proprietary products were to cease, or in the event the cost of these
        products were to be adversely affected, it will be able to have these products manufactured
        by other suppliers.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        Company&rsquo;s current bank revolving credit facility includes a $250,000 foreign exchange
        subfacility for the purpose of enabling the Company to mitigate its currency exposure in
        connection with its import activities through spot foreign exchange and forward exchange
        contracts. There were no open foreign exchange contracts at either June 30, 2007 or
        2006.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Imports
        into the United States are also affected by the cost of transportation, the imposition of
        import duties and increased competition from greater production demands abroad. The United
        States, Italy and the European Union may, from time to time, impose quotas, duties, tariffs
        or other restrictions or adjust prevailing quotas, duties or tariff levels, which could
        affect the Company&rsquo;s margins on its Aero-Tech&reg; and Multi-Jet&reg; machines. There
        have been no custom duties on the Company&rsquo;s imported dry cleaning machines in either
        fiscal 2007 and 2006.</font></p>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">7</font></p>

        <div style="PAGE-BREAK-AFTER: always">
        </div>
        <!-- MARKER PAGE="; page: 7" -->
        <hr color="gray" noshade size="5">
        <!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" --><a name="A024"></a>

        <h1 align="left">
        <font face="Times New Roman, Times, Serif" size="2">Competition</font></h1>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        commercial and industrial laundry and dry cleaning equipment distribution business is
        highly competitive and fragmented with over 100 full-line or partial-line equipment
        distributors in the United States. The Company&rsquo;s management believes that no one
        distributor has a major share of the market, substantially all distributors are
        independently owned and, with the exception of several regional distributors, operate
        primarily in local markets. Competition is based primarily on price, product quality,
        delivery and support services provided to the customer. In Florida, the Company&rsquo;s
        principal domestic market, the Company&rsquo;s primary competition is derived from a number
        of full line distributors, which operate throughout Florida. In the export market, the
        Company competes with several distributors and anticipates increased competition as the
        export market grows. The Company&rsquo;s proprietary dry cleaning equipment competes with
        over a dozen manufacturers of dry cleaning equipment whose products are distributed
        nationally. In all geographic areas, the Company competes by offering an extensive product
        selection, value-added services, such as product inspection and quality assurance, a
        toll-free customer support line, reliability, warehouse location, price, competitive
        special features and, with respect to certain products, as to which the Company acts as
        distributor, exclusivity.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
        a franchisor/licensor of retail dry cleaning stores, DRYCLEAN USA competes with several
        other franchisors and turn-key suppliers of dry cleaning stores primarily on the basis of
        trademark recognition and reputation. As a broker in the purchase and sale of retail dry
        cleaning stores and coin laundry businesses, Steiner Brokerage competes with business
        brokers generally, as well as with other professionals with contacts in the retail dry
        cleaning and coin laundry business. Competition in this latter area is primarily based on
        reputation, advertising and, to a lesser degree, on the level of fees charged.</font></p>
        <!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" --><a name="A025"></a>

        <h1 align="left"><font face="Times New Roman, Times, Serif" size="2">Research and
        Development</font></h1>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        Company has designed and introduced its Green-Jet&reg; dry-wetcleaning and Multi-Jet&reg;
        drycleaning machines and continues to improve these products. The amounts of research and
        development expenses for the years ended June 30, 2007 and 2006 were $41,910 and $27,805,
        respectively.</font></p>
        <!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" --><a name="A026"></a>

        <h1 align="left"><font face="Times New Roman, Times, Serif" size="2">Patents and
        Trademarks</font></h1>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        Company is the owner of United States service mark registrations for the names
        Aero-Tech&reg;, Multi-Jet&reg; and Green-Jet&reg;, which are used in connection with its
        laundry and dry cleaning equipment, and of DRYCLEAN USA&reg;, which is licensed by it to
        retail dry cleaning establishments. The Company intends to use and protect these or related
        service marks, as necessary. The Company believes its trademarks and service marks have
        significant value and are an important factor in the marketing of its products. Patents
        were granted in May 2005 for the protection of the Company&rsquo;s new Green-Jet&reg;
        dry-wetcleaning machine in the United States which will expire in May 2021 and patents have
        been applied for in certain foreign countries.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
        January 3, 2005, the Company entered into a Patent License Agreement with Whirlpool
        Corporation (&ldquo;Whirlpool&rdquo;) in which the Company granted Whirlpool an exclusive
        license until December 31, 2008 and thereafter a non-exclusive license to make and sell
        laundry appliances incorporating the Company&rsquo;s patent applications and other
        intellectual property related to fabric treatment technology for improving the drying and
        refreshing of garments in home clothes dryers. In consideration for the grant of the
        exclusive license through December 31, 2008, Whirlpool paid the Company $350,000, of which
        $331,100 was for the exclusive license fee. In addition, Whirlpool is to pay the Company a
        per unit royalty for dryers using the licensed technology that are sold during the three
        year period following the first sale following commercial production of dryers using the
        license technology. As of June 30, 2007 Whirlpool has not introduced any products
        containing the Company&rsquo;s technologies.</font></p>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">8</font></p>

        <div style="PAGE-BREAK-AFTER: always">
        </div>
        <!-- MARKER PAGE="; page: 8" -->
        <hr color="gray" noshade size="5">
        <!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" -->

        <h1 align="left"><font face="Times New Roman, Times, Serif" size="2">Compliance with
        Environmental and Other Government Laws and Regulations</font></h1>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Over
        the past several decades in the United States, federal, state and local governments have
        enacted environmental protection laws in response to public concerns about the environment,
        including with respect to perchloroethylene (Perc), the primary cleaning agent historically
        used in the commercial and industrial dry cleaning process. A number of industries,
        including the commercial and industrial dry cleaning and laundry equipment industries, are
        subject to these evolving laws and implementing regulations. As a supplier to the industry,
        the Company serves customers who are primarily responsible for compliance with
        environmental regulations. Among the federal laws that the Company believes are applicable
        to the industry are the Comprehensive Environmental Response, Compensation and Liability
        Act of 1980 (&ldquo;CERCLA&rdquo;), which provides for the investigation and remediation of
        hazardous waste sites; the Resource Conservation and Recovery Act of 1976, as amended
        (&ldquo;RCRA&rdquo;), which regulates the generation and transportation of hazardous waste
        as well as its treatment, storage and disposal; and the Occupational Safety and Health
        Administration Act (&ldquo;OSHA&rdquo;), which regulates exposure to toxic substances and
        other health and safety hazards in the workplace. Most states and a number of localities
        have laws that regulate the environment which are at least as stringent as the federal
        laws. In Florida, for example, in which a significant amount of the Company&rsquo;s dry
        cleaning and laundry equipment sales are made, environmental matters are regulated by the
        Florida Department of Environmental Protection which generally follows the United States
        government&rsquo;s Environmental Protection Agency&rsquo;s (&ldquo;EPA&rdquo;) policy in
        the EPA&rsquo;s implementation of CERCLA and RCRA and closely adheres to OSHA&rsquo;s
        standards.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        Company believes its Aero-Tech&reg; and Multi-Jet&reg; dry cleaning machines and its
        Green-Jet&reg; dry-wetcleaning machine exceed environmental regulation standards set by
        safety and environmental regulatory agencies.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        Company does not believe that compliance with Federal, state and local environmental and
        other laws and regulations which have been adopted have had, or will have, a material
        effect on its capital expenditures, earnings or competitive position.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        Company is also subject to Federal Trade Commission (the &ldquo;FTC&rdquo;) regulations and
        various state laws regulating the offer and sale of franchises. The FTC and various state
        laws require the Company to, among other things, furnish to prospective franchisees a
        franchise offering circular containing prescribed information. Certain states in the United
        States require separate filings in order to offer and sell franchises in those states. The
        Company believes that it is in compliance in all material respects with these
        laws.</font></p>
        <!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" -->

        <h1 align="left"><font face="Times New Roman, Times, Serif" size="2">Employees</font></h1>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        Company currently employs 34 employees on a full-time basis, of whom 4 serve in executive
        management capacities, 13 are engaged in sales and marketing, 8 are administrative and
        clerical personnel, and 9 serve as warehouse support. None of the Company&rsquo;s employees
        are subject to a collective bargaining agreement, nor has the Company experienced any work
        stoppages. The Company believes that its relations with employees are
        satisfactory.</font></p>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">9</font></p>

        <div style="PAGE-BREAK-AFTER: always">
        </div>
        <!-- MARKER PAGE="; page: 9" -->
        <hr color="gray" noshade size="5">
        <!-- MARKER FORMAT-SHEET="Para Large Hang BU" FSL="Project" --><a name="A031"></a>

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%">
                <font face="Times New Roman, Times, Serif" size="2"><b><a name="f10ksb063007-Item2">
                Item 2.</a></b></font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%">
                <font face="Times New Roman, Times, Serif" size="2"><b><u>Description of
                Properties.</u></b></font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        Company&rsquo;s executive offices and the main distribution center for its products are
        housed in three leased adjacent facilities totaling approximately 45,000 square feet in
        Miami, Florida. The Company believes its facilities are adequate for its present and
        anticipated future needs. The following table sets forth certain information concerning the
        leases at these facilities:</font></p>

        <table cellspacing="0" cellpadding="0" width="50%" align="center" border="0">
            <tr valign="bottom">
                <th align="left"><font face="Times New Roman" size="1"><u><br>
                Facility</u></font></th>

                <th><font face="Times New Roman" size="1">Approximate<br>
                <u>Sq. Ft.</u></font> </th>

                <th align="left"><font face="Times New Roman" size="1"><u><br>
                Expiration</u></font></th>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left" width="35%"><font face="Times New Roman" size="2"><br>
                Miami, Florida (1)</font></td>

                <td align="center" width="30%">
                <font face="Times New Roman" size="2">27,000&nbsp;</font> </td>

                <td align="left" width="35%"><font face="Times New Roman" size="2">October 2008
                (2)</font></td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">Miami, Florida</font></td>

                <td align="center">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;8,000</font></td>

                <td align="left"><font face="Times New Roman" size="2">March 2008</font></td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">Miami, Florida</font></td>

                <td align="center"><font face="Times New Roman" size="2">10,000&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">December 2008
                (3)</font></td>
            </tr>
        </table>
        <!-- MARKER FORMAT-SHEET="Cutoff Rule" FSL="Default" -->

        <p>_________________</p>
        <!-- MARKER FORMAT-SHEET="Para (List) Hang " FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td align="left" width="3%">
                <font face="Times New Roman, Times, Serif" size="2">(1)</font> </td>

                <td width="97%">
                    <p align="left"><font face="Times New Roman, Times, Serif" size="2">&nbsp;
                    Leased from Sheila Steiner, who, together with her husband, William K. Steiner,
                    Chairman of the Board of Directors and a director of the Company, are the
                    trustees of a trust which is a principal shareholder of the Company.</font></p>
                </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para (List) Hang " FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td align="left" width="3%">
                <font face="Times New Roman, Times, Serif" size="2">(2)</font> </td>

                <td width="97%">
                    <p align="left"><font face="Times New Roman, Times, Serif" size="2">&nbsp; The
                    Company has two three-year renewal options.</font></p>
                </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para (List) Hang " FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td align="left" width="3%">
                <font face="Times New Roman, Times, Serif" size="2">(3)</font> </td>

                <td width="97%">
                    <p align="left"><font face="Times New Roman, Times, Serif" size="2">&nbsp; The
                    Company has a three-year renewal option.</font></p>
                </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Large Hang BU" FSL="Project" --><a name="A032"></a>

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%">
                <font face="Times New Roman, Times, Serif" size="2"><b><a name="f10ksb063007-Item3">
                Item 3.</a></b></font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2"><b><u>Legal
                Proceedings.</u></b></font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        Company is not a party to any material pending legal proceedings.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Hang BU" FSL="Project" --><a name="A033"></a>

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%">
                <font face="Times New Roman, Times, Serif" size="2"><b><a name="f10ksb063007-Item4">
                Item 4.</a></b></font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%">
                <font face="Times New Roman, Times, Serif" size="2"><b><u>Submission of Matters to
                a Vote of Security Holders.</u></b></font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not
        applicable.</font></p>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">10</font></p>

        <div style="PAGE-BREAK-AFTER: always">
        </div>
        <!-- MARKER PAGE="; page: 10" -->
        <hr color="gray" noshade size="5">
        <!-- MARKER FORMAT-SHEET="Head Minor Center Bold" FSL="Default" -->

        <h1 align="center"><font face="Times New Roman, Times, Serif" size="2">PART II</font></h1>
        <!-- MARKER FORMAT-SHEET="Para Large Hang BU" FSL="Project" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%">
                <font face="Times New Roman, Times, Serif" size="2"><b><a name="f10ksb063007-Item5">
                Item 5.</a></b></font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2"><b><u>Market
                for the Common Equity and Related Stockholder Matters.</u></b></font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        Company&rsquo;s Common Stock is traded on the American Stock Exchange (the
        &ldquo;Amex&rdquo;) and on the Chicago Stock Exchange, each under the symbol
        &ldquo;DCU.&rdquo; The following table sets forth, for the Company&rsquo;s Common Stock,
        the high and low sales prices on the Amex, as reported by Amex, for the periods reflected
        below.</font></p>
        &nbsp;

        <table cellspacing="0" cellpadding="0" width="40%" align="center" border="0">
            <tr valign="bottom">
                <th colspan="3">
                </th>

                <th align="right" colspan="2">
                <font face="Times New Roman" size="1"><u>High</u></font></th>

                <th>
                </th>

                <th align="right" colspan="2">
                <font face="Times New Roman" size="1"><u>Low</u></font></th>

                <th>
                </th>
            </tr>

            <tr valign="bottom">
                <td align="left" width="46%"><font face="Times New Roman" size="2"><u>Fiscal
                2007</u></font></td>

                <td align="left" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="left" width="9%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="16%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="left" width="9%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="16%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="left" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">First Quarter</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">2</font></td>

                <td align="left"><font face="Times New Roman" size="2">.39</font></td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">1</font></td>

                <td align="left"><font face="Times New Roman" size="2">.40</font></td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">Second Quarter</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">2</font></td>

                <td align="left"><font face="Times New Roman" size="2">.65</font></td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">1</font></td>

                <td align="left"><font face="Times New Roman" size="2">.80</font></td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">Third Quarter</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">2</font></td>

                <td align="left"><font face="Times New Roman" size="2">.70</font></td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">1</font></td>

                <td align="left"><font face="Times New Roman" size="2">.79</font></td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">Fourth Quarter</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">2</font></td>

                <td align="left"><font face="Times New Roman" size="2">.15</font></td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">1</font></td>

                <td align="left"><font face="Times New Roman" size="2">.90</font></td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2"><br>
                <u>Fiscal 2006</u></font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">First Quarter</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">2</font></td>

                <td align="left"><font face="Times New Roman" size="2">.95</font></td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">2</font></td>

                <td align="left"><font face="Times New Roman" size="2">.45</font></td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">Second Quarter</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">2</font></td>

                <td align="left"><font face="Times New Roman" size="2">.80</font></td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">2</font></td>

                <td align="left"><font face="Times New Roman" size="2">.12</font></td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">Third Quarter</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">2</font></td>

                <td align="left"><font face="Times New Roman" size="2">.60</font></td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">1</font></td>

                <td align="left"><font face="Times New Roman" size="2">.95</font></td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">Fourth Quarter</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">2</font></td>

                <td align="left"><font face="Times New Roman" size="2">.23</font></td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">1</font></td>

                <td align="left"><font face="Times New Roman" size="2">.79</font></td>
            </tr>
        </table>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
        of September 21, 2007, there were approximately 480 holders of record of the
        Company&rsquo;s Common Stock.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        following table sets forth information concerning the cash dividends declared by the
        Company&rsquo;s Board of Directors during the periods covered by this Report:</font></p>

        <table cellspacing="0" cellpadding="0" width="90%" align="center">
            <tr valign="bottom">
                <th>
                    <font face="Times New Roman" size="1">Declaration<br>
                    Date</font>
                    <hr width="90%" color="black" noshade size="1">
                </th>

                <th>
                    <font face="Times New Roman" size="1">Record<br>
                    Date</font>
                    <hr width="90%" color="black" noshade size="1">
                </th>

                <th>
                    <font face="Times New Roman" size="1">Payment<br>
                    Date</font>
                    <hr width="90%" color="black" noshade size="1">
                </th>

                <th align="center">
                    <font face="Times New Roman" size="1">Per Share<br>
                    Amount</font>
                    <hr width="90%" color="black" noshade size="1">
                </th>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left" width="30%">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;March
                29, 2007</font></td>

                <td align="left" width="30%">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;April
                13, 2007</font></td>

                <td align="left" width="30%">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;May
                1, 2007</font></td>

                <td align="center" width="10%">
                <font face="Times New Roman" size="2">$.04</font></td>
            </tr>

            <tr valign="bottom">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;September
                26, 2006</font></td>

                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;October
                13, 2006</font></td>

                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;November
                1, 2006</font></td>

                <td align="center"><font face="Times New Roman" size="2">$.04</font></td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;March
                31, 2006</font></td>

                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;April
                14, 2006</font></td>

                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;May
                1, 2006</font></td>

                <td align="center"><font face="Times New Roman" size="2">$.04</font></td>
            </tr>

            <tr valign="bottom">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;September
                23, 2005</font></td>

                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;October
                14, 2005</font></td>

                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;November
                1, 2005</font></td>

                <td align="center"><font face="Times New Roman" size="2">$.04</font></td>
            </tr>
        </table>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        Company is a party to a Loan and Security Agreement with a commercial bank, which, among
        other things, provides that the Company may declare or pay dividends only to the extent
        that the dividend payment would not reasonably likely result in a failure by the Company to
        maintain specified consolidated debt service or short-term debt to equity
        ratios.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        Company did not sell any equity securities during the year ended June 30, 2007 that were
        not registered under the Securities Act of 1933, as amended. The Company did not repurchase
        any securities during the fourth quarter of fiscal 2007.</font></p>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">11</font></p>

        <div style="PAGE-BREAK-AFTER: always">
        </div>
        <!-- MARKER PAGE="; page: 11" -->
        <hr color="gray" noshade size="5">
        <!-- MARKER FORMAT-SHEET="Para Large Hang BU" FSL="Project" --><a name="A038"></a>

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%">
                <font face="Times New Roman, Times, Serif" size="2"><b><a name="f10ksb063007-Item6">
                Item 6.</a></b></font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%">
                <font face="Times New Roman, Times, Serif" size="2"><b><u>Management&rsquo;s
                Discussion and Analysis or Plan of Operation.</u></b></font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" --><a name="A039"></a>

        <h1 align="left"><font face="Times New Roman, Times, Serif" size="2">General</font></h1>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        following discussion should be read in conjunction with the Consolidated Financial
        Statements and Notes thereto which appear in Item 7 of this Report.</font></p>
        <!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" --><a name="A040"></a>

        <h1 align="left"><font face="Times New Roman, Times, Serif" size="2">Overview</font></h1>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        Company set record revenues and increased its earnings in fiscal 2007, increasing revenues
        by 11.4% to $22,748,527 and net income by 9.6% to $880,990 over fiscal 2006. While the
        quarters in fiscal 2006 were somewhat erratic due to the hurricanes of southern Florida
        suffered in fiscal 2006, which affected quarterly comparative results, the yearly
        comparisons more accurately represent the Company&rsquo;s comparative
        performance.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        improved performance was led by a 21.1% increase in sales of commercial laundry equipment,
        a 33.8% increase in boiler sales and a 5.3% increase in parts sales, partially offset by a
        decrease of 8.6% in sales of dry cleaning equipment. Approximately 40.1% of the overall
        revenue improvement was produced by increased foreign sales due to improvements in the
        economies of the foreign market served by the Company, which had been weak over the last
        few years.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        increase in sales offset a 8/10 of 1 percentage point decline in gross profit percentage
        caused by accepting larger orders which carry a smaller margin in order to remain
        competitive. The Company believes that its future growth will be with respect to commercial
        laundry equipment, which historically carries lower margins, and away from dry cleaning
        equipment sales, which are expected to remain subdued in coming years.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating
        costs have remained under control, having risen by only 1.1 percentage point, mostly due to
        higher payroll expenses. Due to the high cost of windstorm property insurance following the
        hurricanes in Florida in fiscal 2006, the Company decided to self-insure against wind
        damage, thereby keeping costs at reasonable levels during fiscal 2007. However, effective
        August 15, 2007, the Company purchased windstorm property insurance on inventory and
        personal property at reasonable rates.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        Company continues to strengthen its financial condition. Inventories have remained
        relatively constant while cash on hand increased to over $4 million at the end of fiscal
        2007. The excess cash is invested in money market and overnight &ldquo;sweep&rdquo;
        accounts which, together with higher prevailing interest rates, resulted in an increase in
        interest income.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
        fiscal 2008, the Company will be subject to Sarbanes-Oxley section 404, which requires
        adequate internal controls over financial reporting. Management believes it already has
        adequate controls in place and should be able to meet these new regulations with a minimum
        investment.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At
        the start of fiscal 2008, the Company reorganized a number of individual responsibilities
        and hired a new operations manager. These changes will strengthen the Company&rsquo;s
        operations while allowing the Company to focus on continuing to improve its sales
        performance.</font></p>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">12</font></p>

        <div style="PAGE-BREAK-AFTER: always">
        </div>
        <!-- MARKER PAGE="; page: 12" -->
        <hr color="gray" noshade size="5">
        <!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" -->

        <h1 align="left"><font face="Times New Roman, Times, Serif" size="2">Liquidity and Capital
        Resources</font></h1>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
        the twelve month period ended June 30, 2007, cash increased by $1,189,712 compared to an
        increase of $1,524,587 during fiscal 2006.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        following table summarizes the Company&rsquo;s Consolidated Statement of Cash
        Flows:</font></p>

        <table cellspacing="0" cellpadding="0" width="70%" align="center" border="0">
            <tr valign="bottom">
                <th colspan="3"><font face="Times New Roman" size="1">&nbsp;</font> </th>

                <th colspan="5">
                    <font face="Times New Roman" size="1">Years Ended June 30,</font>
                    <hr width="90%" color="black" noshade size="1">
                </th>

                <th>
                </th>
            </tr>

            <tr valign="bottom">
                <th colspan="3">
                    <font face="Times New Roman" size="1">Net cash provided (used) by:</font>
                    <hr width="100%" color="black" noshade size="1">
                </th>

                <th colspan="3">
                    <font face="Times New Roman" size="1">2007</font>
                    <hr width="100%" color="black" noshade size="1">
                </th>

                <th colspan="3">
                    <font face="Times New Roman" size="1">2006</font>
                    <hr width="100%" color="black" noshade size="1">
                </th>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left" width="40%"><font face="Times New Roman" size="2">Operating
                activities</font></td>

                <td align="left" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="left" width="5%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="1%"><font face="Times New Roman" size="2">$</font></td>

                <td align="right" width="21%">
                <font face="Times New Roman" size="2">1,847,801</font></td>

                <td align="left" width="8%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="1%"><font face="Times New Roman" size="2">$</font></td>

                <td align="right" width="21%">
                <font face="Times New Roman" size="2">2,082,462</font></td>

                <td align="left" width="2%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">Investing
                activities</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">(95,046</font></td>

                <td align="left"><font face="Times New Roman" size="2">)</font></td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">(4,582</font></td>

                <td align="left"><font face="Times New Roman" size="2">)</font></td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">Financing
                activities</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">(563,043</font></td>

                <td align="left"><font face="Times New Roman" size="2">)</font></td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">(553,293</font></td>

                <td align="left"><font face="Times New Roman" size="2">)</font></td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
        the twelve month period ended June 30, 2007, operating activities provided cash of
        $1,847,801 compared to $2,082,462 for the twelve month period ended June 30, 2006. The
        decrease was mostly due to a reduction in changes in assets and liabilities of $409,708,
        attributed mainly to a reduction of $501,329 in customer deposits, which in fiscal 2006
        related to the receipt of certain large orders.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash
        generated from operating activities during fiscal 2007 was provided by net earnings of
        $880,990 and non-cash expenses for depreciation and amortization of $120,479, bad debt
        expense of $32,183, deferred taxes of $66,105 and inventory reserves of $57,428, coupled
        with changes in assets and liabilities of $690,616. The cash generated by changes in assets
        and liabilities was mostly due to decreases in accounts, trade notes and lease receivables
        ($391,214) arising from large end of year shipments in fiscal 2006 which were paid for in
        fiscal 2007, inventories ($21,213) and other assets ($154,722). Additional cash was
        provided by increases in accounts payable and accrued expenses ($183,087), accrued employee
        expenses ($14,250) and customer deposits ($143,427). Cash was reduced by unearned income of
        $82,775 associated with the amortization of the initial fee received from Whirlpool in
        January 2005 and a decrease in taxes payable of $70,391.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
        the twelve month period of fiscal 2006, the Company generated cash through net earnings of
        $803,981 and non-cash expenses for depreciation and amortization of $142,453, bad debt
        expense of $36,731 and inventory reserves of $60,279. This cash was partially offset by a
        reduction in deferred taxes of $61,306. Changes in assets and liabilities provided
        additional cash of $1,100,324 principally due to a $644,756 increase in customer deposits,
        coupled with a decrease in accounts, trade notes and lease receivables ($49,630) and
        inventories ($98,582) and increases in accounts payable and accrued expenses ($213,708),
        accrued employee expenses ($295,693) and income taxes payable ($74,884). This was partially
        offset by an increase in other assets ($134,145) and a decrease in unearned income
        ($82,775).</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investing
        activities for the twelve month period ended June 30, 2007, used cash of $95,046 mainly for
        capital expenditures of machinery and equipment and leasehold improvements ($93,846).
        During the same period of fiscal 2006 investing activities used cash of $4,582, as capital
        expenditures of $71,131 were offset by payments received on a note from the sale of the
        Company&rsquo;s telecommunications segment ($67,857), which was fully paid in November
        2005.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Financing
        activities used cash of $563,043 and $553,293 for the twelve month period ended June 30,
        2007 and 2006, respectively, mostly to pay cash dividends. In fiscal 2006, cash of $9,063
        was received from the exercise of a stock option to purchase 10,000 shares of the
        Company&rsquo;s common stock.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
        September 25, 2007, the Board of Directors declared a $.04 per share semi-annual dividend
        (or an aggregate of $281,372) payable on November 1, 2007 to stockholders of record on
        October 12, 2007.</font></p>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">13</font></p>

        <div style="PAGE-BREAK-AFTER: always">
        </div>
        <!-- MARKER PAGE="; page: 13" -->
        <hr color="gray" noshade size="5">
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
        October 30, 2006, the Company received an extension until October 30, 2007 of its existing
        $2,250,000 revolving line of credit facility. In addition, the Loan Agreement was amended
        to eliminate the requirement that 51% of the stock of the Company be owned by the Steiner
        family or any Steiner trust. The Company&rsquo;s obligations under the facility continue to
        be guaranteed by the Company&rsquo;s subsidiaries and collateralized by substantially all
        of the Company&rsquo;s and its subsidiaries&rsquo; assets. The Company has had no
        borrowings under this facility since May 2003. The Company intends to renew, and believes
        the bank will agree to renew, this line for another year.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        Company believes that its present cash position, the cash it expects to generate from
        operations and, should it need cash not presently anticipated, cash borrowings available
        under its line of credit will be sufficient to meet its presently contemplated operational
        needs.</font></p>
        <!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" --><a name="A044"></a>

        <h1 align="left"><font face="Times New Roman, Times, Serif" size="2">Off-Balance Sheet
        Financing</font></h1>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        Company has no off-balance sheet financing arrangements within the meaning of item 303(c)
        of Regulation S-B.</font></p>
        <!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" -->

        <h1 align="left"><font face="Times New Roman, Times, Serif" size="2">Results of
        Operations</font></h1>

        <table cellspacing="0" cellpadding="0" width="70%" align="center" border="0">
            <tr valign="bottom">
                <th colspan="3"><font face="Times New Roman" size="1">&nbsp;</font> </th>

                <th colspan="5">
                    <font face="Times New Roman" size="1">Year Ended June 30,</font>
                    <hr width="100%" color="black" noshade size="1">
                </th>

                <th colspan="3"><font face="Times New Roman" size="1">&nbsp;</font> </th>
            </tr>

            <tr valign="bottom">
                <th colspan="3"><font face="Times New Roman" size="1">&nbsp;</font> </th>

                <th colspan="3">
                    <font face="Times New Roman" size="1">2007</font>
                    <hr width="100%" color="black" noshade size="1">
                </th>

                <th colspan="3">
                    <font face="Times New Roman" size="1">2006</font>
                    <hr width="100%" color="black" noshade size="1">
                </th>

                <th colspan="3">
                    <font face="Times New Roman" size="1">&nbsp;</font>
                    <hr width="100%" color="black" noshade size="1">
                </th>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left" width="55%"><font face="Times New Roman" size="2">Net
                sales</font></td>

                <td align="left" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="left" width="2%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="1%"><font face="Times New Roman" size="2">$</font></td>

                <td align="right" width="10%">
                <font face="Times New Roman" size="2">22,091,863</font></td>

                <td align="left" width="4%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="1%"><font face="Times New Roman" size="2">$</font></td>

                <td align="right" width="10%">
                <font face="Times New Roman" size="2">19,464,842</font></td>

                <td align="left" width="3%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="left" width="11%">
                <font face="Times New Roman" size="2">+13.5%</font></td>

                <td align="left" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="left" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">Development fees, franchise
                and license</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left">
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">fees, commissions and
                other</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">656,664</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">950,048</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;-30.9%</font></td>

                <td align="left">
                </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td align="right" colspan="12">
                    <hr color="#000000" noshade size="1">
                </td>

                <td>
                </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">Total revenues</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">22,748,527</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">20,414,890</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">+11.4%</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td align="right" colspan="12">
                    <hr color="#000000" noshade size="3">
                </td>

                <td>
                </td>
            </tr>
        </table>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revenues
        for the year ended June 30, 2007 increased by $2,333,637 (11.4%) over fiscal 2006. The
        commercial laundry and dry cleaning segment increased its revenues by 12.0% primarily due
        to the addition of a new salesman and a $1,015,000 (40.1%) increase in foreign sales.
        However, the Company&rsquo;s license and franchise segment experienced a decrease of 22.2%
        in revenues, primarily due to a reduction in royalties and new dry cleaning franchises. For
        the year ended June 30, 2007, sales of commercial laundry equipment increased by 21.1%,
        sales of boilers increased by 33.8%, and sales of spare parts increased by 5.3%. These
        increases were partially offset by an 8.6% decrease in sales of dry cleaning equipment.
        Revenues of the Brokerage and Development divisions, which are included in the commercial
        laundry and dry cleaning segment, each contributed less the 1% of the Company&rsquo;s
        revenues.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Overall
        expenses of the Company, including costs of sales, were 94.5% of total revenues in fiscal
        2007, compared to 94.4% in fiscal 2006. The slight increase reflects the Company&rsquo;s
        ability to maintain a control on costs.</font></p>

        <table cellspacing="0" cellpadding="0" width="70%" align="center" border="0">
            <tr valign="bottom">
                <th colspan="2"><font face="Times New Roman" size="1">&nbsp;</font> </th>

                <th colspan="3">
                    <font face="Times New Roman" size="1">Year Ended June 30,</font>
                    <hr width="100%" color="black" noshade size="1">
                </th>

                <th>
                </th>
            </tr>

            <tr valign="bottom">
                <th colspan="2">
                    <font face="Times New Roman" size="1">&nbsp;</font>
                    <hr width="100%" color="black" noshade size="1">
                </th>

                <th colspan="2">
                    <font face="Times New Roman" size="1">2007</font>
                    <hr width="100%" color="black" noshade size="1">
                </th>

                <th colspan="2">
                    <font face="Times New Roman" size="1">2006</font>
                    <hr width="100%" color="black" noshade size="1">
                </th>
            </tr>

            <tr valign="bottom">
                <td align="left" width="76%"><font face="Times New Roman" size="2"><i>As a
                percentage of net sales:</i></font></td>

                <td align="left" width="4%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="6%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="left" width="6%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="6%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="left" width="2%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cost of
                sales</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">76</font></td>

                <td align="left"><font face="Times New Roman" size="2">.7%</font></td>

                <td align="right"><font face="Times New Roman" size="2">75</font></td>

                <td align="left"><font face="Times New Roman" size="2">.9%</font></td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2"><i>As a percentage of
                revenues:</i></font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right">
                </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Selling,
                general and administrative expenses</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">19</font></td>

                <td align="left"><font face="Times New Roman" size="2">.8%</font></td>

                <td align="right"><font face="Times New Roman" size="2">21</font></td>

                <td align="left"><font face="Times New Roman" size="2">.8%</font></td>
            </tr>

            <tr valign="bottom">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Research and
                development</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right">
                </td>

                <td align="left"><font face="Times New Roman" size="2">.2%</font></td>

                <td align="right">
                </td>

                <td align="left"><font face="Times New Roman" size="2">.1%</font></td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total
                expenses</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">94</font></td>

                <td align="left"><font face="Times New Roman" size="2">.5%</font></td>

                <td align="right"><font face="Times New Roman" size="2">94</font></td>

                <td align="left"><font face="Times New Roman" size="2">.4%</font></td>
            </tr>

            <tr>
                <td colspan="6">
                    <hr color="#000000" noshade size="3">
                </td>
            </tr>
        </table>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">14</font></p>

        <div style="PAGE-BREAK-AFTER: always">
        </div>
        <!-- MARKER PAGE="; page: 14" -->
        <hr color="gray" noshade size="5">
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cost
        of goods sold, expressed as a percentage of sales, increased to 76.7% in fiscal 2007
        compared to 75.9% in fiscal 2006 mostly due to some larger contracts which carry smaller
        margins in order to remain competitive and a change in product mix.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Selling,
        general and administrative expenses increased by $50,084 (1.1%), but improved as a
        percentage of revenues to 19.8% in fiscal 2007 from 21.8% in fiscal 2006. The slight
        increase in costs can be attributed to increased payroll and travel expenses, but were
        offset by reductions in office expenses, professional fees and utility costs. The
        improvement as a percentage of revenues resulted from spreading the costs over the
        increased revenues.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Research
        and development expenses are a small part of the Company&rsquo;s total operating expenses.
        These expenses relate to the on-going research on the Company&rsquo;s Green-Jet&reg; and
        Multi-Jet&reg; technologies and the application of these technologies to smaller machines
        for the dry cleaning and hotel industry.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest
        income increased by $87,350 (115.8%) as a result of interest earned on higher outstanding
        bank balances and higher prevailing rates.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        Company&rsquo;s effective income tax rate increased to 37.6% in fiscal 2007 from 34.5% in
        fiscal 2006 mostly due to a decrease in deferred tax assets.</font></p>
        <!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" --><a name="A047"></a>

        <h1 align="left"><font face="Times New Roman, Times, Serif" size="2">Inflation</font></h1>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inflation
        has not had a significant effect on the Company&rsquo;s operations during any of the
        reported periods.</font></p>
        <!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" -->

        <h1 align="left"><font face="Times New Roman, Times, Serif" size="2">Transactions with
        Related Parties</font></h1>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        Company leases 27,000 square feet of warehouse and office space from Sheila Steiner, who,
        together with her husband, William K. Steiner, Chairman of the Board of Directors and a
        director of the Company, are the trustees of a trust which is a principal shareholder of
        the Company. The lease is for a three-year period beginning November 1, 2005 at an annual
        rental of $94,500, with annual increases commencing November 1, 2006 of 3% over the rent in
        the prior year. The Company is to bear the costs of real estate taxes, utilities,
        maintenance, non-structural repairs and insurance. The lease contains two three-year
        renewal options in favor of the Company. The Company believes that the terms of the lease
        are comparable to terms that would be obtained from an unaffiliated third party for similar
        property in a similar locale.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
        fiscal 2007 and 2006, the Company paid a law firm, in which a director is of counsel,
        $46,700 and $45,300, respectively, for legal services performed.</font></p>
        <!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" --><a name="A049"></a>

        <h1 align="left"><font face="Times New Roman, Times, Serif" size="2">Critical Accounting
        Policies</font></h1>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Securities
        and Exchange Commission Financial Reporting Release No. 60 encourages all companies to
        include a discussion of critical accounting policies or methods used in the preparation of
        financial statements. Management believes the following critical accounting policies affect
        the significant judgments and estimates used in the preparation of the Company&rsquo;s
        financial statements:</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
        <b>Use of Estimates</b></font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        preparation of financial statements requires management to make estimates and judgments
        that affect the reported amounts of assets, liabilities, revenues and expenses, and related
        disclosure of</font></p>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">15</font></p>

        <div style="PAGE-BREAK-AFTER: always">
        </div>
        <!-- MARKER PAGE="; page: 15" -->
        <hr color="gray" noshade size="5">
        <!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->

        <p><font face="Times New Roman, Times, Serif" size="2">contingent assets and liabilities.
        On an ongoing basis, management evaluates these estimates, including those related to
        allowances for doubtful accounts receivable, the carrying value of inventories and
        long-lived assets, the timing of revenue recognition for initial license and franchise fees
        from sales of franchise arrangements and continuing license and franchise service fees, as
        well as sales returns. Management bases these estimates on historical experience and on
        various other assumptions that are believed to be reasonable under the circumstances, the
        results of which form the basis for making judgments about the recognition of revenues and
        expenses and the carrying value of assets and liabilities that are not readily apparent
        from other sources. Actual results may differ from these estimates under different
        assumptions or conditions.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent B" FSL="Project" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
        <b>Revenue Recognition and Accounts and Notes Receivable</b></font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Equipment
        and replacement parts are generally shipped FOB from the Company&rsquo;s warehouse or drop
        shipped FOB factory at which time risk of loss and title passes to the purchaser and the
        sale is recorded. Commissions and development fees are recorded when earned, generally when
        the services are performed or the transaction is closed. Individual franchise arrangements
        include a license and provide for payment of initial fees, as well as continuing royalties.
        Initial franchise fees are generally recorded upon the opening of the franchised store,
        which is evidenced by a certificate from the franchisee, indicating that the store has
        opened, and collectibility is reasonably assured. Continuing royalties represent regular
        contractual payments received for the use of the &ldquo;Dryclean USA&rdquo; marks, which
        are recognized as revenue when earned, generally on a straight line basis.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts
        and trade notes receivable are customer obligations due under normal trade terms. The
        Company sells its products primarily to independent dry clean and laundry plants. The
        Company performs continuing credit evaluations of its customers&rsquo; financial condition
        and depending on the term of credit, the amount of the credit granted and
        management&rsquo;s past history with a customer, the Company may require the customer to
        grant a security interest in the purchased equipment as collateral for the receivable.
        Senior management reviews accounts and notes receivable on a regular basis to determine if
        any such amounts will potentially be uncollectible. The Company includes any balances that
        are determined to be uncollectible, along with a general reserve based on older aged
        amounts, in its overall allowance for doubtful accounts. After all attempts to collect a
        receivable have failed, the receivable is written off. Based on the information available
        to management, it believes the Company&rsquo;s allowance for doubtful accounts as of June
        30, 2007 is adequate. However, actual write-offs might exceed the recorded
        allowance.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent B" FSL="Project" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
        <b>Franchise License Trademark and Other Intangible Assets</b></font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        franchise license, trademark, patents and trade name are stated at cost less accumulated
        amortization. Those assets are amortized on a straight-line basis over the estimated future
        periods to be benefited (10-15 years). The patents are amortized over the shorter of the
        patents&rsquo; useful life or legal life from the date such patents are granted. The
        Company reviews the recoverability of intangible assets based primarily upon an analysis of
        undiscounted cash flows from the intangible assets. In the event the expected future net
        cash flows should become less than the carrying amount of the assets, an impairment loss
        will be recorded in the period such determination is made based on the fair value of the
        related assets.</font></p>
        <!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" -->

        <h1 align="left"><font face="Times New Roman, Times, Serif" size="2">New Accounting
        Pronouncements</font></h1>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
        March 2006, the Emerging Issues Task Force (&ldquo;EITF&rdquo;) reached a consensus on EITF
        Issue No. 06-3, &ldquo;How Taxes Collected from Customers and Remitted to Governmental
        Authorities Should Be Presented in the Income Statement (that is, Gross versus Net
        Presentation).&rdquo; EITF 06-3 requires an entity to disclose its policy for presenting
        taxes assessed on revenue-producing transaction between a seller and customer. Such taxes
        may include sales, use, and some excise taxes, among others. EITF 06-3 is
        effective</font></p>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">16</font></p>

        <div style="PAGE-BREAK-AFTER: always">
        </div>
        <!-- MARKER PAGE="; page: 16" -->
        <hr color="gray" noshade size="5">
        <!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->

        <p><font face="Times New Roman, Times, Serif" size="2">for interim and annual periods
        ending after December 15, 2006 with early application permitted.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->

        <p><font face="Times New Roman, Times, Serif" size="2">For the periods presented in this
        Report, the Company has presented such taxes net. The implementation of EITF 06-3 did not
        have an effect on the Company&rsquo;s financial statements.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
        June 2006, the FASB issued FASB Interpretation No. 48, &ldquo;Accounting for Uncertainty in
        Income Taxes&rdquo; (&ldquo;FIN 48&rdquo;). FIN 48 clarifies the accounting for uncertainty
        in income taxes recognized in financial statements and prescribes a two-step test for the
        recognition and measurement of&nbsp;a tax position taken on a tax return.&nbsp; FIN 48
        provides guidance for determining whether tax benefits may be recognized with respect to
        uncertain tax positions and, if recognized, the amount that may be recorded.&nbsp; FIN 48
        is effective for fiscal years beginning after December 15, 2006. The Company does not
        believe FIN 48 will have a material effect on its consolidated financial
        statements.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
        September 2006, the FASB Issued SFAS No. 157, &ldquo;Fair Value Measurement&rdquo;
        (&ldquo;SFAS 157&rdquo;) which defines fair value, establishes a framework for measuring
        fair value in accordance with generally accepted accounting principles, and provides for
        additional fair value disclosures. SFAS 157 is effective for fiscal years beginning after
        November 15, 2007. The Company does not believe SFAS 157 will have a material effect on its
        consolidated financial statements.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
        September 2006, the Staff of the Securities and Exchange Commission issued Staff Accounting
        Bulletin No. 108, &ldquo;Considering the Effect of Prior Year Misstatements when
        Quantifying Misstatements in Current Year Financial Statements&rdquo; (&ldquo;SAB
        108&rdquo;). SAB&nbsp;108 requires the use of two approaches in quantitatively evaluating
        the materiality of misstatements. If the misstatement as quantified under either approach
        is material to the current year financial statements, the misstatement must be corrected.
        If the effect of correcting a prior year misstatement in the current year income statement
        is material, the prior year financial statements should be corrected. In the year of
        adoption (fiscal years ending after November 15, 2006), the misstatements may be corrected
        as an accounting change by adjusting opening retained earnings rather than being included
        in the current year income statement. The Company does not expect SAB 108 to have an impact
        on the Company&rsquo;s consolidated financial statements.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
        February 2007, the FASB issued SFAS&nbsp;159, &ldquo;The Fair Value Option for Financial
        Assets and Financial Liabilities&rdquo; which permits, at specified election dates, all
        entities to choose to measure eligible items at fair value. SFAS 159 is effective as of the
        beginning of an entity&rsquo;s fiscal year beginning on or after November 15, 2007 with
        early application permitted as of the beginning of a fiscal year beginning on or before
        November 15, 2007 if an entity also elects to apply the provisions of SFAS 157.
        Retrospective application is not permitted unless early adoption is adopted. The Company is
        evaluating the effect, if any, the adoption of SFAS&nbsp;159 will have on the
        Company&rsquo;s financial statements.</font></p>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">17</font></p>
        <!-- MARKER PAGE="; page: 17" -->
        <hr color="gray" noshade size="5">
        <!-- MARKER FORMAT-SHEET="Para Large Hang BU" FSL="Project" --><a name="A057"></a>

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%">
                <font face="Times New Roman, Times, Serif" size="2"><b><a name="f10ksb063007-Item7">
                Item 7.</a></b></font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2"><b><u>Financial
                Statements.</u></b></font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Right" FSL="Default" -->

        <p align="right"><font face="Times New Roman, Times, Serif" size="2">DRYCLEAN USA, Inc. and
        Subsidiaries</font></p>
        <!-- MARKER FORMAT-SHEET="Para Right" FSL="Default" -->

        <p align="right"><font face="Times New Roman, Times, Serif" size="2">Index to Consolidated
        Financial Statements</font></p>

        <table cellspacing="0" cellpadding="0" width="90%" border="0">
            <tr valign="bottom">
                <th>
                </th>

                <th align="right"><font face="Times New Roman" size="1"><u>Page</u></font></th>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left" width="95%"><font face="Times New Roman" size="2"><br>
                Reports of Independent Registered Public Accounting Firms</font></td>

                <td align="right" width="5%"><font face="Times New Roman" size="2">19&nbsp;</font>
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2"><br>
                Consolidated Balance Sheets at June 30, 2007 and 2006</font></td>

                <td align="right"><font face="Times New Roman" size="2">21&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2"><br>
                Consolidated Statements of Operations for the years ended June 30, 2007 and
                2006</font></td>

                <td align="right"><font face="Times New Roman" size="2">22&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2"><br>
                Consolidated Statements of Shareholders' Equity for the years ended June 30, 2007
                and 2006</font></td>

                <td align="right"><font face="Times New Roman" size="2">23&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2"><br>
                Consolidated Statements of Cash Flows for the years ended June 30, 2007 and
                2006</font></td>

                <td align="right"><font face="Times New Roman" size="2">24&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2"><br>
                Summary of Accounting Policies</font></td>

                <td align="right"><font face="Times New Roman" size="2">25&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2"><br>
                Notes to Consolidated Financial Statements</font></td>

                <td align="right"><font face="Times New Roman" size="2">30&nbsp;</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">18</font></p>

        <div style="PAGE-BREAK-AFTER: always">
        </div>
        <!-- MARKER PAGE="; page: 18" -->
        <hr color="gray" noshade size="5">
        <!-- MARKER FORMAT-SHEET="Head Major Center Bold" FSL="Default" -->

        <h1 align="center"><font face="Times New Roman, Times, Serif" size="2"><u>REPORT OF
        INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</u></font></h1>
        <!-- MARKER FORMAT-SHEET="Head Left" FSL="Default" -->

        <p align="left"><font face="Times New Roman, Times, Serif" size="2">Board of Directors and
        Shareholders<br>
        DRYCLEAN USA, Inc. and Subsidiaries:<br>
        Miami, Florida</font></p>
        <!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->

        <p><font face="Times New Roman, Times, Serif" size="2">We have audited the accompanying
        consolidated balance sheet of DRYCLEAN USA, Inc. and Subsidiaries (the
        &ldquo;Company&rdquo;) as of June 30, 2007, and the related consolidated statements of
        operations, shareholders&rsquo; equity, and cash flows for the year then ended. These
        consolidated financial statements are the responsibility of the Company&rsquo;s management.
        Our responsibility is to express an opinion on these financial statements based on our
        audit.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->

        <p><font face="Times New Roman, Times, Serif" size="2">We conducted our audit in accordance
        with the standards of the Public Company Accounting Oversight Board (United States). Those
        standards require that we plan and perform the audit to obtain reasonable assurance about
        whether the consolidated financial statements are free of material misstatement. The
        Company was not required to have, nor were we engaged to perform, an audit of the
        Company&rsquo;s internal control over financial reporting. Our audit included consideration
        of internal control over financial reporting as a basis for designing audit procedures that
        are appropriate in the circumstances, but not for the purpose of expressing an opinion on
        the effectiveness of the Company&rsquo;s internal control over financial reporting.
        Accordingly, we express no such opinion. An audit also includes examining, on a test basis,
        evidence supporting the amounts and disclosures in the consolidated financial statements,
        assessing the accounting principles used and significant estimates made by management, as
        well as evaluating the overall financial statement presentation. We believe that our audit
        provides a reasonable basis for our opinion.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->

        <p><font face="Times New Roman, Times, Serif" size="2">In our opinion, the consolidated
        financial statements referred to above present fairly, in all material respects, the
        consolidated financial position of DRYCLEAN USA, Inc. and Subsidiaries as of June 30, 2007
        and the consolidated results of their operations and their cash flows for the year then
        ended in conformity with accounting principles generally accepted in the United States of
        America.</font></p>
        <!-- MARKER FORMAT-SHEET="Head Left" FSL="Default" -->
        <!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->

        <p><font face="Times New Roman, Times, Serif" size="2">/s/ Berkovits &amp; Company,
        LLP</font></p>

        <p><font face="Times New Roman, Times, Serif" size="2">Fort Lauderdale, Florida<br>
        August 28, 2007, except<br>
        for the second paragraph of<br>
        Note 12 as to which the date<br>
        is September 25, 2007</font></p>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">19</font></p>

        <div style="PAGE-BREAK-AFTER: always">
        </div>
        <!-- MARKER PAGE="; page: 19" -->
        <hr color="gray" noshade size="5">
        <!-- MARKER FORMAT-SHEET="Head Left" FSL="Default" -->

        <p align="left"><font face="Times New Roman, Times, Serif" size="2">Report of Independent
        Registered Public Accounting Firm&nbsp;</font></p>
        <!-- MARKER FORMAT-SHEET="Head Left" FSL="Default" -->

        <p align="left"><font face="Times New Roman, Times, Serif" size="2">Board of Directors and
        Shareholders<br>
        DRYCLEAN USA, Inc. and Subsidiaries:</font></p>
        <!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->

        <p><font face="Times New Roman, Times, Serif" size="2">We have audited the accompanying
        consolidated balance sheet of DRYCLEAN USA, Inc. and subsidiaries as of June 30, 2006, and
        the related consolidated statement of operations, shareholders&rsquo; equity and cash flows
        for the year then ended. These consolidated financial statement are the responsibility of
        the Company&rsquo;s management. Our responsibility is to express an opinion on these
        financial statements based on our audits.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->

        <p><font face="Times New Roman, Times, Serif" size="2">We conducted our audits in
        accordance with the standards of the Public Company Accounting Oversight Board (United
        States). Those standards require that we plan and perform the audit to obtain reasonable
        assurance about whether the consolidated financial statements are free of material
        misstatement. The Company was not required to have, nor were we engaged to perform, an
        audit of the Company&rsquo;s internal control over financial reporting. Our audits included
        consideration of internal control over financial reporting as a basis for designing audit
        procedures that are appropriate in the circumstances, but not for the purpose of expressing
        an opinion on the effectiveness of the Company&rsquo;s internal control over financial
        reporting. Accordingly, we express no such opinion. An audit also includes examining, on a
        test basis, evidence supporting the amounts and disclosures in the consolidated financial
        statements, assessing the accounting principles used and significant estimates made by
        management, as well as evaluating the overall financial statement presentation. We believe
        that our audits provide a reasonable basis for our opinion.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Flush"  -->

        <p><font face="Times New Roman, Times, Serif" size="2">In our opinion, the consolidated
        financial statements referred to above present fairly, in all material respects, the
        consolidated financial position of DRYCLEAN USA, Inc. and subsidiaries as of June 30, 2006
        and the consolidated results of their operations and their cash flows for the year then
        ended in conformity with accounting principles generally accepted in the United States of
        America.</font></p>

        <p><font face="Times New Roman, Times, Serif" size="2">/s/ Morrison, Brown, Argiz &amp;
        Farra, LLP</font></p>

        <p><font face="Times New Roman, Times, Serif" size="2">Miami, Florida<br>
        September 8, 2006, except<br>
        for the first paragraph of<br>
        Note 12 as to which the date<br>
        is September 26, 2006</font></p>

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">20</font></p>

        <div style="PAGE-BREAK-AFTER: always">
        </div>
        <hr color="gray" noshade size="5">

        <p align="right"><font face="Times New Roman, Times, Serif" size="2">DRYCLEAN USA, Inc. and
        Subsidiaries</font></p>

        <p align="right"><font face="Times New Roman, Times, Serif" size="2">Consolidated Balance
        Sheets</font></p>

        <table cellspacing="0" cellpadding="0" width="100%" border="0">
            <tr valign="top">
                <td width="40%">
                </td>
            </tr>

            <tr valign="bottom">
                <th align="left" colspan="3">
                    <font face="Times New Roman" size="1"><i>June 30,</i></font>
                    <hr width="100%" color="black" noshade size="1">
                </th>

                <th colspan="3">
                    <font face="Times New Roman" size="1">2007</font>
                    <hr width="100%" color="black" noshade size="1">
                </th>

                <th colspan="3">
                    <font face="Times New Roman" size="1">2006</font>
                    <hr width="100%" color="black" noshade size="1">
                </th>
            </tr>

            <tr valign="bottom">
                <th align="left" colspan="3"><font face="Times New Roman" size="2"><br>
                <b>Assets</b></font></th>

                <th colspan="3">
                </th>

                <th colspan="3">
                </th>
            </tr>

            <tr valign="bottom">
                <td align="left" width="75%"><font face="Times New Roman" size="2"><br>
                <b>Current assets</b></font></td>

                <td align="left" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="left" width="2%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="7%">
                </td>

                <td align="left" width="4%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="7%">
                </td>

                <td align="left" width="2%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;Cash and
                cash equivalents</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">4,296,415</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">3,106,703</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;Accounts
                and trade notes receivable, net of allowance for</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;doubtful
                accounts of $125,000 and $130,000, respectively</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">1,454,987</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">1,878,384</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;Inventories,
                net</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">2,912,524</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">2,991,165</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;Deferred
                income taxes</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">99,140</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">141,210</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;Refundable income
                taxes</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">64,131</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;Other
                current assets</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">98,353</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">253,075</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2"><br>
                Total current assets</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">8,925,550</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">8,370,537</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2"><br>
                <b>Equipment and improvements, net</b></font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">261,872</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">225,643</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2"><br>
                <b>Franchise license, trademarks and other intangible assets, net</b></font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">246,812</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">308,474</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2"><br>
                <b>Deferred income taxes</b></font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">9,340</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">33,375</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">Total assets</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">9,443,574</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">8,938,029</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="3">
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2"><br>
                <b>Liabilities and Shareholders' Equity</b></font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2"><br>
                <b>Current liabilities</b></font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;Accounts
                payable and accrued expenses</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">1,076,300</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">893,213</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;Accrued
                employee expenses</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">605,383</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">591,133</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;Income taxes
                payable</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">70,391</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;Unearned
                income</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">124,162</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">206,937</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;Customer
                deposits</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">1,365,623</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">1,222,196</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">Total current
                liabilities</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">3,171,468</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">2,983,870</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">Total
                liabilities</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">3,171,468</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">2,983,870</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2"><br>
                <b>Commitments and contingencies</b></font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2"><br>
                <b>Shareholders' equity</b></font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">Preferred Stock, $1.00 par
                value:</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;Authorized
                shares - 200,000; none</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;issued and
                outstanding</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">Common stock, $0.025 par
                value:</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;Authorized
                shares - 15,000,000; 7,065,500,</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares issued,
                including shares held in treasury</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">176,638</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">176,638</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;Additional
                paid-in capital</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">2,095,069</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">2,095,069</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;Retained
                earnings</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">4,003,712</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">3,685,472</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;Treasury
                stock, 31,193 and 31,050 shares,</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;respectively,
                at cost</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">(3,313</font></td>

                <td align="left"><font face="Times New Roman" size="2">)</font></td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">(3,020</font></td>

                <td align="left"><font face="Times New Roman" size="2">)</font></td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">Total shareholders'
                equity</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">6,272,106</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">5,954,159</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">Total liabilities and
                shareholders' equity</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">9,443,574</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">8,938,029</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>
        </table>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->

        <p align="center"><font face="Times New Roman, Times, Serif" size="2"><i>See accompanying
        summary of accounting policies and notes to consolidated financial
        statements.</i></font></p>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">21</font></p>

        <div style="PAGE-BREAK-AFTER: always">
        </div>
        <!-- MARKER PAGE="; page: 21" -->
        <hr color="gray" noshade size="5">
        <!-- MARKER FORMAT-SHEET="Para Right" FSL="Default" -->

        <p align="right"><font face="Times New Roman, Times, Serif" size="2">DRYCLEAN USA, Inc. and
        Subsidiaries</font></p>
        <!-- MARKER FORMAT-SHEET="Para Right" FSL="Default" -->

        <p align="right"><font face="Times New Roman, Times, Serif" size="2">Consolidated
        Statements of Operations</font></p>

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="bottom">
                <th align="left" colspan="3">
                    <font face="Times New Roman" size="1"><i>Years ended June 30,</i></font>
                    <hr width="100%" color="black" noshade size="1">
                </th>

                <th colspan="3">
                    <font face="Times New Roman" size="1">2007</font>
                    <hr width="100%" color="black" noshade size="1">
                </th>

                <th colspan="3">
                    <font face="Times New Roman" size="1">2006</font>
                    <hr width="100%" color="black" noshade size="1">
                </th>
            </tr>

            <tr valign="bottom">
                <td align="left" width="76%">
                <font face="Times New Roman" size="2"><b>Revenues:</b></font></td>

                <td align="left" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="left" width="2%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="7%">
                </td>

                <td align="left" width="3%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="7%">
                </td>

                <td align="left" width="2%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net
                sales</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">22,091,863</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">19,464,842</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Development
                fees, franchise and license fees, commissions</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and
                other</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">656,664</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">950,048</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">Total</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">22,748,527</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">20,414,890</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2"><b>Cost of
                sales</b></font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">16,952,633</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">14,778,382</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2"><b>Selling, general and
                administrative expenses</b></font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">4,506,053</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">4,455,969</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2"><b>Research and development
                expenses</b></font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">41,910</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">27,805</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">Total</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">21,500,596</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">19,262,156</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2"><b>Operating
                income</b></font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">1,247,931</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">1,152,734</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2"><b>Other
                income:</b></font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest
                income</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">162,793</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">75,443</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">Earnings before income
                taxes</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">1,410,724</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">1,228,177</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">Provision for income
                taxes</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">529,734</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">424,196</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">Net earnings</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">880,990</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">803,981</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">Net earnings per
                share</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">.13</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">.11</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Diluted</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">.13</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">.11</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">Weighted average number of
                shares of</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">common stock
                outstanding:</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">7,034,390</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">7,026,950</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Diluted</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">7,037,846</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">7,031,710</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>
        </table>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->

        <p align="center"><font face="Times New Roman, Times, Serif" size="2"><i>See accompanying
        summary of accounting policies and notes to consolidated financial
        statements.</i></font></p>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">22</font></p>

        <div style="PAGE-BREAK-AFTER: always">
        </div>
        <!-- MARKER PAGE="; page: 22" -->
        <hr color="gray" noshade size="5">
        <!-- MARKER FORMAT-SHEET="Para Right" FSL="Default" -->

        <p align="right"><font face="Times New Roman, Times, Serif" size="2">DRYCLEAN USA, Inc. and
        Subsidiaries</font></p>
        <!-- MARKER FORMAT-SHEET="Para Right" FSL="Default" -->

        <p align="right"><font face="Times New Roman, Times, Serif" size="2">Consolidated
        Statements of Shareholders' Equity</font></p>

        <table cellspacing="0" cellpadding="0" width="100%" border="0">
            <tr valign="bottom">
                <th colspan="3"><font face="Times New Roman" size="1">&nbsp;</font> </th>

                <th colspan="6">
                    <font face="Times New Roman" size="1"><i>Common Stock</i></font>
                    <hr width="100%" color="black" noshade size="1">
                </th>

                <th colspan="3"><font face="Times New Roman" size="1"><i>Additional</i><br>
                <i>Paid-in</i></font></th>

                <th colspan="6">
                    <font face="Times New Roman" size="1"><i>Treasury Stock</i></font>
                    <hr width="100%" color="black" noshade size="1">
                </th>

                <th colspan="3"><font face="Times New Roman" size="1"><i>Retained</i></font></th>

                <th colspan="3"><font face="Times New Roman" size="1">&nbsp;</font> </th>
            </tr>

            <tr valign="bottom">
                <th colspan="3"><font face="Times New Roman" size="1">&nbsp;</font> </th>

                <th colspan="3">
                    <font face="Times New Roman" size="1"><i>Shares</i></font>
                    <hr width="100%" color="black" noshade size="1">
                </th>

                <th colspan="3">
                    <font face="Times New Roman" size="1"><i>Amount</i></font>
                    <hr width="100%" color="black" noshade size="1">
                </th>

                <th colspan="3">
                    <font face="Times New Roman" size="1"><i>Capital</i></font>
                    <hr width="100%" color="black" noshade size="1">
                </th>

                <th colspan="3">
                    <font face="Times New Roman" size="1"><i>Shares</i></font>
                    <hr width="100%" color="black" noshade size="1">
                </th>

                <th colspan="3">
                    <font face="Times New Roman" size="1"><i>Cost</i></font>
                    <hr width="100%" color="black" noshade size="1">
                </th>

                <th colspan="3">
                    <font face="Times New Roman" size="1"><i>Earnings</i></font>
                    <hr width="100%" color="black" noshade size="1">
                </th>

                <th colspan="3">
                    <font face="Times New Roman" size="1"><i>Total</i></font>
                    <hr width="100%" color="black" noshade size="1">
                </th>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left" width="35%"><font face="Times New Roman" size="2"><br>
                Balance at June 30, 2005</font></td>

                <td align="left" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="left" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="6%">
                <font face="Times New Roman" size="2">7,055,500</font></td>

                <td align="left" width="2%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="1%"><font face="Times New Roman" size="2">$</font></td>

                <td align="right" width="6%">
                <font face="Times New Roman" size="2">176,388</font></td>

                <td align="left" width="2%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="1%"><font face="Times New Roman" size="2">$</font></td>

                <td align="right" width="6%">
                <font face="Times New Roman" size="2">2,081,763</font></td>

                <td align="left" width="2%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="6%">
                <font face="Times New Roman" size="2">31,050</font></td>

                <td align="left" width="2%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="1%"><font face="Times New Roman" size="2">$</font></td>

                <td align="right" width="6%">
                <font face="Times New Roman" size="2">(3,020</font></td>

                <td align="left" width="2%"><font face="Times New Roman" size="2">)</font></td>

                <td align="right" width="1%"><font face="Times New Roman" size="2">$</font></td>

                <td align="right" width="6%">
                <font face="Times New Roman" size="2">3,443,847</font></td>

                <td align="left" width="2%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="1%"><font face="Times New Roman" size="2">$</font></td>

                <td align="right" width="6%">
                <font face="Times New Roman" size="2">5,698,978</font></td>

                <td align="left" width="2%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2"><br>
                &nbsp;&nbsp;&nbsp;Stock options exercised</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">10,000</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">250</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">8,813</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">9,063</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;Tax
                benefit from stock option exercise</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">4,493</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">4,493</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;Dividends
                paid</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">(562,356</font></td>

                <td align="left"><font face="Times New Roman" size="2">)</font></td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">(562,356</font></td>

                <td align="left"><font face="Times New Roman" size="2">)</font></td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;Net
                earnings</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">803,981</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">803,981</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="24">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">Balance at June 30,
                2006</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">7,065,500</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">176,638</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">2,095,069</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">31,050</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">(3,020</font></td>

                <td align="left"><font face="Times New Roman" size="2">)</font></td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">3,685,472</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">5,954,159</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2"><br>
                &nbsp;&nbsp;&nbsp;Purchase of treasury stock</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">143</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">(293</font></td>

                <td align="left"><font face="Times New Roman" size="2">)</font></td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">(293</font></td>

                <td align="left"><font face="Times New Roman" size="2">)</font></td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;Dividends
                paid</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">(562,750</font></td>

                <td align="left"><font face="Times New Roman" size="2">)</font></td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">(562,750</font></td>

                <td align="left"><font face="Times New Roman" size="2">)</font></td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;Net
                earnings</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">880,990</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">880,990</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="24">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">Balance at June 30,
                2007</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">7,065,500</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">176,638</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">2,095,069</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">31,193</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">(3,313</font></td>

                <td align="left"><font face="Times New Roman" size="2">)</font></td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">4,003,712</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">6,272,106</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="24">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>
        </table>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->

        <p align="center"><font face="Times New Roman, Times, Serif" size="2"><i>See accompanying
        summary of accounting policies and notes to consolidated financial
        statements.</i></font></p>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" --><a name="A069"></a>

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">23</font></p>

        <div style="PAGE-BREAK-AFTER: always">
        </div>
        <!-- MARKER PAGE="; page: 23" -->
        <hr color="gray" noshade size="5">
        <!-- MARKER FORMAT-SHEET="Para Right" FSL="Default" -->

        <p align="right"><font face="Times New Roman, Times, Serif" size="2">DRYCLEAN USA, Inc. and
        Subsidiaries</font></p>
        <!-- MARKER FORMAT-SHEET="Para Right" FSL="Default" -->

        <p align="right"><font face="Times New Roman, Times, Serif" size="2">Consolidated
        Statements of Cash Flows</font></p>

        <table cellspacing="0" cellpadding="0" width="100%" border="0">
            <tr valign="bottom">
                <th align="left" colspan="3">
                    <font face="Times New Roman" size="1">Years ended June 30,</font>
                    <hr width="100%" color="black" noshade size="1">
                </th>

                <th colspan="3">
                    <font face="Times New Roman" size="1">2007</font>
                    <hr width="100%" color="black" noshade size="1">
                </th>

                <th colspan="3">
                    <font face="Times New Roman" size="1">2006</font>
                    <hr width="100%" color="black" noshade size="1">
                </th>
            </tr>

            <tr valign="bottom">
                <td align="left" width="64%"><font face="Times New Roman" size="2"><b>Operating
                activities:</b></font> </td>

                <td align="left" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="left" width="2%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="12%">
                </td>

                <td align="left" width="5%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="12%">
                </td>

                <td align="left" width="2%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;Net
                income</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">880,990</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">803,981</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;Adjustments to reconcile
                net income to net cash</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;provided
                by operating activities:</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation
                and amortization</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">120,479</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">142,453</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Bad debt
                expense</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">32,183</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">36,731</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventory
                reserve</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">57,428</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">60,279</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provision
                (benefit) for deferred income taxes</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">66,105</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">(61,306</font></td>

                <td align="left"><font face="Times New Roman" size="2">)</font></td>
            </tr>

            <tr valign="bottom">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Increase)
                decrease in operating assets:</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts,
                trade notes and lease receivables</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">391,214</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">49,630</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">21,213</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">38,573</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Refundable
                income taxes</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">(64,131</font></td>

                <td align="left"><font face="Times New Roman" size="2">)</font></td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other
                current assets</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">154,722</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">(134,145</font></td>

                <td align="left"><font face="Times New Roman" size="2">)</font></td>
            </tr>

            <tr valign="bottom">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Increase
                (decrease) in operating liabilities:</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts
                payable and accrued expenses</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">183,087</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">213,708</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued
                employee expenses</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">14,250</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">295,693</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unearned
                income</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">(82,775</font></td>

                <td align="left"><font face="Times New Roman" size="2">)</font></td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">(82,775</font></td>

                <td align="left"><font face="Times New Roman" size="2">)</font></td>
            </tr>

            <tr valign="bottom">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Customer
                deposits</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">143,427</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">644,756</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income
                taxes payable</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">(70,391</font></td>

                <td align="left"><font face="Times New Roman" size="2">)</font></td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">74,884</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">Net cash provided by
                operating activities</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">1,847,801</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">2,082,462</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2"><b>Investing
                activities:</b></font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;Payments
                received on note receivable</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">67,857</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;Capital
                expenditures</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">(93,846</font></td>

                <td align="left"><font face="Times New Roman" size="2">)</font></td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">(71,131</font></td>

                <td align="left"><font face="Times New Roman" size="2">)</font></td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;Patent
                expenditures</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">(1,200</font></td>

                <td align="left"><font face="Times New Roman" size="2">)</font></td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">(1,308</font></td>

                <td align="left"><font face="Times New Roman" size="2">)</font></td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">Net cash used by investing
                activities</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">(95,046</font></td>

                <td align="left"><font face="Times New Roman" size="2">)</font></td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">(4,582</font></td>

                <td align="left"><font face="Times New Roman" size="2">)</font></td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2"><b>Financing
                activities:</b></font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;Proceeds
                from exercise of stock options</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">9,063</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;Dividends
                paid</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">(562,750</font></td>

                <td align="left"><font face="Times New Roman" size="2">)</font></td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">(562,356</font></td>

                <td align="left"><font face="Times New Roman" size="2">)</font></td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;Purchase
                of treasury stock</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">(293</font></td>

                <td align="left"><font face="Times New Roman" size="2">)</font></td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">Net cash used in financing
                activities</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">(563,043</font></td>

                <td align="left"><font face="Times New Roman" size="2">)</font></td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">(553,293</font></td>

                <td align="left"><font face="Times New Roman" size="2">)</font></td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">Net increase in cash and
                cash equivalents</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">1,189,712</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">1,524,587</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">Cash and cash equivalents at
                beginning of year</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">3,106,703</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">1,582,116</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">Cash and cash equivalents at
                end of year</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">4,296,415</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">3,106,703</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="3">
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">Supplemental
                Information:</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;Cash paid
                for:</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;Income
                taxes</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">598,151</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">385,444</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="3">
                </td>
            </tr>
        </table>
        <!-- MARKER FORMAT-SHEET="Head Center Italic" FSL="Default" -->

        <p align="center"><font face="Times New Roman, Times, Serif" size="2"><i>See accompanying
        summary of accounting policies and notes to consolidated financial
        statements.</i></font></p>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">24</font></p>

        <div style="PAGE-BREAK-AFTER: always">
        </div>
        <!-- MARKER PAGE="; page: 24" -->
        <hr color="gray" noshade size="5">
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">DRYCLEAN USA, Inc.
        and Subsidiaries<br>
        Notes to Consolidated Financial Statements</font></p>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="5%"><font face="Times New Roman, Times, Serif" size="2"><b>1.</b></font>
                </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="95%"><font face="Times New Roman, Times, Serif" size="2"><b>Summary of
                Significant<br>
                Accounting Policies</b></font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%"><font face="Times New Roman, Times, Serif" size="2"><b>Nature of
                Business</b>&nbsp;</font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">DRYCLEAN USA,
                Inc. and subsidiaries (collectively, the &ldquo;Company&rdquo;) sell commercial and
                industrial laundry and dry cleaning equipment, boilers and replacement parts; sell
                individual and area franchises under the DRYCLEAN USA name; and act as a business
                broker in connection with the purchase and sale of retail dry cleaning stores and
                coin laundries.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Flush Level 3" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">The Company
                primarily sells to customers located in the United States, the Caribbean and Latin
                America.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%"><font face="Times New Roman, Times, Serif" size="2"><b>Principles
                of Consolidation</b></font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">The
                accompanying consolidated financial statements include the accounts of DRYCLEAN
                USA, Inc. and its wholly-owned subsidiaries. Intercompany transactions and balances
                have been eliminated in consolidation.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%"><font face="Times New Roman, Times, Serif" size="2"><b>Revenue
                Recognition</b></font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">Sales of
                products are generally shipped FOB origin and revenue is recorded as they are
                shipped. Shipping, delivery and handling fee income of approximately $974,000 and
                $581,000 for the years ended June 30, 2007 and 2006, respectively, are included in
                revenues in the consolidated financial statements. Shipping, delivery and handling
                costs are included in cost of sales. Commissions and development fees are recorded
                when earned. Individual franchise arrangements include a license and provide for
                the payment of initial fees for the granting of the franchise. Royalty fees are
                generated for the use of the name DRYCLEAN USA&reg;. Initial franchise fees are
                generally recorded upon the opening of the franchise store. Continuing royalty fees
                are recorded when earned. Royalty fees recognized in fiscal 2007 and 2006 were
                approximately $197,000 and $241,000, respectively.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Flush Level 3" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">Customer
                deposits represent primarily amounts received from customers for future delivery of
                equipment or services. In January 2005, the Company signed an exclusive license
                agreement with Whirlpool Corporation, licensing the use of the Company&rsquo;s
                patent technology on home appliances. Whirlpool Corporation paid to the Company
                $350,000, including $331,100 as a one time up front fee for the exclusive license,
                and is to pay royalties during the three year period following the introduction of
                Whirlpool Corporation manufactured products using the licensed technology. After
                this period, Whirlpool Corporation will retain a non-exclusive license and the
                Company is free to license its technology to other manufacturers. Unearned income
                represents the $331,100 fee for the exclusive license which is being amortized over
                48 months, the life of the contract. At June 30, 2007, $124,162 remained to be
                amortized.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%"><font face="Times New Roman, Times, Serif" size="2"><b>Accounts and
                Trade<br>
                Notes Receivable</b></font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">Accounts and
                trade notes receivable are customer obligations due under normal trade terms. The
                Company sells its products primarily to independent dry cleaning and laundry
                plants. The Company performs continuing credit evaluations of its customers&rsquo;
                financial condition and, depending on the terms of credit, the amount of the credit
                granted and management&rsquo;s history with a customer, the Company may require the
                customer to grant a security interest in the purchased equipment as</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">25</font></p>

        <div style="PAGE-BREAK-AFTER: always">
        </div>
        <!-- MARKER PAGE="; page: 25" -->
        <hr color="gray" noshade size="5">
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">DRYCLEAN USA, Inc.
        and Subsidiaries<br>
        Notes to Consolidated Financial Statements</font></p>
        <!-- MARKER FORMAT-SHEET="Para Flush Level 5" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">collateral for
                the receivable. Senior management reviews accounts and notes receivable on a
                regular basis to determine if any amounts will potentially be uncollectible. The
                Company includes any balances that are determined to be uncollectible, along with a
                general reserve, in its overall allowance for doubtful accounts. After all attempts
                to collect a receivable have failed, the receivable is written off. Based on the
                information available, management believes the Company&rsquo;s allowance for
                doubtful accounts as of June 30, 2007 and 2006 is adequate. However, actual
                write-offs might exceed the recorded allowance.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Large Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%">
                <font face="Times New Roman, Times, Serif" size="2"><b>Inventories</b></font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">Inventories
                consist principally of equipment and spare parts. Equipment is valued at the lower
                of cost, determined on the specific identification method, or market. Spare parts
                are valued at the lower of average cost or market.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%">
                <font face="Times New Roman, Times, Serif" size="2"><b>Equipment,<br>
                Improvements and<br>
                Depreciation</b></font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">Property and
                equipment are stated at cost. Depreciation and amortization are calculated on
                accelerated and straight-line methods over lives of five to seven years for
                furniture and equipment and the lesser of ten years or the life of the lease for
                leasehold improvements for both financial reporting and income tax purposes, except
                that leasehold improvements are amortized over 31 years for income tax purposes.
                Repairs and maintenance costs are expensed as incurred.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Large Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%"><font face="Times New Roman, Times, Serif" size="2"><b>Franchise
                License,<br>
                Trademark and Other<br>
                Intangible Assets</b></font> </td>

                <td>
                </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">Franchise
                license, trademark, and other intangible assets are stated at cost lessaccumulated
                amortization. These assets are amortized on a straight-line basis over the
                estimated future periods to be benefited (10-15 years). Patents are amortized over
                the shorter of the patent&rsquo;s useful life or legal life from the date such
                patent is granted. The Company reviews the recoverability of intangible assets
                based primarily upon an analysis of undiscounted cash flows expected to be
                generated from the acquired assets. In the event the expected future net cash flows
                should become less than the carrying amount of the assets, an impairment loss will
                be recorded in the period such determination is made, based on the fair value of
                the related assets.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Large Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%"><font face="Times New Roman, Times, Serif" size="2"><b>Asset
                &nbsp;Impairments</b></font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">The Company
                accounts for long-lived assets in accordance with the provisions of the Financial
                Accounting Standards Board (&ldquo;FASB&rdquo;) Statement of Financial Accounting
                Standard (&ldquo;SFAS&rdquo;) No. 144, &ldquo;Accounting for the Impairment or
                Disposal of Long-Lived Assets.&rdquo; This statement requires that long-lived
                assets and certain identifiable intangibles be reviewed for impairment whenever
                events or changes in circumstances indicate that the carrying amount of an asset
                may not be recoverable. Recoverability of assets to be held and used is measured by
                a comparison of the carrying amount of an asset to future net cash flows expected
                to be generated by the asset. If such assets are considered to be impaired, the
                impairment to be recognized is measured by the amount by which the carrying amount
                of the assets exceeds the fair value of the assets. Assets to be disposed of are
                reported at the lower of the carrying amount or fair value less estimated costs to
                sell.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">26</font></p>

        <div style="PAGE-BREAK-AFTER: always">
        </div>
        <!-- MARKER PAGE="; page: 26" -->
        <hr color="gray" noshade size="5">
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">DRYCLEAN USA, Inc.
        and Subsidiaries<br>
        Notes to Consolidated Financial Statements</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%"><font face="Times New Roman, Times, Serif" size="2"><b>Income
                Taxes</b></font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">The Company
                utilizes the asset and liability method wherein deferred taxes are recognized for
                differences between consolidated financial statement and income tax bases of assets
                and liabilities.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Large Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%"><font face="Times New Roman, Times, Serif" size="2"><b>Cash
                Equivalents</b></font></td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">Cash
                equivalents include all highly liquid investments with original maturities of three
                months or less.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Large Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%">
                <font face="Times New Roman, Times, Serif" size="2"><b>Estimates</b></font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">The preparation
                of consolidated financial statements in conformity with accounting principles
                generally accepted in the United States of America requires management to make
                estimates and assumptions that affect the reported amounts of assets and
                liabilities and disclosure of contingent assets and liabilities at the date of the
                consolidated financial statements and the reported amounts of revenues and expenses
                during the reporting period. Actual results could differ from those
                estimates.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Large Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%"><font face="Times New Roman, Times, Serif" size="2"><b>Stock
                &nbsp;Based<br>
                Compensation</b></font></td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">The
                Company&rsquo;s 2000 Stock Option Plan and 1994 Non-Employee Director Stock Option
                Plan are the Company&rsquo;s only stock-based compensation plans. The 2000 Stock
                Option Plan authorizes the grant (until May 2, 2010) of options to purchase up to
                500,000 shares of the Company&rsquo;s common stock to employees, directors and
                consultants. No options were outstanding under the 2000 Stock Option Plan on June
                30, 2007 and 2006. The 1994 Non-Employee Director Stock Option Plan terminated as
                to future grants on August 23, 2004, but options to purchase 20,000 shares remain
                outstanding thereunder.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Flush Level 5" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">Effective
                January 1, 2006, the Company adopted SFAS No. 123 (revised), &ldquo;Share-Based
                Payment&rdquo; (&ldquo;SFAS 123(R)&rdquo;), utilizing the modified prospective
                approach. Prior to the adoption of SFAS 123(R), the Company accounted for stock
                option grants under the recognition and measurement principles of APB Opinion No.
                25, &ldquo;Accounting for Stock Issued to Employees,&rdquo; and related
                interpretations, and, accordingly, recognized no compensation expense for stock
                option grants in net income.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Flush Level 5" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">Under the
                modified prospective approach, SFAS 123(R) applies to new grants and to grants that
                were outstanding on December 31, 2005 to the extent not yet vested. Since no new
                options were granted during the years ended June 30, 2006 and 2007 and all
                outstanding options were fully vested at December 31, 2005, no compensation cost
                for share-based payments was recognized under SFAS 123(R) during the years ended
                June 30, 2007 and 2006. Prior periods are not required to be restated to reflect
                the impact of adopting the new standard. No compensation cost would have been
                recognized under the provisions of SFAS 123(R) had SFAS 123(R) been in effect as to
                the Company during any of the periods reported in this Report.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Large Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%"><font face="Times New Roman, Times, Serif" size="2"><b>Earnings
                &nbsp;Per Share</b></font></td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">Basic earnings
                per share are computed on the basis of the weighted average number of common shares
                outstanding during each year. Diluted earnings per share are computed on the basis
                of the weighted average number of common shares and dilutive securities outstanding
                during each year. Securities having an anti-dilutive effect on earnings per share
                are excluded from the calculations.</font></td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">27</font></p>

        <div style="PAGE-BREAK-AFTER: always">
        </div>
        <!-- MARKER PAGE="; page: 27" -->
        <hr color="gray" noshade size="5">
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">DRYCLEAN USA, Inc.
        and Subsidiaries<br>
        Notes to Consolidated Financial Statements</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%"><font face="Times New Roman, Times, Serif" size="2"><b>Advertising
                &nbsp;Costs</b></font></td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">The Company
                expenses the cost of advertising as of the first date an advertisement is run. The
                Company expensed approximately $130,000 and $132,000 of advertising costs for the
                years ended June 30, 2007 and 2006, respectively.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Large Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%"><font face="Times New Roman, Times, Serif" size="2"><b>Fair Value
                of Financial Instruments</b></font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">The
                Company&rsquo;s financial instruments consist principally of cash and cash
                equivalents, accounts and trade notes receivable, lease receivables, notes
                receivable, accounts payable and accrued expenses. Due to their relatively
                short-term nature or variable rates, the carrying amounts of such financial
                instruments, as reflected in the accompanying consolidated balance sheets,
                approximate their estimated fair value. Their estimated fair value is not
                necessarily indicative of the amounts the Company could realize in a current market
                exchange or of future earnings or cash flows.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Large Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%"><font face="Times New Roman, Times, Serif" size="2"><b>Customer
                &nbsp;Deposits</b></font></td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">Customer
                deposits represent advances paid by certain customers when placing orders for
                equipment with the Company. These deposits are generally non-refundable.</font>
                </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Large Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%"><font face="Times New Roman, Times, Serif" size="2"><b>New
                &nbsp;Accounting<br>
                Pronouncements</b></font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">In March 2006,
                the Emerging Issues Task Force (&ldquo;EITF&rdquo;) reached a consensus on EITF
                Issue No. 06-3, &ldquo;How Taxes Collected from Customers and Remitted to
                Governmental Authorities Should Be Presented in the Income Statement (that is,
                Gross versus Net Presentation).&rdquo; EITF 06-3 requires an entity to disclose its
                policy for presenting taxes assessed on revenue-producing transaction between a
                seller and customer. Such taxes may include sales, use, and some excise taxes,
                among others. EITF 06-3 is effective for interim and annual periods ending after
                December 15, 2006 with early application permitted. For the periods presented in
                this Report, the Company has presented such taxes net. The implementation of EITF
                06-3 did not have an effect on the Company&rsquo;s financial statements.</font>
                </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Flush Level 5" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">In June 2006,
                the FASB issued FASB Interpretation No. 48, &ldquo;Accounting for Uncertainty in
                Income Taxes&rdquo; (&ldquo;FIN 48&rdquo;). FIN 48 clarifies the accounting for
                uncertainty in income taxes recognized in financial statements and prescribes a
                two-step test for the recognition and measurement of&nbsp;a tax position taken on a
                tax return.&nbsp; FIN 48 provides guidance for determining whether tax benefits may
                be recognized with respect to uncertain tax positions and, if recognized, the
                amount that may be recorded.&nbsp; FIN 48 is effective for fiscal years beginning
                after December 15, 2006. The Company does not believe FIN 48 will have a material
                effect on its consolidated financial statements.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Flush Level 5" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">In September
                2006, the FASB Issued SFAS No. 157, &ldquo;Fair Value Measurement&rdquo;
                (&ldquo;SFAS 157&rdquo;) which defines fair value, establishes a framework for
                measuring fair value in accordance with generally accepted accounting principles,
                and provides for additional fair value disclosures. SFAS 157 is effective for
                fiscal years beginning after November 15, 2007. The Company does not believe SFAS
                157 will have a material effect on its consolidated financial statements.</font>
                </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">28</font></p>

        <div style="PAGE-BREAK-AFTER: always">
        </div>
        <!-- MARKER PAGE="; page: 28" -->
        <hr color="gray" noshade size="5">
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">DRYCLEAN USA, Inc.
        and Subsidiaries<br>
        Notes to Consolidated Financial Statements</font></p>
        <!-- MARKER FORMAT-SHEET="Para Flush Level 5" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">In September
                2006, the Staff of the Securities and Exchange Commission issued Staff Accounting
                Bulletin No. 108, &ldquo;Considering the Effect of Prior Year Misstatements when
                Quantifying Misstatements in Current Year Financial Statements&rdquo; (&ldquo;SAB
                108&rdquo;). SAB&nbsp;108 requires the use of two approaches in quantitatively
                evaluating the materiality of misstatements. If the misstatement as quantified
                under either approach is material to the current year financial statements, the
                misstatement must be corrected. If the effect of correcting a prior year
                misstatement in the current year income statement is material, the prior year
                financial statements should be corrected. In the year of adoption (fiscal years
                ending after November 15, 2006), the misstatements may be corrected as an
                accounting change by adjusting opening retained earnings rather than being included
                in the current year income statement. The Company does not expect SAB 108 to have
                an impact on the Company&rsquo;s consolidated financial statements.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Flush Level 5" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">In February
                2007, the FASB issued SFAS&nbsp;159, &ldquo;The Fair Value Option for Financial
                Assets and Financial Liabilities&rdquo; which permits, at specified election dates,
                all entities to choose to measure eligible items at fair value. SFAS 159 is
                effective as of the beginning of an entity&rsquo;s fiscal year beginning on or
                after November 15, 2007 with early application permitted as of the beginning of a
                fiscal year beginning on or before November 15, 2007 if an entity also elects to
                apply the provisions of SFAS 157. Retrospective application is not permitted unless
                early adoption is adopted. The Company is evaluating the effect, if any, the
                adoption of SFAS&nbsp;159 will have on the Company&rsquo;s financial
                statements.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Large Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%">
                <font face="Times New Roman, Times, Serif" size="2"><b>Reclassification</b></font></td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;Certain
                items in the 2006 consolidated financial statements have been reclassified to
                conform to the 2007 presentation.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">29</font></p>

        <div style="PAGE-BREAK-AFTER: always">
        </div>
        <!-- MARKER PAGE="; page: 29" -->
        <hr color="gray" noshade size="5">
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">DRYCLEAN USA, Inc.
        and Subsidiaries<br>
        Notes to Consolidated Financial Statements</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%">
                <font face="Times New Roman, Times, Serif" size="2"><b>2.&nbsp;&nbsp;&nbsp;&nbsp;Inventories</b></font></td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">Inventories are
                comprised of:</font> </td>
            </tr>
        </table>
        <br>

        <table cellspacing="0" cellpadding="0" width="50%" align="center">
            <tr valign="bottom">
                <th align="left" colspan="3">
                    <font face="Times New Roman" size="1"><i>June 30,</i></font>
                    <hr width="100%" color="black" noshade size="1">
                </th>

                <th colspan="3">
                    <font face="Times New Roman" size="1">2007</font>
                    <hr width="100%" color="black" noshade size="1">
                </th>

                <th colspan="3">
                    <font face="Times New Roman" size="1">2006</font>
                    <hr width="100%" color="black" noshade size="1">
                </th>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left" width="60%"><font face="Times New Roman" size="2"><br>
                Equipment</font></td>

                <td align="left" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="left" width="6%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="1%"><font face="Times New Roman" size="2">$</font></td>

                <td align="right" width="10%">
                <font face="Times New Roman" size="2">1,983,876</font></td>

                <td align="left" width="9%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="1%"><font face="Times New Roman" size="2">$</font></td>

                <td align="right" width="10%">
                <font face="Times New Roman" size="2">2,082,243</font></td>

                <td align="left" width="2%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">Parts</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">971,499</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">1,009,201</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">2,955,375</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">3,091,444</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">Less reserve</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">(42,851</font></td>

                <td align="left"><font face="Times New Roman" size="2">)</font></td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">(100,279</font></td>

                <td align="left"><font face="Times New Roman" size="2">)</font></td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">2,912,524</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">2,991,165</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="3">
                </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Flush Level 5" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">The Company has
                provided reserves of $42,851 and $100,279 for the years ended June 30, 2007 and
                2006, respectively, against slow moving inventory. For the year ended June 30,
                2007, the Company wrote-off $57,428 in slow moving inventory. There was no
                write-off in fiscal 2006.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Large Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%">
                <font face="Times New Roman, Times, Serif" size="2"><b>3.&nbsp;&nbsp;&nbsp;&nbsp;Equipment
                and<br>
                &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Improvements</b></font></td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">Major classes
                of equipment and improvements consist of the following:</font></td>
            </tr>
        </table>
        <br>

        <table cellspacing="0" cellpadding="0" width="50%" align="center">
            <tr valign="bottom">
                <th align="left" colspan="3">
                    <font face="Times New Roman" size="1"><i>June 30,</i></font>
                    <hr width="100%" color="black" noshade size="1">
                </th>

                <th colspan="3">
                    <font face="Times New Roman" size="1">2007</font>
                    <hr width="100%" color="black" noshade size="1">
                </th>

                <th colspan="3">
                    <font face="Times New Roman" size="1">2006</font>
                    <hr width="100%" color="black" noshade size="1">
                </th>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left" width="66%"><font face="Times New Roman" size="2">Furniture and
                equipment</font></td>

                <td align="left" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="left" width="3%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="1%"><font face="Times New Roman" size="2">$</font></td>

                <td align="right" width="10%">
                <font face="Times New Roman" size="2">808,407</font></td>

                <td align="left" width="6%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="1%"><font face="Times New Roman" size="2">$</font></td>

                <td align="right" width="10%">
                <font face="Times New Roman" size="2">770,430</font></td>

                <td align="left" width="2%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">Leasehold
                improvements</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">429,158</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">377,665</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">1,237,565</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">1,148,095</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">Less accumulated
                depreciation and</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;amortization</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">(975,693</font></td>

                <td align="left"><font face="Times New Roman" size="2">)</font></td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">(922,452</font></td>

                <td align="left"><font face="Times New Roman" size="2">)</font></td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">261,872</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">225,643</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="3">
                </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Flush Level 5" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">Depreciation
                and amortization of equipment and improvements amounted to $52,346 and $75,840 for
                the years ended June 30, 2007 and 2006, respectively.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Large Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%"><font face="Times New Roman, Times, Serif" size="2"><b>4.
                &nbsp;&nbsp;&nbsp;&nbsp;Intangible Assets</b></font></td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">Franchise
                license, trademarks and other intangible assets consist of the following:</font>
                </td>
            </tr>
        </table>
        <br>

        <table cellspacing="0" cellpadding="0" width="50%" align="center">
            <tr valign="bottom">
                <th colspan="3">
                    <font face="Times New Roman" size="1">&nbsp;</font>
                    <hr width="100%" color="black" noshade size="1">
                </th>

                <th colspan="3">
                    <font face="Times New Roman" size="1"><em>Estimated<br>
                    Useful Lives<br>
                    (in years)</em></font>
                    <hr width="100%" color="black" noshade size="1">
                </th>

                <th colspan="3">
                    <font face="Times New Roman" size="1">June 30,<br>
                    2007</font>
                    <hr width="100%" color="black" noshade size="1">
                </th>

                <th colspan="3">
                    <font face="Times New Roman" size="1">June 30,<br>
                    2006</font>
                    <hr width="100%" color="black" noshade size="1">
                </th>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left" width="47%"><font face="Times New Roman" size="2">Franchise
                license agreements</font></td>

                <td align="left" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="left" width="3%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="center" width="13%"><font face="Times New Roman" size="2">10</font></td>

                <td align="center" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="left" width="4%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="1%"><font face="Times New Roman" size="2">$</font></td>

                <td align="center" width="13%">
                <font face="Times New Roman" size="2">529,500</font></td>

                <td align="left" width="6%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="1%"><font face="Times New Roman" size="2">$</font></td>

                <td align="center" width="13%">
                <font face="Times New Roman" size="2">529,500</font></td>

                <td align="left" width="2%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">Trademarks, patents
                and</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;Tradenames</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="center"><font face="Times New Roman" size="2">10-15</font></td>

                <td align="center"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="center"><font face="Times New Roman" size="2">217,354</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="center"><font face="Times New Roman" size="2">211,779</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="12">
                    <hr color="#000000" noshade size="3">
                </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="center"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="center"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="center"><font face="Times New Roman" size="2">746,854</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="center"><font face="Times New Roman" size="2">741,279</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">Less accumulated
                amortization</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="center"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="center"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="center"><font face="Times New Roman" size="2">(500,042)</font></td>

                <td align="left">
                </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="center"><font face="Times New Roman" size="2">(432,805)</font></td>

                <td align="left">
                </td>
            </tr>

            <tr>
                <td colspan="12">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="center"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="center"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="center"><font face="Times New Roman" size="2">246,812</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="center"><font face="Times New Roman" size="2">308,474</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="12">
                    <hr color="#000000" noshade size="3">
                </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Flush Level 5" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">Amortization
                expense amounted to $68,132 in fiscal 2007 and $66,613 in fiscal 2006.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">30</font></p>

        <div style="PAGE-BREAK-AFTER: always">
        </div>
        <!-- MARKER PAGE="; page: 30" -->
        <hr color="gray" noshade size="5">
        <!-- MARKER FORMAT-SHEET="Para Large Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%"><font face="Times New Roman, Times, Serif" size="2"><b>5.
                &nbsp;&nbsp;&nbsp;&nbsp;Income Taxes</b></font></td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">The following
                are the components of income taxes (benefit):</font></td>
            </tr>
        </table>
        <br>

        <table cellspacing="0" cellpadding="0" width="50%" align="center">
            <tr valign="bottom">
                <th align="left" colspan="3">
                    <font face="Times New Roman" size="1"><i>Years ended June 30,</i></font>
                    <hr width="100%" color="black" noshade size="1">
                </th>

                <th colspan="3">
                    <font face="Times New Roman" size="1">2007</font>
                    <hr width="100%" color="black" noshade size="1">
                </th>

                <th colspan="3">
                    <font face="Times New Roman" size="1">2006</font>
                    <hr width="100%" color="black" noshade size="1">
                </th>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left" width="50%">
                <font face="Times New Roman" size="2">Current</font></td>

                <td align="left" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="left" width="7%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="15%">
                </td>

                <td align="left" width="8%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="15%">
                </td>

                <td align="left" width="2%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;Federal</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">395,865</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">414,174</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;State</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">67,764</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">71,328</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">463,629</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">485,502</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">Deferred</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;Federal</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">56,443</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">(52,346</font></td>

                <td align="left"><font face="Times New Roman" size="2">)</font></td>
            </tr>

            <tr valign="bottom">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;State</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">9,662</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">(8,960</font></td>

                <td align="left"><font face="Times New Roman" size="2">)</font></td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">66,105</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">(61,306</font></td>

                <td align="left"><font face="Times New Roman" size="2">)</font></td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">529,734</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">424,196</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="3">
                </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Flush Level 5" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">The
                reconciliation of income tax expense computed at the Federal statutory tax rate of
                34% to income taxes (benefit) is as follows:</font> </td>
            </tr>
        </table>
        <br>

        <table cellspacing="0" cellpadding="0" width="50%" align="center" border="0">
            <tr valign="bottom">
                <th align="left" colspan="3">
                    <font face="Times New Roman" size="1"><i>Years ended June 30,</i></font>
                    <hr width="100%" color="black" noshade size="1">
                </th>

                <th colspan="3">
                    <font face="Times New Roman" size="1">2007</font>
                    <hr width="100%" color="black" noshade size="1">
                </th>

                <th colspan="3">
                    <font face="Times New Roman" size="1">2006</font>
                    <hr width="100%" color="black" noshade size="1">
                </th>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left" width="52%"><font face="Times New Roman" size="2">Tax at the
                statutory rate</font></td>

                <td align="left" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="left" width="4%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="1%"><font face="Times New Roman" size="2">$</font></td>

                <td align="right" width="16%">
                <font face="Times New Roman" size="2">479,646</font></td>

                <td align="left" width="7%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="1%"><font face="Times New Roman" size="2">$</font></td>

                <td align="right" width="16%">
                <font face="Times New Roman" size="2">417,582</font></td>

                <td align="left" width="2%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">State income
                taxes,</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;net of
                federal benefit</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">51,102</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">41,163</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">Other</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">(1,014</font></td>

                <td align="left"><font face="Times New Roman" size="2">)</font></td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">(34,549</font></td>

                <td align="left"><font face="Times New Roman" size="2">)</font></td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">529,734</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">424,196</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="3">
                </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Flush Level 5" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">Deferred income
                taxes reflect the net tax effect of temporary differences between the bases of
                assets and liabilities for financial reporting purposes and the bases used for
                income tax purposes. Significant components of the Company&rsquo;s current and
                noncurrent deferred tax assets and liabilities are as follows:</font> </td>
            </tr>
        </table>
        <br>

        <table cellspacing="0" cellpadding="0" width="50%" align="center" border="0">
            <tr valign="bottom">
                <th align="left" colspan="3">
                    <font face="Times New Roman" size="1"><i>Years ended June 30,</i></font>
                    <hr width="100%" color="black" noshade size="1">
                </th>

                <th colspan="3">
                    <font face="Times New Roman" size="1">2007</font>
                    <hr width="100%" color="black" noshade size="1">
                </th>

                <th colspan="3">
                    <font face="Times New Roman" size="1">2006</font>
                    <hr width="100%" color="black" noshade size="1">
                </th>
            </tr>

            <tr valign="bottom">
                <td align="left" width="52%"><font face="Times New Roman" size="2">Current deferred
                tax asset:</font></td>

                <td align="left" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="left" width="4%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="16%">
                </td>

                <td align="left" width="7%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="16%">
                </td>

                <td align="left" width="2%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;Allowance for
                doubtful accounts</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">47,038</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">48,919</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;Inventory
                capitalization</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">49,591</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">66,462</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;Other</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">2,511</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">25,829</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">99,140</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">141,210</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">Noncurrent deferred tax
                asset (liability):</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;Equipment and
                improvements</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">(44,337</font></td>

                <td align="left"><font face="Times New Roman" size="2">)</font></td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">(18,619</font></td>

                <td align="left"><font face="Times New Roman" size="2">)</font></td>
            </tr>

            <tr valign="bottom">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;Franchise, trademarks
                and other</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;intangible
                assets</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">53,677</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">51,994</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">9,340</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">33,375</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">Total net deferred income
                tax asset</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">108,480</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">174,585</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="3">
                </td>
            </tr>
        </table>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" --><a name="A086"></a>

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">31</font></p>
        <!-- MARKER PAGE="; page: 31" -->
        <hr color="gray" noshade size="5">
        <!-- MARKER FORMAT-SHEET="Para Large Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="5%"><font face="Times New Roman, Times, Serif" size="2"><b>6.</b></font>
                </td>

                <td width="20%"><font face="Times New Roman, Times, Serif" size="2"><b>Credit
                Agreement and<br>
                Term Loan</b></font> </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">The Company is
                a party to a bank loan agreement which provides the Company with a revolving credit
                facility of $2,250,000, including a $1,000,000 letter of credit subfacility and
                $250,000 foreign exchange subfacility. On October 30, 2006, the Loan Agreement was
                amended to eliminate the requirement that the Company maintain windstorm insurance
                coverage, thereby enabling the Company to self insure against windstorm damages. On
                October 30, 2005, the Loan Agreement was amended to eliminate the requirement that
                51% of the common stock of the Company be owned by the Steiner family or any
                Steiner Trust. Borrowings under the revolving credit facility bear interest at
                2.50% per annum above the Adjusted LIBOR Market Index Rate, are guaranteed by all
                of the Company&rsquo;s subsidiaries and are collateralized by substantially all of
                the Company&rsquo;s and its subsidiaries&rsquo; assets. The revolving credit
                facility matures October 30, 2007. At June 30, 2007 and 2006, there were no
                outstanding borrowings, letters of credit or foreign exchange contracts outstanding
                under the line of credit. The loan agreement requires maintenance of certain debt
                service coverage and leverage ratios and contains other restrictive covenants,
                including limitations on the extent to which the Company and its subsidiaries may
                incur additional indebtedness, pay dividends, guarantee indebtedness of others,
                grant liens, sell assets and make investments. The Company was in compliance with
                these covenants at June 30, 2007 and 2006.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Large Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="5%"><font face="Times New Roman, Times, Serif" size="2"><b>7.</b></font>
                </td>

                <td width="20%"><font face="Times New Roman, Times, Serif" size="2"><b>Related
                Party Transactions</b></font> </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">The Company
                leases warehouse and office space under an operating lease from Sheila Steiner,
                who, together with her husband, William K. Steiner, Chairman of the Board of
                Directors and a director of the Company, are trustees of a trust which is a
                principal shareholder of the Company. Annual rental expense under this lease was
                $96,400 in fiscal 2007 and $90,700 in fiscal 2006.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Flush Level 5" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">The lease
                provides for a three-year term that commenced on November 1, 2005 at an annual
                rental of $94,500, with annual increases commencing November 1, 2006 of 3% over the
                rent in the prior year. The Company bears the cost of real estate taxes, utilities,
                maintenance, non-structural repairs and insurance. The lease contains two
                three-year renewal options in favor of the Company. The Company believes that the
                terms of the lease are comparable to terms that would be obtained from an
                unaffiliated third party for similar property in a similar locale.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Flush Level 5" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">The Company
                paid a law firm, in which a director is of counsel, $46,700 and $45,300 in fiscal
                2007 and 2006, respectively, for legal services performed.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Large Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="5%"><font face="Times New Roman, Times, Serif" size="2"><b>8.</b></font>
                </td>

                <td width="20%">
                <font face="Times New Roman, Times, Serif" size="2"><b>Concentrations of<br>
                Credit Risk</b></font> </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">The Company
                places its excess cash in overnight deposits with a large national bank and a large
                broker firm. At times, such deposits have exceeded insured limits. Concentration of
                credit risk with respect to trade and lease receivables is limited due to a large
                customer base. Based on the Company&rsquo;s credit evaluation, trade receivables
                may be collateralized by the equipment sold.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" --><a name="A087"></a>

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">32</font></p>
        <!-- MARKER PAGE="; page: 32" -->
        <hr color="gray" noshade size="5">
        <!-- MARKER FORMAT-SHEET="Para Large Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="5%"><font face="Times New Roman, Times, Serif" size="2"><b>9.</b></font>
                </td>

                <td width="20%">
                <font face="Times New Roman, Times, Serif" size="2"><b>Commitments</b></font> </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">In addition to
                the warehouse and office space leased from the wife of an officer and director who,
                together, are trustees of a trust which is a principal shareholder (see Note 7),
                the Company leases two additional office and warehouse facilities from unrelated
                third parties under operating leases expiring in March and December 2008,
                respectively. As of June 30, 2007, the Company is also obligated under a lease for
                a future dry cleaning store, for a sum of $33,600 in annual base rent per year for
                the next five years. The Company anticipates assigning the lease to a dry cleaning
                franchisee or another customer when the leased facility is available for
                occupancy.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Flush Level 5" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">Minimum future
                rental commitments for leases in effect at June 30, 2007 approximates the
                following:</font> </td>
            </tr>
        </table>
        <br>

        <table cellspacing="0" cellpadding="0" width="50%" align="center" border="0">
            <tr valign="bottom">
                <td colspan="3"><font face="Times New Roman, Times, serif" size="2"><i>Years ending
                June 30,</i></font> </td>
            </tr>

            <tr>
                <td colspan="6">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left" width="46%"><font face="Times New Roman" size="2">2008</font></td>

                <td align="left" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="left" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="1%"><font face="Times New Roman" size="2">$</font></td>

                <td align="right" width="1%">
                <font face="Times New Roman" size="2">181,700</font></td>

                <td align="left" width="2%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">2009</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">86,500</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">2010</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">33,600</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">2011</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">33,600</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">2012</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">33,600</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">Thereafter</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">16,800</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="6">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">Total</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">385,800</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="6">
                    <hr color="#000000" noshade size="3">
                </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Flush Level 5" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">Rent expense
                aggregated $179,503 and $169,278 for the years ended June 30, 2007 and 2006,
                respectively.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Flush Level 5" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">As of June 30,
                2007, the Company had no outstanding letters of credit.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Flush Level 5" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">The Company,
                through its manufacturers, provides parts warranties for products sold. These
                warranties are the responsibility of the manufacturer. As such, warranty related
                expenses are insignificant to the consolidated financial statements.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Large Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="5%">
                <font face="Times New Roman, Times, Serif" size="2"><b>10.</b></font> </td>

                <td width="20%"><font face="Times New Roman, Times, Serif" size="2"><b>Deferred<br>
                Compensation Plan</b></font></td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">The Company has
                a participatory deferred compensation plan wherein it matches employee
                contributions up to 2% of an eligible employee&rsquo;s yearly compensation.
                Employees are eligible to participate in the plan after one year of service. The
                Company contributed approximately $12,600 and $9,700 to the Plan during fiscal 2007
                and fiscal 2006, respectively. The plan is tax deferred under Section 401(k) of the
                Internal Revenue Code.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" --><a name="A088"></a>

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">33</font></p>
        <!-- MARKER PAGE="; page: 33" -->
        <hr color="gray" noshade size="5">
        <!-- MARKER FORMAT-SHEET="Para Large Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="5%">
                <font face="Times New Roman, Times, Serif" size="2"><b>11.</b></font> </td>

                <td width="20%"><font face="Times New Roman, Times, Serif" size="2"><b>Earnings Per
                Share</b></font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">The following
                reconciles the components of the earnings per share computation:</font> </td>
            </tr>
        </table>
        <br>

        <table cellspacing="0" cellpadding="0" width="50%" align="center" border="0">
            <tr valign="bottom">
                <td colspan="3"><font face="Times New Roman, Times, serif" size="2"><b><i>Year
                ended June 30, 2007</i></b></font> </td>
            </tr>

            <tr>
                <td colspan="12">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom">
                <td align="center" colspan="3">
                </td>

                <td align="center" colspan="3">
                <font face="Times New Roman, Times, serif" size="2"><b><i>Income<br>
                (Numerator)</i></b></font> </td>

                <td align="center" colspan="3">
                <font face="Times New Roman, Times, serif" size="2"><b><i>Shares<br>
                (Denominator)</i></b></font> </td>

                <td align="center" colspan="3">
                <font face="Times New Roman, Times, serif" size="2"><b><i>Per Share<br>
                Amount</i></b></font> </td>
            </tr>

            <tr>
                <td colspan="12">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left" width="44%"><font face="Times New Roman" size="2">Net
                earnings</font></td>

                <td align="left" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="left" width="3%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="1%"><font face="Times New Roman" size="2">$</font></td>

                <td align="right" width="13%">
                <font face="Times New Roman" size="2">880,990</font></td>

                <td align="left" width="4%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="13%">
                <font face="Times New Roman" size="2">7,034,390</font></td>

                <td align="left" width="4%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="1%"><font face="Times New Roman" size="2">$</font></td>

                <td align="right" width="13%"><font face="Times New Roman" size="2">.13</font></td>

                <td align="left" width="2%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2"><br>
                </font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">Effect of dilutive
                securities:</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;Stock
                options</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">3,456</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="12">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">880,990</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">7,037,846</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">.13</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="12">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2"><br>
                </font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2"><i>Year ended June 30,
                2006</i></font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="12">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">Net earnings</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">803,981</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">7,026,950</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">.11</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2"><br>
                </font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">Effect of dilutive
                securities:</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;Stock
                options</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">4,760</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="12">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">803,981</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">7,031,710</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">.11</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="12">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Flush Level 5" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">There were no
                options excluded in the computations of earnings per share in fiscal 2007 and
                2006.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Large Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="5%">
                <font face="Times New Roman, Times, Serif" size="2"><b>12.</b></font> </td>

                <td width="20%">
                <font face="Times New Roman, Times, Serif" size="2"><b>Dividends</b></font> </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">The Company
                paid semi-annual dividends of $.04 per share during each of fiscal 2007 and
                2006.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Flush Level 5" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">On September
                25, 2007, the Board of Directors declared a $.04 per share semi-annual dividend (or
                an aggregate of $281,372) payable on November 1, 2007 to shareholders of record on
                October 12, 2007.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Large Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="5%">
                <font face="Times New Roman, Times, Serif" size="2"><b>13.</b></font> </td>

                <td width="20%"><font face="Times New Roman, Times, Serif" size="2"><b>Stock
                Options</b></font> </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">The
                Company&rsquo;s 2000 Stock Option Plan authorizes the grant (until May 2, 2010) of
                options to purchase up to 500,000 shares of the Company&rsquo;s common stock to
                employees, directors and consultants. The Company also has a 1994 Non-Employee
                Director Stock Option Plan which terminated as to future grants on August 23, 2004,
                but under which options to purchase 20,000 shares remain outstanding.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Flush Level 5" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">Pursuant to the
                Company&rsquo;s 2000 Stock Option Plan, the Company may grant incentive stock
                options and nonqualified stock options. Options under the 2000 Stock Option Plan
                must be granted at an exercise price of at least 100% of the market value of the
                Company&rsquo;s common stock on the date of grant, may have a maximum term of 10
                years and are not transferable. However, incentive stock options granted to an
                individual owning more than 10% of the total combined voting power of all classes
                of stock issued by the Company must have an exercise price of at least 110% of the
                fair market value of the Company&rsquo;s common stock on the date of the grant and
                may not have a term of more than five years. Incentive stock options granted under
                the 2000 Stock Option Plan are subject to the limitation that the aggregate fair
                market value (determined as of the date of grant) of those options which may first
                become exercisable in any calendar year cannot exceed $100,000.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" --><a name="A089"></a>

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">34</font></p>
        <!-- MARKER PAGE="; page: 34" -->
        <hr color="gray" noshade size="5">
        <!-- MARKER FORMAT-SHEET="Para Flush Level 5" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">Generally,
                options granted to date had become exercisable, on a cumulative basis, as to
                one-fourth of the shares covered thereby on each of the first four anniversaries of
                grant. Generally, options terminate three months following termination of service
                (except generally one year in the case of termination of service by reason of death
                or disability). Options granted under the plan also terminate upon a merger in
                which the Company is not the surviving corporation or in which shareholders before
                the merger cease to own at least 50% of the combined voting power in the elections
                of directors of the surviving corporation, the sale of substantially all of the
                Company&rsquo;s assets or the liquidation or dissolution of the Company, unless
                another provision is made by the board of directors.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Flush Level 5" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">Options under
                the 1994 Non-Employee Director Stock Option Plan have a term of 10 years, are not
                transferable and are exercisable at a price equal to 100% of the market value of
                the Company&rsquo;s common stock on the date of grant. Options under this plan are
                exercisable as to one-fourth of the shares covered thereby on each of the first
                four anniversaries of grant. Vesting accelerates upon a change of control of the
                Company (as defined in the Plan). Options terminate three months following
                termination of service (except one year in the case of termination of service by
                reason of death or disability).</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Flush Level 5" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">In April 2006,
                a director exercised options under the 1994 Non-Employee Director Stock Option Plan
                to purchase 10,000 shares of the Company&rsquo;s common stock at an exercise price
                of $.91 per share.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Flush Level 5" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">A summary of
                options under the Company&rsquo;s stock option plans as of June 30, 2007, and
                changes during the year then ended is presented below:</font> </td>
            </tr>
        </table>
        <br>

        <table cellspacing="0" cellpadding="0" width="50%" align="center" border="0">
            <tr valign="bottom">
                <td colspan="3"><font face="Times New Roman, Times, serif" size="2"><b><i>Year
                Ended June 30, 2007</i></b></font> </td>

                <th colspan="3">
                <font face="Times New Roman, Times, serif" size="2"><i>Shares</i></font> </th>

                <th colspan="3"><font face="Times New Roman, Times, serif" size="2"><b>Weighted<br>
                Average<br>
                Exercise<br>
                Price</b></font> </th>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left" width="70%"><font face="Times New Roman" size="2"><br>
                </font></td>

                <td align="left" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="left" width="3%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="9%">
                </td>

                <td align="left" width="4%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="9%">
                </td>

                <td align="left" width="2%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">Outstanding at beginning of
                year</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">20,000</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">1.45</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">Granted</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">Exercised</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">Expired</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">Outstanding at end of
                year</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">20,000</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">1.45</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">Options exercisable at
                year-end</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">20,000</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">1.45</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">Options available for future
                grant at year-end</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">500,000</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>
        </table>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" --><a name="A090"></a>

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">35</font></p>
        <!-- MARKER PAGE="; page: 35" -->
        <hr color="gray" noshade size="5">

        <table cellspacing="0" cellpadding="0" width="50%" align="center" border="0">
            <tr valign="bottom">
                <td colspan="3"><font face="Times New Roman, Times, serif" size="2"><b><i>Year
                Ended June 30, 2006</i></b></font> </td>

                <th colspan="3">
                <font face="Times New Roman, Times, serif" size="2"><i>Shares</i></font> </th>

                <th colspan="3"><font face="Times New Roman, Times, serif" size="2"><b>Weighted<br>
                Average<br>
                Exercise<br>
                Price</b></font> </th>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left" width="60%"><font face="Times New Roman" size="2"><br>
                </font></td>

                <td align="left" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="left" width="4%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="12%">
                </td>

                <td align="left" width="7%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="12%">
                </td>

                <td align="left" width="2%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">Outstanding at beginning of
                year</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">30,000</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">1.27</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">Granted</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">Exercised</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">(10,000</font></td>

                <td align="left"><font face="Times New Roman" size="2">)</font></td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">.91</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">Expired</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2"><br>
                </font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">Outstanding at end of
                year</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">20,000</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">1.45</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2"><br>
                </font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">Options exercisable at
                year-end</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">20,000</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">1.45</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Flush Level 5" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">The following
                table summarizes information about outstanding stock options at June 30,
                2007:</font> </td>
            </tr>
        </table>
        <br>

        <table cellspacing="0" cellpadding="0" width="50%" align="center" border="0">
            <tr valign="bottom">
                <th colspan="3"><font face="Times New Roman, Times, serif" size="2"><i>Exercise<br>
                Prices</i></font> </th>

                <th colspan="3"><font face="Times New Roman, Times, serif" size="2"><i>Number<br>
                Outstanding<br>
                at 6/30/07</i></font> </th>

                <th colspan="3">
                <font face="Times New Roman, Times, serif" size="2"><i>Remaining<br>
                Contractual<br>
                Life</i></font> </th>

                <th colspan="3"><font face="Times New Roman, Times, serif" size="2"><i>Exercise<br>
                Prices</i></font> </th>

                <th colspan="3"><font face="Times New Roman, Times, serif" size="2"><i>Number<br>
                Exercisable<br>
                at 6/30/07</i></font> </th>

                <th colspan="3"><font face="Times New Roman, Times, serif" size="2"><i><br>
                Exercise<br>
                Price<br>
                </i></font></th>
            </tr>

            <tr>
                <td colspan="18">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom">
                <td align="right" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="12%">
                </td>

                <td align="left" width="4%"><font face="Times New Roman" size="2"><br>
                </font></td>

                <td align="right" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="12%">
                </td>

                <td align="left" width="4%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="12%">
                </td>

                <td align="left" width="4%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="12%">
                </td>

                <td align="left" width="4%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="12%">
                </td>

                <td align="left" width="4%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="12%">
                </td>

                <td align="left" width="2%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">.91</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">10,000</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">1.3 years</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">.91</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">10,000</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">.91</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">2.00</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">10,000</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">1.9 years</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">2.00</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">10,000</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">2.00</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="18">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Large Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="5%">
                <font face="Times New Roman, Times, Serif" size="2"><b>14.</b></font> </td>

                <td width="20%"><font face="Times New Roman, Times, Serif" size="2"><b>Segment
                Information</b></font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">The
                Company&rsquo;s reportable segments are strategic businesses that offer different
                products and services. They are managed separately because each business requires
                different technology and marketing strategies.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Flush Level 5" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="75%">
                <font face="Times New Roman, Times, Serif" size="2">Steiner-Atlantic Corp.,
                Steiner-Atlantic Brokerage Corp. and DRYCLEAN USA Development Corp., wholly-owned
                subsidiaries of the Company, comprise the commercial and industrial laundry and dry
                cleaning equipment segment. Steiner-Atlantic Corp. sells commercial and industrial
                laundry and dry cleaning equipment and steam boilers to customers in the United
                States, the Caribbean and Latin American markets. Steiner-Atlantic Brokerage Corp.
                acts as a business broker to assist others seeking to buy or sell existing dry
                cleaning and coin laundry businesses. DRYCLEAN USA Development Corp. develops
                turn-key dry cleaning establishments for resale to third parties.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Flush Level 5" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">DRYCLEAN USA
                License Corp. comprises the license and franchise operations segment.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Flush Level 5" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">The Company
                primarily evaluates the operating performance of its segments based on the
                categories noted in the table below. The Company has no sales between
                segments.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" --><a name="A091"></a>

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">36</font></p>
        <!-- MARKER PAGE="; page: 36" -->
        <hr color="gray" noshade size="5">
        <!-- MARKER FORMAT-SHEET="Para Flush Level 5" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">Financial
                information for the Company&rsquo;s business segments is as follows:</font> </td>
            </tr>
        </table>
        <br>

        <table cellspacing="0" cellpadding="0" width="50%" align="center" border="0">
            <tr valign="bottom">
                <td colspan="3"><font face="Times New Roman, Times, serif" size="2"><b><i>Year
                ended June 30,</i></b></font> </td>

                <td align="center" colspan="3">
                <font face="Times New Roman, Times, serif" size="2"><b><i>2007</i></b></font> </td>

                <td align="center" colspan="3">
                <font face="Times New Roman, Times, serif" size="2"><b><i>2006</i></b></font> </td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left" width="60%">
                <font face="Times New Roman" size="2">Revenues:</font></td>

                <td align="left" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="left" width="2%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="14%">
                </td>

                <td align="left" width="5%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="14%">
                </td>

                <td align="left" width="2%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;Commercial
                and industrial laundry and dry</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;cleaning
                equipment</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">22,484,383</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">20,075,224</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;License
                and franchise operations</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">264,144</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">339,666</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">Total revenues</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">22,748,527</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">20,414,890</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="3">
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">Operating income
                (loss):</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;Commercial
                and industrial laundry</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and dry
                cleaning equipment</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">1,353,391</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">1,176,438</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;&nbsp;License and
                franchise operations</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">185,022</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">252,548</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;Corporate</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">(290,482</font></td>

                <td align="left"><font face="Times New Roman" size="2">)</font></td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">(276,252</font></td>

                <td align="left"><font face="Times New Roman" size="2">)</font></td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">Total operating
                income</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">1,247,931</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">1,152,734</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="3">
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">Identifiable
                assets:</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;Commercial
                and industrial laundry</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and dry
                cleaning equipment</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">8,712,151</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">8,052,901</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;License
                and franchise operations</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">554,518</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">668,828</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;&nbsp;Corporate</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">176,905</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">216,300</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="1">
                </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">Total assets</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">9,443,574</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$</font></td>

                <td align="right"><font face="Times New Roman" size="2">8,938,029</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="9">
                    <hr color="#000000" noshade size="3">
                </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Flush Level 5" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">For the years
                ended June 30, 2007 and 2006, export revenues, principally to the Caribbean and
                Latin America, aggregated approximately $3,684,000 and $2,739,000, respectively, of
                which approximately $3,548,000 and $2,533,000, respectively, related to the
                commercial and industrial laundry and dry cleaning equipment segment. All such
                sales are denominated in U.S. Dollars and, accordingly, the Company is not exposed
                to risks of foreign currency fluctuations as a result of such sales.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Flush Level 5" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="25%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="75%"><font face="Times New Roman, Times, Serif" size="2">One customer
                accounted for approximately 11% of the Company&rsquo;s revenues in fiscal 2007.
                Another customer accounted for approximately 17% of the Company&rsquo;s revenue in
                fiscal 2006.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" --><a name="A092"></a>

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">37</font></p>
        <!-- MARKER PAGE="; page: 37" -->
        <hr color="gray" noshade size="5">
        <!-- MARKER FORMAT-SHEET="Para Large Hang" FSL="Default" --><a name="A093"></a>

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%">
                <font face="Times New Roman, Times, Serif" size="2"><b><a name="f10ksb063007-Item8">
                Item 8.</a></b></font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2"><b>Changes In
                and Disagreements With Accountants on<br>
                <u>Accounting and Financial Disclosure</u>.</b></font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Head Major Center Bold 1"  --><a name="A094"></a>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not
        applicable.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Hang" FSL="Default" --><a name="A095"></a>

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%">
                <font face="Times New Roman, Times, Serif" size="2"><b><a name="f10ksb063007-Item8A">
                Item 8A.</a></b></font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2"><u><b>Controls
                and Procedures.</b></u></font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
        of the end of the period covered by this report, management of the Company, with the
        participation of the Company&rsquo;s principal executive officer and the Company&rsquo;s
        principal financial officer, evaluated the effectiveness of the Company&rsquo;s
        &ldquo;disclosure controls and procedures,&rdquo; as defined in Rule 13a-15(e) under the
        Securities Exchange Act of 1934. Based on that evaluation, these officers concluded that,
        as of the date of their evaluation, the Company&rsquo;s disclosure controls and procedures
        were effective to provide reasonable assurance that information required to be disclosed in
        the Company&rsquo;s periodic filings under the Securities Exchange Act of 1934 is
        accumulated and communicated to the Company&rsquo;s management, including those officers,
        to allow timely decisions regarding required disclosure. It should be noted that a control
        system, no matter how well designed and operated, can provide only reasonable, not
        absolute, assurance that it will detect or uncover failures within the Company to disclose
        material information otherwise required to be set forth in the Company&rsquo;s periodic
        reports.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
        the period covered by this Report, there were no changes in the Company&rsquo;s internal
        control over financial reporting that have materially affected, or are reasonably likely to
        materially affect, the Company&rsquo;s internal control over financial
        reporting.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Hang" FSL="Default" --><a name="A096"></a>

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%">
                <font face="Times New Roman, Times, Serif" size="2"><b><a name="f10ksb063007-Item8B">
                Item 8B.</a></b></font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2"><u><b>Other
                Information.</b></u></font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None.</font></p>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" --><a name="A097"></a>

        <p align="center"><font face="Times New Roman, Times, Serif" size="2"><b>PART
        III</b></font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Hang" FSL="Default" --><a name="A098"></a>

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%">
                <font face="Times New Roman, Times, Serif" size="2"><b><a name="f10ksb063007-Item9">
                Item 9.</a></b></font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2"><b>Directors,
                Executive Officers, Promoters and Control Persons;<br>
                <u>Compliance with Section 16(a) of the Exchange Act.</u></b></font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Head Major Center Bold 1" FSL="Default" --><a name="A099"></a>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        following information is presented with respect to the background of each of the directors
        and executive officers of the Company:</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Michael
        S. Steiner, 51, has been President, Chief Executive Officer and a director of the Company
        since November 1998 and of Steiner since 1988.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;William
        K. Steiner, 77, has been a director of the Company since November 1998 and Chairman of the
        Board of Steiner since he founded Steiner in 1960.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Venerando
        J. Indelicato, 74, was President of the Company from December 1967 until November 1998 and
        has been Treasurer and Chief Financial Officer of the Company since December
        1969.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Alan
        I. Greenstein, 51, has been Executive Vice President and Chief Operating Officer of Steiner
        since May 2004. From October 1995 until it was sold in 2000, he was President and principal
        stockholder of Professional Cleaners, Inc., an operator of a south Florida chain of dry
        cleaning and laundry stores. From February 2001 to September 2004, Mr. Greenstein was Vice
        President and a principal shareholder of South Florida Transport, Inc., a south Florida
        Thrifty Car rental franchise. In October 2004, South Florida Transport, Inc. filed a
        Chapter 11 bankruptcy proceeding, which subsequently converted to Chapter 7 liquidation.
        Mr. Greenstein believes the heavy losses from the hurricanes that hit Florida in
        the</font></p>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" --><a name="A100"></a>

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">38</font></p>
        <!-- MARKER PAGE="; page: 38" -->
        <hr color="gray" noshade size="5">
        <!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" --><a name="A101"></a>

        <p><font face="Times New Roman, Times, Serif" size="2">summer of 2004 were the cause for
        South Florida Transport, Inc.'s financial problems. Since he joined Steiner, Mr. Greenstein
        has been a full time employee of Steiner.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lloyd
        Frank, 82, has been a director of the Company since 1977. Mr. Frank has been of counsel to
        the law firm of Troutman Sanders LLP since April 2005. Prior thereto, Mr. Frank was a
        member of the law firm of Jenkens &amp; Gilchrist Parker Chapin LLP and its predecessor
        from 1977 until the end of 2003 and of counsel to that firm from January 2004 until March
        2005. The Company retained Troutman Sanders LLP during the Company&rsquo;s last fiscal year
        and is retaining that firm during the Company&rsquo;s current fiscal year. Mr. Frank is
        also a director of Park Electrochemical Corp. and Volt Information Sciences,
        Inc.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;David
        Blyer, 47, has served as a director of the Company since November 1998. Mr. Blyer has been
        Co-Chairman of Profiles in Concrete, Inc., a manufacturer and installer of architectural
        cast stone for residential and commercial construction markets, since January 2005. From
        July 2002 until January 2005, Mr. Blyer was an independent consultant. Mr. Blyer was Chief
        Executive Officer and President of Vento Software, Inc., a developer of software for
        specialized business applications, from 1994, when he co-founded that company, until
        November 1999, when the company was acquired by SPSS Inc, a computer software company that
        develops and distributes technology for the analysis of data in decision making. From
        November 1999 until December 2000, Mr. Blyer served as Vice President of Vento Software,
        Inc., and, from January 2001 until July 2002, served as President of the Enabling
        Technology Division of SPSS Inc.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Alan
        M. Grunspan, 47, has served as a director of the Company since May 1999. Since 2004, Mr.
        Grunspan has been a member of the law firm of Carlton Fields, PA. Prior thereto, Mr.
        Grunspan was a member of the law firm of Kaufman Dickstein &amp; Grunspan P. A. from 1991
        until 2004.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stuart
        Wagner, 75, has served as a director of the Company since November 1998. Mr. Wagner has
        been retired since 1999. From 1975 to 1997, Mr. Wagner served as President of Wagner
        Products Corp., a manufacturer and distributor of products in the HVAC industry, a company
        which he founded, and served as a consultant to Diversified Corp., which acquired Wagner
        Products Corp., from 1997 until 1999 .</font></p>
        <!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;Mr.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
        Michael S. Steiner is the son of Mr. William K. Steiner. There are no other family
        relationships among any of the directors and executive officers of the Company. All
        directors serve until the next annual meeting of stockholders and until the election and
        qualification of their respective successors. All officers serve at the pleasure of the
        Board of Directors.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        balance of the information called for by this Item will be contained in the Company&rsquo;s
        definitive Proxy Statement with respect to the Company&rsquo;s 2007 Annual Meeting of
        Stockholders to be filed pursuant to Regulation 14A under the Securities Exchange Act of
        1934, and is incorporated herein by reference to such information.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Hang" FSL="Default" --><a name="A102"></a>

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%">
                <font face="Times New Roman, Times, Serif" size="2"><b><a name="f10ksb063007-Item10">
                Item 10.</a></b></font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2"><u><b>Executive
                Compensation.</b></u></font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        information called for by this Item will be contained in the Company&rsquo;s definitive
        Proxy Statement with respect to the Company&rsquo;s 2007 Annual Meeting of Stockholders to
        be filed pursuant to Regulation 14A under the Securities Exchange Act of 1934, and is
        incorporated herein by reference to such information.</font></p>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" --><a name="A103"></a>

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">39</font></p>
        <!-- MARKER PAGE="; page: 39" -->
        <hr color="gray" noshade size="5">
        <!-- MARKER FORMAT-SHEET="Para Large Hang" FSL="Default" --><a name="A104"></a>

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%">
                <font face="Times New Roman, Times, Serif" size="2"><b><a name="f10ksb063007-Item11">
                Item 11.</a></b></font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2"><b>Security
                Ownership of Certain Beneficial Owners and Management<br>
                <u>and Related Stockholder Matters.</u></b></font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        following table sets forth certain information, as at June 30, 2007, with respect to the
        Company&rsquo;s equity compensation plans:</font></p>

        <table cellspacing="0" cellpadding="0" width="100%" align="center" border="0">
            <tr valign="bottom">
                <th colspan="2">
                    <font face="Times New Roman, Times, serif" size="2">Plan Category</font>
                    <hr width="100%" color="black" noshade size="1">
                </th>

                <th>
                </th>

                <th colspan="2">
                    <font face="Times New Roman, Times, serif" size="2">Number of securities to<br>
                    be issued upon exercise<br>
                    of outstanding options,<br>
                    warrants and rights</font>
                    <hr width="100%" color="black" noshade size="1">
                </th>

                <th>
                </th>

                <th colspan="2">
                    <font face="Times New Roman, Times, serif" size="2">Weighted-average<br>
                    exercise price of<br>
                    outstanding options,<br>
                    warrants and rights</font>
                    <hr width="100%" color="black" noshade size="1">
                </th>

                <th>
                </th>

                <th colspan="2">
                    <font face="Times New Roman, Times, serif" size="2">Number of securities<br>
                    remaining available for<br>
                    future issuance<br>
                    under equity compensation<br>
                    plans<br>
                    </font>
                    <hr width="100%" color="black" noshade size="1">
                </th>

                <th>
                </th>
            </tr>

            <tr valign="bottom">
                <td align="left" width="46%">
                </td>

                <td align="left" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="left" width="3%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="12%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="left" width="4%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="12%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="left" width="4%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="right" width="12%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="left" width="2%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left"><font face="Times New Roman" size="2">Equity compensation plans
                approved<br>
                by security holders</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">20,000</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;(a)</font></td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">$1.45</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">500,000</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;(b)</font></td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2"><br>
                </font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">Equity compensation plans
                not</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">approved by security
                holders</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">0</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">-</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">0</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="3">
                </td>

                <td align="right" colspan="2">
                    <hr color="#000000" noshade size="1">
                </td>

                <td>
                </td>

                <td align="right" colspan="2">
                    <hr color="#000000" noshade size="1">
                </td>

                <td>
                </td>

                <td align="right" colspan="2">
                    <hr color="#000000" noshade size="1">
                </td>

                <td>
                </td>
            </tr>

            <tr valign="bottom" bgcolor="#c0c0c0">
                <td align="left">
                <font face="Times New Roman" size="2">&nbsp;&nbsp;Total</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">20,000</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right">
                </td>

                <td align="right"><font face="Times New Roman" size="2">$1.45</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="right"><font face="Times New Roman" size="2">500,000</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr>
                <td colspan="3">
                </td>

                <td align="right" colspan="2">
                    <hr color="#000000" noshade size="3">
                </td>

                <td>
                </td>

                <td align="right" colspan="2">
                    <hr color="#000000" noshade size="3">
                </td>

                <td>
                </td>

                <td align="right" colspan="2">
                    <hr color="#000000" noshade size="3">
                </td>

                <td>
                </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="5%"><font face="Times New Roman, Times, Serif" size="2">(a)</font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="95%"><font face="Times New Roman, Times, Serif" size="2">All options
                were granted under the Company&rsquo;s 1994 Non-Employee Director Stock Option Plan
                under which no future options may be granted.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="5%"><font face="Times New Roman, Times, Serif" size="2">(b)</font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="95%"><font face="Times New Roman, Times, Serif" size="2">Represents
                shares available for future grant under the Company&rsquo;s 2000 Stock Option Plan
                (the &ldquo;2000 Plan&rdquo;), which permits the grant of options to employees and
                directors of, and consultants to, the Company. Upon the expiration, cancellation or
                termination of unexercised options, shares subject to options under the 2000 Plan
                will again be available for the grant of options under the 2000 Plan.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        balance of the information called for by this Item will be contained in the Company&rsquo;s
        definitive Proxy Statement with respect to the Company&rsquo;s 2007 Annual Meeting of
        Stockholders to be filed pursuant to Regulation 14A under the Securities Exchange Act of
        1934, and is incorporated herein by reference to such information.</font></p>
        <!-- MARKER FORMAT-SHEET="Para Large Hang" FSL="Default" --><a name="A106"></a>

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%">
                <font face="Times New Roman, Times, Serif" size="2"><b><a name="f10ksb063007-Item12">
                Item 12.</a></b></font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2"><u><b>Certain
                Relationships and Related Transactions.</b></u></font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        information called for by this Item will be contained in the Company&rsquo;s definitive
        Proxy Statement with respect to the Company&rsquo;s 2007 Annual Meeting of Stockholders to
        be filed pursuant to Regulation 14A under the Securities Exchange Act of 1934, and is
        incorporated herein by reference to such information.</font></p>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" --><a name="A107"></a>

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">40</font></p>
        <!-- MARKER PAGE="; page: 40" -->
        <hr color="gray" noshade size="5">
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" --><a name="A108"></a>

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="5%">
                <font face="Times New Roman, Times, Serif" size="2"><b><a name="f10ksb063007-Item13">
                Item 13.</a></b></font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="95%">
                <font face="Times New Roman, Times, Serif" size="2"><u><b>Exhibits.</b></u></font>
                </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%"><font face="Times New Roman, Times, Serif" size="2">3(a)(1)</font>
                </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">Certificate of
                Incorporation of the Company, as filed with the Secretary of State of the State of
                Delaware on June 30, 1963. (Exhibit 4.1(a) to the Company&rsquo;s Current Report on
                Form 8-K dated (date of earliest event reported) October 29, 1998, File No.
                000-9040.)</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%"><font face="Times New Roman, Times, Serif" size="2">3(a)(2)</font>
                </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">Certificate of
                Amendment to the Certificate of Incorporation of the Company, as filed with the
                Secretary of State of the State of Delaware on March 27, 1968. (Exhibit 4.1(b) to
                the Company&rsquo;s Current Report on Form 8-K dated (date of earliest event
                reported) October 29, 1998, File No. 000-9040.)</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%"><font face="Times New Roman, Times, Serif" size="2">3(a)(3)</font>
                </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">Certificate of
                Amendment to the Certificate of Incorporation of the Company, as filed with the
                Secretary of State of the State of Delaware on November 4, 1983. (Exhibit 4.1(c) to
                the Company&rsquo;s Current Report on Form 8-K dated (date of earliest event
                reported) October 29, 1998, File No. 000-9040.)</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%"><font face="Times New Roman, Times, Serif" size="2">3(a)(4)</font>
                </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">Certificate of
                Amendment to the Certificate of Incorporation of the Company, as filed with the
                Secretary of State of the State of Delaware on November 5, 1986. (Exhibit 4.1(d) to
                the Company&rsquo;s Current Report on Form 8-K dated (date of earliest event
                reported) October 29, 1998, File No. 000-9040.)</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%"><font face="Times New Roman, Times, Serif" size="2">3(a)(5)</font>
                </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">Certificate of
                Change of Location of Registered Office and of Agent, as filed with the Secretary
                of State of the State of Delaware on December 31, 1986. (Exhibit 4.1(e) to the
                Company&rsquo;s Current Report on Form 8-K dated (date of earliest event reported)
                October 29, 1998, File No. 000-9040.)</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%"><font face="Times New Roman, Times, Serif" size="2">3(a)(6)</font>
                </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">Certificate of
                Ownership and Merger of Design Development Incorporated into the Company, as filed
                with the Secretary of State of the State of Delaware on June 30, 1998. (Exhibit
                4.1(f) to the Company&rsquo;s Current Report on Form 8-K dated (date of earliest
                event reported) October 29, 1998, File No. 000-9040.)</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%"><font face="Times New Roman, Times, Serif" size="2">3(a)(7)</font>
                </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">Certificate of
                Amendment to the Company&rsquo;s Certificate of Incorporation, as filed with the
                Secretary of State of the State of Delaware on October 30, 1998. (Exhibit 4.1(g) to
                the Company&rsquo;s Current Report on Form 8-K dated (date of earliest event
                reported) October 29, 1998, File No. 000-9040.)</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%"><font face="Times New Roman, Times, Serif" size="2">3(a)(8)</font>
                </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">Certificate of
                Amendment to the Company&rsquo;s Certificate of Incorporation, as filed with the
                Secretary of State of the State of Delaware on November 5, 1999. (Exhibit 4.1 to
                the Company&rsquo;s Quarterly Report on Form 10-QSB for the quarter ended September
                30, 1999, File No. 001-14757.)</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%"><font face="Times New Roman, Times, Serif" size="2">3(b)</font>
                </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">By-Laws of the
                Company, as amended. (Exhibit 4.2 to the Company&rsquo;s Quarterly Report on Form
                10-QSB for the quarter ended September 30, 1999, File No. 000-9040.)</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%">
                <font face="Times New Roman, Times, Serif" size="2">4(a)(1)(A)</font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">Loan and
                Security Agreement, dated as of December 19, 2001, from the Company in favor of
                Wachovia Bank, National Association, formerly named First Union National Bank
                (&ldquo;Wachovia&rdquo;). (Exhibit 4.1(a) to the Company&rsquo;s Quarterly Report
                on Form 10-QSB for the quarter ended December 31, 2001, File No. 001-14757).</font>
                </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%">
                <font face="Times New Roman, Times, Serif" size="2">4(a)(1)(B)</font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">Letter
                agreement dated September 23, 2002 between the Company and Wachovia (Exhibit
                4(a)(1)(B) to the Company&rsquo;s Annual Report on Form 10-KSB for the year ended
                June 30, 2002, File No. 001-14757).</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" --><a name="A109"></a>

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">41</font></p>
        <!-- MARKER PAGE="; page: 41" -->
        <hr color="gray" noshade size="5">
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%">
                <font face="Times New Roman, Times, Serif" size="2">4(a)(1)(C)</font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">Letter
                agreement dated October 11, 2002 between the Company and Wachovia (Exhibit 4.01 to
                the Company&rsquo;s Quarterly Report on Form 10-QSB for the quarter ended September
                30, 2002, File No. 001-14757).</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%">
                <font face="Times New Roman, Times, Serif" size="2">4(a)(1)(D)</font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">Letter
                agreement dated October 22, 2003 between the Company and Wachovia (Exhibit 4.01 to
                the Company&rsquo;s Quarterly Report on Form 10-QSB for the quarter ended September
                30, 2003. File No. 001-14757.)</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%">
                <font face="Times New Roman, Times, Serif" size="2">4(a)(1)(E)</font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">Letter
                agreement, dated October 28, 2004, between the Company and Wachovia, extending the
                Company&rsquo;s revolving credit facility. (Exhibit 4.01 to the Company&rsquo;s
                Current Report on Form 8-K dated (date of earliest event reported) October 28,
                2004, File No. 001-14757.)</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%">
                <font face="Times New Roman, Times, Serif" size="2">4(a)(1)(F)</font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">Letter
                agreement, dated October 28, 2004, between the Company and Wachovia, eliminating
                the borrowing base restriction on borrowings under the Company&rsquo;s revolving
                credit facility. (Exhibit 4.02 to the Company&rsquo;s Current Report on Form 8-K
                dated (date of earliest event reported) October 28, 2004, File No.
                001-14757.)</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%">
                <font face="Times New Roman, Times, Serif" size="2">4(a)(1)(G)</font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">Letter, dated
                as of October 30, 2005, from Wachovia. (Exhibit 4.01 to the Company&rsquo;s Current
                Report on Form 8-K dated (date of earliest event reported) October 31, 2005, File
                No. 001-14757.)</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%">
                <font face="Times New Roman, Times, Serif" size="2">4(a)(1)(H)</font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">Letter, dated
                as of October 30, 2005, from Wachovia. (Exhibit 4.02 to the Company&rsquo;s Current
                Report on Form 8-K dated (date of earliest event reported) October 31, 2005, File
                No. 001-14757.)</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%"><font face="Times New Roman, Times, Serif" size="2">4(a)(2)</font>
                </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">Revolving
                Credit Note, dated as of December 19, 2001, from the Company in favor of Wachovia.
                (Exhibit 4.1(c) to the Company&rsquo;s Quarterly Report on Form 10-QSB for the
                quarter ended December 31, 2001, File No. 001-14757).</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%"><font face="Times New Roman, Times, Serif" size="2">4(a)(3)</font>
                </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">Guaranty and
                Security Agreement, dated as of December 19, 2001, from Steiner-Atlantic Corp.,
                Steiner-Atlantic Brokerage Company, DRYCLEAN USA Development Corp. and DRYCLEAN USA
                License Corp., subsidiaries of the Company, in favor of Wachovia. (Exhibit 4.1(d)
                to the Company&rsquo;s Quarterly Report on Form 10-QSB for the quarter ended
                December 31, 2001, File No. 001-14757).</font> </td>
            </tr>
        </table>
        <br>
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        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%"><font face="Times New Roman, Times, Serif" size="2">10(a)</font>
                </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">Commercial
                lease dated September 9, 2005 between Steiner and William K. Steiner with respect
                to Steiner&rsquo;s facilities located at 290 NE 68 Street, 296 NE 67 Street and 277
                NE 67 Street, Miami, Florida. (Exhibit 10(a)(1)(B) to the Company&rsquo;s Annual
                Report on Form 10-KSB for the year ended June 30, 2005, File No. 001-14757.)</font>
                </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%">
                <font face="Times New Roman, Times, Serif" size="2">10(b)(1)+</font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">The Company's
                1994 Non-Employee Director Stock Option Plan. (Exhibit A to the Company's Proxy
                Statement dated October 14, 1994 used in connection with the Company's 1994 Annual
                Meeting of Stockholders, File No. 000-9040.)</font> </td>
            </tr>
        </table>
        <br>
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        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%">
                <font face="Times New Roman, Times, Serif" size="2">10(b)(2)+</font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">The Company's
                2000 Stock Option Plan. (Exhibit 99.1 to the Company's Registration Statement on
                Form S-8, File No. 333-37582.)</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%"><font face="Times New Roman, Times, Serif" size="2">14</font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">Code of Ethics
                for Principal Executive Officer and Senior Financial Officers. (Exhibit 14 to the
                Company's Annual Report on Form 10-KSB for the year ended June 20, 2004, File No.
                001-14757)</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%"><font face="Times New Roman, Times, Serif" size="2">21</font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">Subsidiaries of
                the Company. (Exhibit 21 to the Company's Annual Report on Form 10-KSB for the year
                ended June 30, 2001, File No. 001-14757.)</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" --><a name="A110"></a>

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">42</font></p>
        <!-- MARKER PAGE="; page: 42" -->
        <hr color="gray" noshade size="5">
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%"><font face="Times New Roman, Times, Serif" size="2">*23(a)</font>
                </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%">
                <a href="ex23a-f10ksb063007_a.htm"><font face="Times New Roman, Times, Serif" size="2">
                Consent of Berkovits &amp; Company, LLP.</font></a> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%"><font face="Times New Roman, Times, Serif" size="2">*23(b)</font>
                </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%">
                <a href="ex23b-f10ksb063007_a.htm"><font face="Times New Roman, Times, Serif" size="2">
                Consent of Morrison, Brown, Argiz &amp; Farra, LLP.</font></a> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%"><font face="Times New Roman, Times, Serif" size="2">*31(a)</font>
                </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%">
                <a href="ex31a-f10ksb063007_a.htm"><font face="Times New Roman, Times, Serif" size="2">
                Certification of Principal Executive Officer pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002 promulgated under the Securities Exchange Act of
                1934.</font></a> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%"><font face="Times New Roman, Times, Serif" size="2">*31(b)</font>
                </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%">
                <a href="ex31b-f10ksb063007_a.htm"><font face="Times New Roman, Times, Serif" size="2">
                Certification of Principal Financial Officer pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002 promulgated under the Securities Exchange Act of
                1934.</font></a> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%"><font face="Times New Roman, Times, Serif" size="2">*32(a)</font>
                </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%">
                <a href="ex32a-f10ksb063007_a.htm"><font face="Times New Roman, Times, Serif" size="2">
                Certification of Principal Executive Officer pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002.</font></a> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%"><font face="Times New Roman, Times, Serif" size="2">*32(b)</font>
                </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%">
                <a href="ex32b-f10ksb063007_a.htm"><font face="Times New Roman, Times, Serif" size="2">
                Certification of Principal Financial Officer pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002.</font></a> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Cutoff Rule" FSL="Default" -->

        <p>_________________</p>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="5%">
                <font face="Times New Roman, Times, Serif" size="2"><sup>*</sup></font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="95%"><font face="Times New Roman, Times, Serif" size="2">Filed with this
                Report. All other exhibits are incorporated herein by reference to the filing
                indicated in the parenthetical reference following the exhibit description.</font>
                </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="5%"><font face="Times New Roman, Times, Serif" size="2">+</font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="95%"><font face="Times New Roman, Times, Serif" size="2">Management
                contract or compensatory plan or arrangement.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Large Hang" FSL="Default" --><a name="A111"></a>

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%">
                <font face="Times New Roman, Times, Serif" size="2"><b><a name="f10ksb063007-Item14">
                Item 14.</a></b></font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2"><u><b>Principal
                Accountant Fees and Services</b></u><b>.</b></font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
        information called for by this Item will be contained in the Company&rsquo;s definitive
        Proxy Statement with respect to the Company&rsquo;s 2007 Annual Meeting of Stockholders to
        be filed pursuant to Regulation 14A under the Securities Exchange Act of 1934, and is
        incorporated herein by reference to such information.</font></p>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" --><a name="A112"></a>

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">43</font></p>
        <!-- MARKER PAGE="; page: 43" -->
        <hr color="gray" noshade size="5">
        <!-- MARKER FORMAT-SHEET="Head Major Center Bold" FSL="Default" --><a name="A113"></a>

        <h1 align="center">
        <a name="f10ksb063007-Signatures"><font face="Times New Roman, Times, Serif" size="2">SIGNATURES</font></a></h1>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant
        to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the
        registrant has duly caused this Report to be signed on its behalf by the undersigned,
        thereunto duly authorized.</font></p>

        <table cellspacing="0" cellpadding="0" width="100%" align="center" border="0">
            <tr valign="bottom">
                <th colspan="3">
                </th>

                <th colspan="3">
                </th>
            </tr>

            <tr valign="bottom">
                <td align="left" width="40%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="left" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="left" width="3%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="left" width="56%"><font face="Times New Roman" size="2">DRYCLEAN USA,
                Inc.</font></td>

                <td align="left" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="left" width="1%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2"><br>
                </font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">Dated: September 26,
                2007</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">By: <u>/s/ Michael S.
                Steiner</u></font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">Michael S.
                Steiner</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">President and Chief
                Executive Officer</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>
        </table>
        <!-- MARKER FORMAT-SHEET="Para Large Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant
        to the requirements of the Securities Exchange Act of 1934, this Report has been signed
        below by the following persons on behalf of the registrant and in the capacities and on the
        dates indicated.</font></p>

        <table cellspacing="0" cellpadding="0" width="100%" align="center" border="0">
            <tr valign="bottom">
                <td colspan="2">
                <font face="Times New Roman, Times, serif" size="2"><u>Signature</u></font> </td>

                <td colspan="2">
                <font face="Times New Roman, Times, serif" size="2"><u>Capacity</u></font> </td>

                <td colspan="2">
                <font face="Times New Roman, Times, serif" size="2"><u>Date</u></font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left" width="32%"><font face="Times New Roman" size="2"><br>
                </font></td>

                <td align="left" width="3%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="left" width="40%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="left" width="3%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="left" width="20%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="left" width="2%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2"><u>/s/ Michael S.
                Steiner</u></font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">President, Chief Executive
                Officer</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">September 26,
                2007</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">Michael S.
                Steiner</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">(Principal Executive
                Officer) and</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">Director</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2"><br>
                </font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2"><u>/s/ Venerando J.
                Indelicato</u></font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">Chief Financial
                Officer</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">September 26,
                2007</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">Venerando J.
                Indelicato</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">(Principal Financial and
                Accounting</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">Officer) and
                Director</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2"><br>
                </font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2"><u>/s/ David
                Blyer</u></font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">Director</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">September 26,
                2007</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">David Blyer</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2"><br>
                </font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2"><u>/s/ Lloyd
                Frank</u></font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">Director</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">September 26,
                2007</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">Lloyd Frank</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2"><br>
                </font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2"><u>/s/ Alan M.
                Grunspan</u></font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">Director</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">September 26,
                2007</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">Alan M. Grunspan</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2"><br>
                </font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2"><u>/s/ William K.
                Steiner</u></font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">Director</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">September 26,
                2007</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">William K.
                Steiner</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2"><br>
                </font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2"><u>/s/ Stuart
                Wagner</u></font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">Director</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">September 26,
                2007</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">Stuart Wagner</font></td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>
            </tr>
        </table>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" --><a name="A114"></a>

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">44</font></p>
        <!-- MARKER PAGE="; page: 44" -->
        <hr color="gray" noshade size="5">
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" --><a name="A115"></a>

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">EXHIBIT
        INDEX</font></p>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" --><a name="A108a"></a>

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%"><font face="Times New Roman, Times, Serif" size="2"><u>Exhibit
                No.</u></font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%">
                <font face="Times New Roman, Times, Serif" size="2"><u>Description</u></font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%"><font face="Times New Roman, Times, Serif" size="2">3(a)(1)</font>
                </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">Certificate of
                Incorporation of the Company, as filed with the Secretary of State of the State of
                Delaware on June 30, 1963. (Exhibit 4.1(a) to the Company&rsquo;s Current Report on
                Form 8-K dated (date of earliest event reported) October 29, 1998, File No.
                000-9040.)</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%"><font face="Times New Roman, Times, Serif" size="2">3(a)(2)</font>
                </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">Certificate of
                Amendment to the Certificate of Incorporation of the Company, as filed with the
                Secretary of State of the State of Delaware on March 27, 1968. (Exhibit 4.1(b) to
                the Company&rsquo;s Current Report on Form 8-K dated (date of earliest event
                reported) October 29, 1998, File No. 000-9040.)</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%"><font face="Times New Roman, Times, Serif" size="2">3(a)(3)</font>
                </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">Certificate of
                Amendment to the Certificate of Incorporation of the Company, as filed with the
                Secretary of State of the State of Delaware on November 4, 1983. (Exhibit 4.1(c) to
                the Company&rsquo;s Current Report on Form 8-K dated (date of earliest event
                reported) October 29, 1998, File No. 000-9040.)</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%"><font face="Times New Roman, Times, Serif" size="2">3(a)(4)</font>
                </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">Certificate of
                Amendment to the Certificate of Incorporation of the Company, as filed with the
                Secretary of State of the State of Delaware on November 5, 1986. (Exhibit 4.1(d) to
                the Company&rsquo;s Current Report on Form 8-K dated (date of earliest event
                reported) October 29, 1998, File No. 000-9040.)</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%"><font face="Times New Roman, Times, Serif" size="2">3(a)(5)</font>
                </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">Certificate of
                Change of Location of Registered Office and of Agent, as filed with the Secretary
                of State of the State of Delaware on December 31, 1986. (Exhibit 4.1(e) to the
                Company&rsquo;s Current Report on Form 8-K dated (date of earliest event reported)
                October 29, 1998, File No. 000-9040.)</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%"><font face="Times New Roman, Times, Serif" size="2">3(a)(6)</font>
                </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">Certificate of
                Ownership and Merger of Design Development Incorporated into the Company, as filed
                with the Secretary of State of the State of Delaware on June 30, 1998. (Exhibit
                4.1(f) to the Company&rsquo;s Current Report on Form 8-K dated (date of earliest
                event reported) October 29, 1998, File No. 000-9040.)</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%"><font face="Times New Roman, Times, Serif" size="2">3(a)(7)</font>
                </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">Certificate of
                Amendment to the Company&rsquo;s Certificate of Incorporation, as filed with the
                Secretary of State of the State of Delaware on October 30, 1998. (Exhibit 4.1(g) to
                the Company&rsquo;s Current Report on Form 8-K dated (date of earliest event
                reported) October 29, 1998, File No. 000-9040.)</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%"><font face="Times New Roman, Times, Serif" size="2">3(a)(8)</font>
                </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">Certificate of
                Amendment to the Company&rsquo;s Certificate of Incorporation, as filed with the
                Secretary of State of the State of Delaware on November 5, 1999. (Exhibit 4.1 to
                the Company&rsquo;s Quarterly Report on Form 10-QSB for the quarter ended September
                30, 1999, File No. 001-14757.)</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%"><font face="Times New Roman, Times, Serif" size="2">3(b)</font>
                </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">By-Laws of the
                Company, as amended. (Exhibit 4.2 to the Company&rsquo;s Quarterly Report on Form
                10-QSB for the quarter ended September 30, 1999, File No. 000-9040.)</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%">
                <font face="Times New Roman, Times, Serif" size="2">4(a)(1)(A)</font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">Loan and
                Security Agreement, dated as of December 19, 2001, from the Company in favor of
                Wachovia Bank, National Association, formerly named First Union National Bank
                (&ldquo;Wachovia&rdquo;). (Exhibit 4.1(a) to the Company&rsquo;s Quarterly Report
                on Form 10-QSB for the quarter ended December 31, 2001, File No. 001-14757).</font>
                </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%">
                <font face="Times New Roman, Times, Serif" size="2">4(a)(1)(B)</font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">Letter
                agreement dated September 23, 2002 between the Company and Wachovia (Exhibit
                4(a)(1)(B) to the Company&rsquo;s Annual Report on Form 10-KSB for the year ended
                June 30, 2002, File No. 001-14757).</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" --><a name="A109a"></a>

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">45</font></p>
        <!-- MARKER PAGE="; page: 41" -->
        <hr color="gray" noshade size="5">
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%">
                <font face="Times New Roman, Times, Serif" size="2">4(a)(1)(C)</font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">Letter
                agreement dated October 11, 2002 between the Company and Wachovia (Exhibit 4.01 to
                the Company&rsquo;s Quarterly Report on Form 10-QSB for the quarter ended September
                30, 2002, File No. 001-14757).</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%">
                <font face="Times New Roman, Times, Serif" size="2">4(a)(1)(D)</font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">Letter
                agreement dated October 22, 2003 between the Company and Wachovia (Exhibit 4.01 to
                the Company&rsquo;s Quarterly Report on Form 10-QSB for the quarter ended September
                30, 2003. File No. 001-14757.)</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%">
                <font face="Times New Roman, Times, Serif" size="2">4(a)(1)(E)</font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">Letter
                agreement, dated October 28, 2004, between the Company and Wachovia, extending the
                Company&rsquo;s revolving credit facility. (Exhibit 4.01 to the Company&rsquo;s
                Current Report on Form 8-K dated (date of earliest event reported) October 28,
                2004, File No. 001-14757.)</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%">
                <font face="Times New Roman, Times, Serif" size="2">4(a)(1)(F)</font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">Letter
                agreement, dated October 28, 2004, between the Company and Wachovia, eliminating
                the borrowing base restriction on borrowings under the Company&rsquo;s revolving
                credit facility. (Exhibit 4.02 to the Company&rsquo;s Current Report on Form 8-K
                dated (date of earliest event reported) October 28, 2004, File No.
                001-14757.)</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%">
                <font face="Times New Roman, Times, Serif" size="2">4(a)(1)(G)</font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">Letter, dated
                as of October 30, 2005, from Wachovia. (Exhibit 4.01 to the Company&rsquo;s Current
                Report on Form 8-K dated (date of earliest event reported) October 31, 2005, File
                No. 001-14757.)</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%">
                <font face="Times New Roman, Times, Serif" size="2">4(a)(1)(H)</font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">Letter, dated
                as of October 30, 2005, from Wachovia. (Exhibit 4.02 to the Company&rsquo;s Current
                Report on Form 8-K dated (date of earliest event reported) October 31, 2005, File
                No. 001-14757.)</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%"><font face="Times New Roman, Times, Serif" size="2">4(a)(2)</font>
                </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">Revolving
                Credit Note, dated as of December 19, 2001, from the Company in favor of Wachovia.
                (Exhibit 4.1(c) to the Company&rsquo;s Quarterly Report on Form 10-QSB for the
                quarter ended December 31, 2001, File No. 001-14757).</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%"><font face="Times New Roman, Times, Serif" size="2">4(a)(3)</font>
                </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">Guaranty and
                Security Agreement, dated as of December 19, 2001, from Steiner-Atlantic Corp.,
                Steiner-Atlantic Brokerage Company, DRYCLEAN USA Development Corp. and DRYCLEAN USA
                License Corp., subsidiaries of the Company, in favor of Wachovia. (Exhibit 4.1(d)
                to the Company&rsquo;s Quarterly Report on Form 10-QSB for the quarter ended
                December 31, 2001, File No. 001-14757).</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%"><font face="Times New Roman, Times, Serif" size="2">10(a)</font>
                </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">Commercial
                lease dated September 9, 2005 between Steiner and William K. Steiner with respect
                to Steiner&rsquo;s facilities located at 290 NE 68 Street, 296 NE 67 Street and 277
                NE 67 Street, Miami, Florida. (Exhibit 10(a)(1)(B) to the Company&rsquo;s Annual
                Report on Form 10-KSB for the year ended June 30, 2005, File No. 001-14757.)</font>
                </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%">
                <font face="Times New Roman, Times, Serif" size="2">10(b)(1)+</font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">The Company's
                1994 Non-Employee Director Stock Option Plan. (Exhibit A to the Company's Proxy
                Statement dated October 14, 1994 used in connection with the Company's 1994 Annual
                Meeting of Stockholders, File No. 000-9040.)</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%">
                <font face="Times New Roman, Times, Serif" size="2">10(b)(2)+</font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">The Company's
                2000 Stock Option Plan. (Exhibit 99.1 to the Company's Registration Statement on
                Form S-8, File No. 333-37582.)</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%"><font face="Times New Roman, Times, Serif" size="2">14</font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">Code of Ethics
                for Principal Executive Officer and Senior Financial Officers. (Exhibit 14 to the
                Company's Annual Report on Form 10-KSB for the year ended June 20, 2004, File No.
                001-14757)</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%"><font face="Times New Roman, Times, Serif" size="2">21</font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">Subsidiaries of
                the Company. (Exhibit 21 to the Company's Annual Report on Form 10-KSB for the year
                ended June 30, 2001, File No. 001-14757.)</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%"><font face="Times New Roman, Times, Serif" size="2">*23(a)</font>
                </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">Consent of
                Berkovits &amp; Company, LLP.</font> </td>
            </tr>
        </table>
        <br>
        <br>
        <br>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" --><a name="A110a"></a>

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">46</font></p>
        <!-- MARKER PAGE="; page: 42" -->
        <hr color="gray" noshade size="5">
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%"><font face="Times New Roman, Times, Serif" size="2">*23(b)</font>
                </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">Consent of
                Morrison, Brown, Argiz &amp; Farra, LLP.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%"><font face="Times New Roman, Times, Serif" size="2">*31(a)</font>
                </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">Certification
                of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
                2002 promulgated under the Securities Exchange Act of 1934.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%"><font face="Times New Roman, Times, Serif" size="2">*31(b)</font>
                </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">Certification
                of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of
                2002 promulgated under the Securities Exchange Act of 1934.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%"><font face="Times New Roman, Times, Serif" size="2">*32(a)</font>
                </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">Certification
                of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="10%"><font face="Times New Roman, Times, Serif" size="2">*32(b)</font>
                </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">Certification
                of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of
                2002.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Cutoff Rule" FSL="Default" -->

        <p>_________________</p>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="5%">
                <font face="Times New Roman, Times, Serif" size="2"><sup>*</sup></font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="95%"><font face="Times New Roman, Times, Serif" size="2">Filed with this
                Report. All other exhibits are incorporated herein by reference to the filing
                indicated in the parenthetical reference following the exhibit description.</font>
                </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Hang" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="5%"><font face="Times New Roman, Times, Serif" size="2">+</font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="95%"><font face="Times New Roman, Times, Serif" size="2">Management
                contract or compensatory plan or arrangement.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" --><a name="A119"></a>

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">47</font></p>
    </body>
</html>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>GRAPHIC
<SEQUENCE>2
<FILENAME>ballot.jpg
<DESCRIPTION>GRAPHIC
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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>4
<FILENAME>ex23a-f10ksb063007_a.htm
<DESCRIPTION>EXHIBIT 23(A)
<TEXT>
<html>
    <head>
        <title></title>
    </head>

    <body>
        <!-- MARKER FORMAT-SHEET="Head Right" FSL="Default" --><a name="A120"></a>

        <p align="right"><font face="Times New Roman, Times, Serif" size="2"><u>EXHIBIT
        23(a)</u></font></p>
        <!-- MARKER FORMAT-SHEET="Head Major Center Bold" FSL="Default" --><a name="A121"></a>

        <h1 align="center"><font face="Times New Roman, Times, Serif" size="2">CONSENT OF
        INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</font></h1>
        <!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->

        <p><font face="Times New Roman, Times, Serif" size="2">We consent to the incorporation by
        reference in the Registration Statements on Form S-8 (File No. 333-37576 and 333-37582) of
        our report dated August 28, 2007, except for the second paragraph of Note 12 as to which
        the date is September 25, 2007, relating to the consolidated financial statements of
        DRYCLEAN USA, Inc. appearing in the Company&rsquo;s Annual Report on Form 10-KSB for the
        fiscal year ended June 30, 2007.</font></p>

        <p><font face="Times New Roman, Times, Serif" size="2">/s/ Berkovits &amp; Company,
        LLP</font></p>

        <p><font face="Times New Roman, Times, Serif" size="2">Fort Lauderdale, Florida<br>
        September 26, 2007</font></p>
        <br>
        <br>
        <a name="A122"></a>

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">48</font></p>
    </body>
</html>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>5
<FILENAME>ex23b-f10ksb063007_a.htm
<DESCRIPTION>EXHIBIT 23(B)
<TEXT>
<html>
    <head>
        <title></title>
    </head>

    <body>
        <!-- MARKER FORMAT-SHEET="Head Right" FSL="Default" --><a name="A123"></a>

        <p align="right"><font face="Times New Roman, Times, Serif" size="2"><u>EXHIBIT
        23(b)</u></font></p>
        <!-- MARKER FORMAT-SHEET="Head Major Center Bold" FSL="Default" --><a name="A124"></a>

        <h1 align="center"><font face="Times New Roman, Times, Serif" size="2">CONSENT OF
        INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</font></h1>
        <!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->

        <p><font face="Times New Roman, Times, Serif" size="2">We consent to the incorporation by
        reference in the Registration Statements on Form S-8 (File No. 333-37576 and 333-37582) of
        our report dated September 8, 2006, except for the&nbsp;first paragraph of Note 12 as to
        which the date is September 26, 2006, relating to the consolidated financial statements of
        DRYCLEAN USA, Inc. appearing in the Company&rsquo;s Annual Report on Form 10-KSB for the
        fiscal year ended June 30, 2006.</font></p>


<!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>/s/ Morrison, Brown,
                Argiz &amp; Farra, LLP </FONT></P>

        <p><font face="Times New Roman, Times, Serif" size="2">Miami, Florida<br>
        September 26, 2007</font></p>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" --><a name="A125"></a>

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">49</font></p>
    </body>
</html>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31
<SEQUENCE>6
<FILENAME>ex31a-f10ksb063007_a.htm
<DESCRIPTION>EXHIBIT 31(A)
<TEXT>
<html>
    <head>
        <title></title>
    </head>

    <body>
        <!-- MARKER FORMAT-SHEET="Head Right" FSL="Default" --><a name="A126"></a>

        <p align="right"><font face="Times New Roman, Times, Serif" size="2"><u>Exhibit
        31(a)</u></font></p>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" --><a name="A127"></a>

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">CERTIFICATION OF
        PRINCIPAL EXECUTIVE OFFICER PURSUANT TO<br>
        18 U.S.C. SECTION 1350,<br>
        AS ADOPTED PURSUANT TO<br>
        SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002</font></p>
        <!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->

        <p><font face="Times New Roman, Times, Serif" size="2">I, Michael S. Steiner, certify
        that:</font></p>
        <!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
        I have reviewed this Annual Report on Form 10-KSB for the year ended June 30, 2007 of
        DRYCLEAN USA, Inc.;</font></p>
        <!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
        Based on my knowledge, this report does not contain any untrue statement of a material fact
        or omit to state a material fact necessary to make the statements made, in light of the
        circumstances under which such statements were made, not misleading with respect to the
        period covered by this report;</font></p>
        <!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
        Based on my knowledge, the financial statements, and other financial information included
        in this report, fairly present in all material respects the financial condition, results of
        operations and cash flows of the small business issuer as of, and for, the periods
        presented in this report;</font></p>
        <!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
        The small business issuer&rsquo;s other certifying officer(s) and I are responsible for
        establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
        Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have:</font></p>
        <!-- MARKER FORMAT-SHEET="Para Flush Level 1" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="5%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="95%"><font face="Times New Roman, Times, Serif" size="2">(a)
                &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Designed such disclosure controls and
                procedures, or caused such disclosure controls and procedures to be designed under
                our supervision, to ensure that material information relating to the small business
                issuer, including its consolidated subsidiaries, is made known to us by others
                within those entities, particularly during the period in which this report is being
                prepared;</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Flush Level 1" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="5%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="95%"><font face="Times New Roman, Times, Serif" size="2">(b)
                &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Evaluated the effectiveness of the small
                business issuer&rsquo;s disclosure controls and procedures and presented in this
                report our conclusions about the effectiveness of the disclosure controls and
                procedures, as of the end of the period covered by this report based on such
                evaluation; and</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Flush Level 1" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="5%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="95%"><font face="Times New Roman, Times, Serif" size="2">(c)
                &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Disclosed in this report any change in
                the small business issuer&rsquo;s internal control over financial reporting that
                occurred during the small business issuer&rsquo;s most recent fiscal quarter (the
                small business issuer&rsquo;s fourth fiscal quarter in the case of an annual
                report) that has materially affected, or is reasonably likely to materially affect,
                the small business issuer&rsquo;s internal control over financial reporting;
                and</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER PAGE="; page: 50" -->
        <hr color="gray" noshade size="5">
        <!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
        The small business issuer&rsquo;s other certifying officer(s) and I have disclosed, based
        on our most recent evaluation of internal control over financial reporting, to the small
        business issuer&rsquo;s auditors and the audit committee of the small business
        issuer&rsquo;s board of directors (or persons performing the equivalent
        functions):</font></p>
        <!-- MARKER FORMAT-SHEET="Para Flush Level 1" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="5%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="95%"><font face="Times New Roman, Times, Serif" size="2">(a)
                &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; All significant deficiencies and
                material weaknesses in the design or operation of internal control over financial
                reporting which are reasonably likely to adversely affect the small business
                issuer&rsquo;s ability to record, process, summarize and report financial
                information; and</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Flush Level 1" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="5%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="95%"><font face="Times New Roman, Times, Serif" size="2">(b)
                &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Any fraud, whether or not material, that
                involves management or other employees who have a significant role in the small
                business issuer&rsquo;s internal control over financial reporting.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" --><a name="A131"></a>

        <p><font face="Times New Roman, Times, Serif" size="2">Date: September 26, 2007</font></p>

        <table cellspacing="0" cellpadding="0" width="100%" align="center" border="0">
            <tr valign="bottom">
                <th>
                </th>

                <th>
                </th>
            </tr>

            <tr valign="bottom">
                <td align="left" width="55%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="left" width="71%"><font face="Times New Roman" size="2"><u>/s/Michael S.
                Steiner</u><br>
                Michael S. Steiner</font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">President and
                Principal</font></td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">Executive
                Officer</font></td>
            </tr>
        </table>
    </body>
</html>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31
<SEQUENCE>7
<FILENAME>ex31b-f10ksb063007_a.htm
<DESCRIPTION>EXHIBIT 31(B)
<TEXT>
<html>
    <head>
        <title></title>
    </head>

    <body>
        <!-- MARKER FORMAT-SHEET="Head Right" FSL="Default" --><a name="A132"></a>

        <p align="right"><font face="Times New Roman, Times, Serif" size="2"><u>Exhibit
        31(b)</u></font></p>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" --><a name="A133"></a>

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">CERTIFICATION OF
        PRINCIPAL FINANCIAL OFFICER PURSUANT TO<br>
        18 U.S.C. SECTION 1350,<br>
        AS ADOPTED PURSUANT TO<br>
        SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002</font></p>
        <!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->

        <p><font face="Times New Roman, Times, Serif" size="2">I, Venerando J. Indelicato, certify
        that:</font></p>
        <!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
        I have reviewed this Annual Report on Form 10-KSB for the year ended June 30, 2007 of
        DRYCLEAN USA, Inc.;</font></p>
        <!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
        Based on my knowledge, this report does not contain any untrue statement of a material fact
        or omit to state a material fact necessary to make the statements made, in light of the
        circumstances under which such statements were made, not misleading with respect to the
        period covered by this report;</font></p>
        <!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
        Based on my knowledge, the financial statements, and other financial information included
        in this report, fairly present in all material respects the financial condition, results of
        operations and cash flows of the small business issuer as of, and for, the periods
        presented in this report;</font></p>
        <!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
        The small business issuer&rsquo;s other certifying officer(s) and I are responsible for
        establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
        Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have:</font></p>
        <!-- MARKER FORMAT-SHEET="Para Flush Level 1" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="5%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="95%"><font face="Times New Roman, Times, Serif" size="2">(a)
                &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Designed such disclosure controls and
                procedures, or caused such disclosure controls and procedures to be designed under
                our supervision, to ensure that material information relating to the small business
                issuer, including its consolidated subsidiaries, is made known to us by others
                within those entities, particularly during the period in which this report is being
                prepared;</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Flush Level 1" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="5%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="95%"><font face="Times New Roman, Times, Serif" size="2">(b)
                &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Evaluated the effectiveness of the small
                business issuer&rsquo;s disclosure controls and procedures and presented in this
                report our conclusions about the effectiveness of the disclosure controls and
                procedures, as of the end of the period covered by this report based on such
                evaluation; and</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Flush Level 1" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="5%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="95%"><font face="Times New Roman, Times, Serif" size="2">(c)
                &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Disclosed in this report any change in
                the small business issuer&rsquo;s internal control over financial reporting that
                occurred during the small business issuer&rsquo;s most recent fiscal quarter (the
                small business issuer&rsquo;s fourth fiscal quarter in the case of an annual
                report) that has materially affected, or is reasonably likely to materially affect,
                the small business issuer&rsquo;s internal control over financial reporting;
                and</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER PAGE="; page: 52" -->
        <hr color="gray" noshade size="5">
        <!-- MARKER FORMAT-SHEET="Para (List) Indent" FSL="Default" -->

        <p>
        <font face="Times New Roman, Times, Serif" size="2">&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
        The small business issuer&rsquo;s other certifying officer(s) and I have disclosed, based
        on our most recent evaluation of internal control over financial reporting, to the small
        business issuer&rsquo;s auditors and the audit committee of the small business
        issuer&rsquo;s board of directors (or persons performing the equivalent
        functions):</font></p>
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        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="5%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="95%"><font face="Times New Roman, Times, Serif" size="2">(a)
                &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; All significant deficiencies and
                material weaknesses in the design or operation of internal control over financial
                reporting which are reasonably likely to adversely affect the small business
                issuer&rsquo;s ability to record, process, summarize and report financial
                information; and</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Para Flush Level 1" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="5%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="95%"><font face="Times New Roman, Times, Serif" size="2">(b)
                &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Any fraud, whether or not material, that
                involves management or other employees who have a significant role in the small
                business issuer&rsquo;s internal control over financial reporting.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Head Left" FSL="Default" --><a name="A137"></a>

        <p align="left"><font face="Times New Roman, Times, Serif" size="2">Date: September 26,
        2007</font></p>

        <table cellspacing="0" cellpadding="0" width="100%" align="center" border="0">
            <tr valign="bottom">
                <th>
                </th>

                <th>
                </th>
            </tr>

            <tr valign="bottom">
                <td align="left" width="55%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="left" width="75%"><font face="Times New Roman" size="2"><u>/s/ Venerando
                J. Indelicato</u></font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">Venerando J.
                Indelicato</font></td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">Treasurer and
                Principal</font></td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">Financial
                Officer</font></td>
            </tr>
        </table>
    </body>
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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32
<SEQUENCE>8
<FILENAME>ex32a-f10ksb063007_a.htm
<DESCRIPTION>EXHIBIT 32(A)
<TEXT>
<html>
    <head>
        <title></title>
    </head>

    <body>
        <!-- MARKER FORMAT-SHEET="Head Right" FSL="Default" --><a name="A138"></a>

        <p align="right"><font face="Times New Roman, Times, Serif" size="2">EXHIBIT
        32(a)</font></p>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" --><a name="A139"></a>

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">CERTIFICATION
        PURSUANT TO<br>
        18 U.S.C. SECTION 1350,<br>
        AS ADOPTED PURSUANT TO<br>
        SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002</font></p>
        <!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->

        <p><font face="Times New Roman, Times, Serif" size="2">In connection with the Annual Report
        of DRYCLEAN USA, Inc. (the &ldquo;Company&rdquo;) on Form 10-KSB for the year ended June
        30, 2007, as filed with the Securities and Exchange Commission on the date hereof (the
        &ldquo;Report&rdquo;), I, Michael S. Steiner, Principal Executive Officer of the Company,
        certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
        Sarbanes-Oxley Act of 2002 that, to the best of my knowledge:</font></p>
        <!-- MARKER FORMAT-SHEET="Para Hang Level 1" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="5%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="5%"><font face="Times New Roman, Times, Serif" size="2">(1)</font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">The Report
                fully complies with the requirements of Section 13(a) or 15(d) of the Securities
                Exchange Act of 1934; and</font> </td>
            </tr>
        </table>
        <!-- MARKER FORMAT-SHEET="Para Hang Level 1" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="5%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="5%"><font face="Times New Roman, Times, Serif" size="2">(2)</font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">The information
                contained in the report fairly presents, in all material respects, the financial
                condition and results of operations of the Company.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Head Left" FSL="Default" --><a name="A143"></a>

        <p align="left"><font face="Times New Roman, Times, Serif" size="2">September 26,
        2007</font></p>

        <table cellspacing="0" cellpadding="0" width="100%" align="center" border="0">
            <tr valign="bottom">
                <th>
                </th>

                <th>
                </th>
            </tr>

            <tr valign="bottom">
                <td align="left" width="55%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="left" width="75%"><font face="Times New Roman" size="2"><u>/s/ Michael
                S. Steiner</u></font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">Michael S.
                Steiner</font></td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">Principal Executive
                Offi</font></td>
            </tr>
        </table>
    </body>
</html>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32
<SEQUENCE>9
<FILENAME>ex32b-f10ksb063007_a.htm
<DESCRIPTION>EXHIBIT 32(B)
<TEXT>
<html>
    <head>
        <title></title>
    </head>

    <body>
        <!-- MARKER FORMAT-SHEET="Head Right" FSL="Default" --><a name="A144"></a>

        <p align="right"><font face="Times New Roman, Times, Serif" size="2">EXHIBIT
        32(b)</font></p>
        <!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" --><a name="A145"></a>

        <p align="center"><font face="Times New Roman, Times, Serif" size="2">CERTIFICATION
        PURSUANT TO<br>
        18 U.S.C. SECTION 1350,<br>
        AS ADOPTED PURSUANT TO<br>
        SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002</font></p>
        <!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->

        <p><font face="Times New Roman, Times, Serif" size="2">In connection with the Annual Report
        of DRYCLEAN USA, Inc. (the &ldquo;Company&rdquo;) on Form 10-KSB for the year ended June
        30, 2007, as filed with the Securities and Exchange Commission on the date hereof (the
        &ldquo;Report&rdquo;), I, Venerando J. Indelicato, Principal Financial Officer of the
        Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
        the Sarbanes-Oxley Act of 2002 that, to the best of my knowledge:</font></p>
        <!-- MARKER FORMAT-SHEET="Para Hang Level 1" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="5%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="5%"><font face="Times New Roman, Times, Serif" size="2">(1)</font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">The Report
                fully complies with the requirements of Section 13(a) or 15(d) of the Securities
                Exchange Act of 1934; and</font> </td>
            </tr>
        </table>
        <!-- MARKER FORMAT-SHEET="Para Hang Level 1" FSL="Default" -->

        <table cellspacing="0" cellpadding="0" width="100%">
            <tr valign="top">
                <td width="5%"><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font>
                </td>

                <td width="5%"><font face="Times New Roman, Times, Serif" size="2">(2)</font> </td>

                <td><font face="Times New Roman, Times, Serif" size="2">&nbsp;</font> </td>

                <td width="90%"><font face="Times New Roman, Times, Serif" size="2">The information
                contained in the report fairly presents, in all material respects, the financial
                condition and results of operations of the Company.</font> </td>
            </tr>
        </table>
        <br>
        <!-- MARKER FORMAT-SHEET="Head Left" FSL="Default" --><a name="A149"></a>

        <p align="left"><font face="Times New Roman, Times, Serif" size="2">September 26,
        2007</font></p>

        <table cellspacing="0" cellpadding="0" width="100%" align="center" border="0">
            <tr valign="bottom">
                <th>
                </th>

                <th>
                </th>
            </tr>

            <tr valign="bottom">
                <td align="left" width="55%"><font face="Times New Roman" size="2">&nbsp;</font>
                </td>

                <td align="left" width="75%"><font face="Times New Roman" size="2"><u>/s/ Venerando
                J. Indelicato</u></font> </td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">Venerando J.
                Indelicato</font></td>
            </tr>

            <tr valign="bottom">
                <td align="left"><font face="Times New Roman" size="2">&nbsp;</font> </td>

                <td align="left"><font face="Times New Roman" size="2">Principal Financial
                Offi</font></td>
            </tr>
        </table>
    </body>
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</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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