-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
Originator-Key-Asymmetric:
 MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen
 TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB
MIC-Info: RSA-MD5,RSA,
 Loz9u2IWQfdkSKYeF+9U3BLUcEBs5Uvk7yiYVTRcM1Zkifz8SNgo0OWp9dX+CWzW
 1//+NIN7idbKyi4AIlZ6aw==

<SEC-DOCUMENT>0001104659-01-503363.txt : 20020410
<SEC-HEADER>0001104659-01-503363.hdr.sgml : 20020410
ACCESSION NUMBER:		0001104659-01-503363
CONFORMED SUBMISSION TYPE:	10QSB
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20010930
FILED AS OF DATE:		20011114

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			PRECISION OPTICS CORPORATION INC
		CENTRAL INDEX KEY:			0000867840
		STANDARD INDUSTRIAL CLASSIFICATION:	ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845]
		IRS NUMBER:				042795294
		STATE OF INCORPORATION:			MA
		FISCAL YEAR END:			0630

	FILING VALUES:
		FORM TYPE:		10QSB
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-10647
		FILM NUMBER:		1790533

	BUSINESS ADDRESS:	
		STREET 1:		22 EAST BROADWAY
		CITY:			GARDNER
		STATE:			MA
		ZIP:			01440-3338
		BUSINESS PHONE:		9786301800

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	PRECISION OPTICS CORP INC
		DATE OF NAME CHANGE:	19600201
</SEC-HEADER>
<DOCUMENT>
<TYPE>10QSB
<SEQUENCE>1
<FILENAME>j2127_10qsb.htm
<DESCRIPTION>10QSB
<TEXT>
<html>



<head>



<title>Prepared by MERRILL CORPORATION</title>



</head>



<body link="blue" vlink="purple">



<div class="Section1">



<div style="border:none;border-top:double windowtext 9.0pt;padding:0in 0in 0in 0in">



<p style="border:none;font-size:13.0pt;font-weight:bold;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;padding:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></b></p>



<p style="border:none;font-size:13.0pt;font-weight:bold;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;padding:0in;text-align:center;"><b><font size="5" face="Times New Roman"><font style="font-size:18.0pt;">FORM 10-QSB</font></font></b></p>



</div>



<p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="5" face="Times New Roman"><font style="font-size:18.0pt;font-weight:bold">U.S. SECURITIES AND EXCHANGE

COMMISSION</font></font></b></p>



<p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;

font-weight:bold">Washington, DC&#160; 20549</font></font></b></p>



<p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<table width="100%" style="width:100.0%;

 border-collapse:collapse;">

 <tr>

  <td width="11%" valign="top" style="width:11.78%;padding:0in 0in 0in 0in">

  <p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><font size="3" face="Wingdings"><font style="font-size:12.0pt;

  font-family:Wingdings;">&#253;</font></font></p>

  </td>

  <td width="88%" valign="top" style="width:88.22%;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><b><font size="3" face="Times New Roman"><font style="font-size:12.0pt;font-weight:bold">QUARTERLY

  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</font></font></b></p>

  </td>

 </tr>

</table>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-weight:bold">For the quarterly period ended

September 30, 2001</font></font></b></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-weight:bold">Commission file number&#160; <u>001-10647</u></font></font></b></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="5" face="Times New Roman"><font style="font-size:18.0pt;

font-weight:bold">PRECISION OPTICS CORPORATION, INC.</font></font></b></p>



<p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(Exact name of small

business issuer as specified in its charter)</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<div align="center">



<table width="100%" style="width:100.0%;

 border-collapse:collapse;">

 <tr>

  <td width="48%" valign="top" style="width:48.9%;padding:0in .7pt .7pt .7pt">

  <p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-weight:bold">Massachusetts</font></font></b></p>

  </td>

  <td width="3%" valign="bottom" style="width:3.32%;padding:0in .7pt .7pt .7pt">

  <p style="font-family:Arial;font-size:10.0pt;font-weight:bold;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="47%" valign="top" style="width:47.78%;padding:0in .7pt .7pt .7pt">

  <p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-weight:bold">04-2795294</font></font></b></p>

  </td>

 </tr>

 <tr>

  <td width="48%" valign="top" style="width:48.9%;padding:0in .7pt .7pt .7pt">

  <p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(State or other

  jurisdiction of<br>

  incorporation or organization)</font></font></p>

  </td>

  <td width="3%" valign="bottom" style="width:3.32%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="47%" valign="top" style="width:47.78%;padding:0in .7pt .7pt .7pt">

  <p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(I.R.S. Employer<br>

  Identification No.)</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="48%" valign="top" style="width:48.9%;padding:0in .7pt .7pt .7pt">

  <p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;">&nbsp;</p>

  </td>

  <td width="3%" valign="bottom" style="width:3.32%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="47%" valign="top" style="width:47.78%;padding:0in .7pt .7pt .7pt">

  <p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="100%" colspan="3" valign="top" style="width:100.0%;padding:0in .7pt .7pt .7pt">

  <p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-weight:bold">22

  East Broadway,&#160; Gardner,

  Massachusetts&#160; 01440-3338</font></font></b></p>

  </td>

 </tr>

 <tr>

  <td width="100%" colspan="3" valign="top" style="width:100.0%;padding:0in .7pt .7pt .7pt">

  <p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(Address of principal

  executive offices)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; (Zip Code)</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="48%" valign="top" style="width:48.9%;padding:0in .7pt .7pt .7pt">

  <p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;">&nbsp;</p>

  </td>

  <td width="3%" valign="bottom" style="width:3.32%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="47%" valign="top" style="width:47.78%;padding:0in .7pt .7pt .7pt">

  <p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="100%" colspan="3" valign="top" style="width:100.0%;padding:0in .7pt .7pt .7pt">

  <p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-weight:bold">(978)

  630-1800</font></font></b></p>

  </td>

 </tr>

 <tr>

  <td width="100%" colspan="3" valign="top" style="width:100.0%;padding:0in .7pt .7pt .7pt">

  <p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(Issuer's telephone

  number, including area code)</font></font></p>

  </td>

 </tr>

</table>



</div>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">Check whether the issuer (1) filed all reports required to be filed by

Section 13 or 15(d) of the Securities Exchange Act of 1934 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.</font></font></p>



<p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">Yes&#160; </font></font><font face="Wingdings"><font style="font-family:Wingdings;">&#253;</font></font>&#160;&#160;&#160; No&#160;

<font face="Wingdings"><font style="font-family:Wingdings;">o</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">The number of shares outstanding of issuer's common stock, par value

$.01 per share, at September 30, 2001 was 10,503,908 shares.</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">Transitional Small Business Disclosure Format (check one):</font></font></p>



<p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">Yes&#160; </font></font><font face="Wingdings"><font style="font-family:Wingdings;">o</font></font>&#160;&#160;&#160; No&#160;

<font face="Wingdings"><font style="font-family:Wingdings;">&#253;</font></font></p>



<div style="border:none;border-bottom:double windowtext 9.0pt;padding:0in 0in 0in 0in">



<p align="center" style="border:none;font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;padding:0in;text-align:center;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



</div>



<p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-family:

'Times New Roman';"><br clear="all" style="page-break-before:always">

</font></font>



<p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;

font-weight:bold">PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES</font></font></b></p>



<p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><u><font size="2" face="Times New Roman"><font style="font-size:10.0pt">INDEX</font></font></u></p>



<p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<table style="border-collapse:collapse;" width="100%">

 <tr>

  <td width="72" valign="top" style="width:53.65pt;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><a name="TableHead"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">PART I.</font></font></a></p>

  </td>

  <td width="661" valign="top" style="width:495.6pt;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">FINANCIAL INFORMATION:</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="72" valign="top" style="width:53.65pt;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="661" valign="top" style="width:495.6pt;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="72" valign="top" style="width:53.65pt;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Item 1</font></font></p>

  </td>

  <td width="661" valign="top" style="width:495.6pt;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Consolidated Financial Statements</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="72" valign="top" style="width:53.65pt;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="661" valign="top" style="width:495.6pt;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="72" valign="top" style="width:53.65pt;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="661" valign="top" style="width:495.6pt;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt"><a href="#ConsolidatedBalanceSheets" title="Click to goto PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS">Consolidated

  Balance Sheets - September 30, 2001 and June 30, 2001 (unaudited)</a></font></font></p>

  </td>

 </tr>

 <tr>

  <td width="72" valign="top" style="width:53.65pt;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="661" valign="top" style="width:495.6pt;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="72" valign="top" style="width:53.65pt;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="661" valign="top" style="width:495.6pt;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt"><a href="#ConsolidatedStatementsOfOperations" title="Click to goto PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS">Consolidated

  Statements of Operations - Three Months Ended September 30, 2001and September

  30, 2000 (unaudited)</a></font></font></p>

  </td>

 </tr>

 <tr>

  <td width="72" valign="top" style="width:53.65pt;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="661" valign="top" style="width:495.6pt;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="72" valign="top" style="width:53.65pt;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="661" valign="top" style="width:495.6pt;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt"><a href="#ConsolidatedStatementsOfCashFlows" title="Click to goto PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS ">Consolidated

  Statements of Cash Flows - Three Months Ended September 30, 2001and September

  30, 2000 (unaudited)</a></font></font></p>

  </td>

 </tr>

 <tr>

  <td width="72" valign="top" style="width:53.65pt;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="661" valign="top" style="width:495.6pt;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="72" valign="top" style="width:53.65pt;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="661" valign="top" style="width:495.6pt;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt"><a href="#NotesToConsolidatedFinancialStatemen" title="Click to goto NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ">Notes to

  Consolidated Financial Statements</a></font></font></p>

  </td>

 </tr>

 <tr>

  <td width="72" valign="top" style="width:53.65pt;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="661" valign="top" style="width:495.6pt;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="72" valign="top" style="width:53.65pt;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><u><font size="2" face="Times New Roman"><font style="font-size:10.0pt"><a href="#ManagementsDiscussionAndAnalysisOf" title="Click to goto Management's Discussion and Analysis of Financial Condition and Results of Operations">Item

  2</a></font></font></u></p>

  </td>

  <td width="661" valign="top" style="width:495.6pt;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt"><a href="#ManagementsDiscussionAndAnalysisOf" title="Click to goto Management's Discussion and Analysis of Financial Condition and Results of Operations">Management's

  Discussion and Analysis of Financial Condition and Results of Operations</a></font></font></p>

  </td>

 </tr>

 <tr>

  <td width="72" valign="top" style="width:53.65pt;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="661" valign="top" style="width:495.6pt;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="72" valign="top" style="width:53.65pt;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt"><a href="#PartIi_OtherInformation" title="Click to goto PART II.  OTHER INFORMATION">PART II.</a></font></font></p>

  </td>

  <td width="661" valign="top" style="width:495.6pt;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt"><a href="#PartIi_OtherInformation" title="Click to goto PART II.  OTHER INFORMATION">OTHER INFORMATION</a></font></font></p>

  </td>

 </tr>

 <tr>

  <td width="72" valign="top" style="width:53.65pt;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="661" valign="top" style="width:495.6pt;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="72" valign="top" style="width:53.65pt;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><u><font size="2" face="Times New Roman"><font style="font-size:10.0pt"><a href="#NotApplicable" title="Click to goto Not Applicable">Items 1-5</a></font></font></u></p>

  </td>

  <td width="661" valign="top" style="width:495.6pt;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt"><a href="#NotApplicable" title="Click to goto Not Applicable">Not Applicable</a></font></font></p>

  </td>

 </tr>

 <tr>

  <td width="72" valign="top" style="width:53.65pt;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="661" valign="top" style="width:495.6pt;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="72" valign="top" style="width:53.65pt;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><u><font size="2" face="Times New Roman"><font style="font-size:10.0pt"><a href="#ExhibitsAndReportsOnForm8k" title="Click to goto Exhibits and Reports on Form 8-K">Item 6</a></font></font></u></p>

  </td>

  <td width="661" valign="top" style="width:495.6pt;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt"><a href="#ExhibitsAndReportsOnForm8k" title="Click to goto Exhibits and Reports on Form 8-K">Exhibits and Reports

  on Form 8-K</a></font></font></p>

  </td>

 </tr>

 <tr>

  <td width="72" valign="top" style="width:53.65pt;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="661" valign="top" style="width:495.6pt;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="72" valign="top" style="width:53.65pt;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="661" valign="top" style="width:495.6pt;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt"><a href="#ExhibitsNone" title="Click to goto Exhibits &#150; None">(a)Exhibits &#150; None</a></font></font></p>

  </td>

 </tr>

 <tr>

  <td width="72" valign="top" style="width:53.65pt;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="661" valign="top" style="width:495.6pt;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="72" valign="top" style="width:53.65pt;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="661" valign="top" style="width:495.6pt;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt"><a href="#ReportsOnForm8k" title="Click to goto Reports on Form 8-K">(b)Reports on Form 8-K</a></font></font></p>

  </td>

 </tr>

</table>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-family:'Times New Roman';font-weight:bold"><br clear="all" style="page-break-before:

always">

</font></font></b>



<p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><a name="ConsolidatedBalanceSheets"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-weight:bold">PRECISION

OPTICS CORPORATION, INC. AND SUBSIDIARIES</font></font></b></a></p>



<p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;

font-weight:bold">CONSOLIDATED BALANCE SHEETS</font></font></b></p>



<p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-weight:bold">(UNAUDITED)</font></font></b></p>



<p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"></p>



<table width="100%" style="width:100.0%;

 border-collapse:collapse;">

 <tr>

  <td width="62%" valign="bottom" style="width:62.2%;padding:0in .7pt .7pt .7pt">

  <p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-align:center;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="width:2.22%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="width:15.96%;border:none;

  border-bottom:solid windowtext .5pt;padding:0in .7pt .7pt .7pt">

  <p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-weight:bold">September

  30, 2001</font></font></b></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.86%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="width:15.96%;border:none;

  border-bottom:solid windowtext .5pt;padding:0in .7pt .7pt .7pt">

  <p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-weight:bold">June

  30, 2001</font></font></b></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.8%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="98%" colspan="7" valign="top" bgcolor="#cceeff" style="width:98.2%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-weight:bold">ASSETS</font></font></b></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.8%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="62%" valign="top" style="width:62.2%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">CURRENT

  ASSETS</font></font></p>

  </td>

  <td width="2%" valign="bottom" style="width:2.22%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="width:15.96%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.86%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="width:15.96%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.8%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="62%" valign="top" bgcolor="#cceeff" style="width:62.2%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:30.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Cash and Cash

  Equivalents</font></font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.22%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="width:.96%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">$</font></font></p>

  </td>

  <td width="15%" valign="bottom" bgcolor="#cceeff" style="width:15.0%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">9,050,069</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.86%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="width:.96%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">$</font></font></p>

  </td>

  <td width="15%" valign="bottom" bgcolor="#cceeff" style="width:15.0%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">10,530,298</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.8%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="62%" valign="top" style="width:62.2%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:30.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Accounts

  Receivable, Net</font></font></p>

  </td>

  <td width="2%" valign="bottom" style="width:2.22%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="width:15.96%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">252,797</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.86%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="width:15.96%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">1,003,496</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.8%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="62%" valign="top" bgcolor="#cceeff" style="width:62.2%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:30.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Inventories</font></font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.22%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:15.96%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">1,148,277</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.86%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:15.96%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">1,524,119</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.8%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="62%" valign="top" style="width:62.2%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:30.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Prepaid Expenses</font></font></p>

  </td>

  <td width="2%" valign="bottom" style="width:2.22%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="width:15.96%;border:none;

  border-bottom:solid windowtext .5pt;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">301,580</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.86%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="width:15.96%;border:none;

  border-bottom:solid windowtext .5pt;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">109,760</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.8%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="62%" valign="top" bgcolor="#cceeff" style="width:62.2%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:50.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Total Current

  Assets</font></font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.22%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:15.96%;

  border:none;border-bottom:solid windowtext .5pt;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">10,752,723</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.86%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:15.96%;

  border:none;border-bottom:solid windowtext .5pt;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">13,167,673</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.8%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="62%" valign="top" style="width:62.2%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="width:2.22%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="width:15.96%;border:none;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.86%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="width:15.96%;border:none;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.8%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="62%" valign="top" bgcolor="#cceeff" style="width:62.2%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">PROPERTY AND

  EQUIPMENT</font></font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.22%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:15.96%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">5,973,868</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.86%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:15.96%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">9,386,047</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.8%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="62%" valign="top" style="width:62.2%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:30.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Less:&#160; Accumulated Depreciation</font></font></p>

  </td>

  <td width="2%" valign="bottom" style="width:2.22%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="width:15.96%;border:none;

  border-bottom:solid windowtext .5pt;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(3,731,851</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.86%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">)</font></font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="width:15.96%;border:none;

  border-bottom:solid windowtext .5pt;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(3,600,380</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.8%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">)</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="62%" valign="top" bgcolor="#cceeff" style="width:62.2%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:50.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Net Property and

  Equipment</font></font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.22%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:15.96%;

  border:none;border-bottom:solid windowtext .5pt;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">2,242,017</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.86%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:15.96%;

  border:none;border-bottom:solid windowtext .5pt;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">5,785,667</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.8%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="62%" valign="top" style="width:62.2%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="width:2.22%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="width:15.96%;border:none;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.86%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="width:15.96%;border:none;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.8%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="62%" valign="top" bgcolor="#cceeff" style="width:62.2%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">OTHER ASSETS</font></font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.22%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:15.96%;

  border:none;border-bottom:solid windowtext .5pt;background:#CCEEFF;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">262,539</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.86%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:15.96%;

  border:none;border-bottom:solid windowtext .5pt;background:#CCEEFF;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">266,671</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.8%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="62%" valign="top" style="width:62.2%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="width:2.22%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="width:15.96%;border:none;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.86%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="width:15.96%;border:none;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.8%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="62%" valign="top" bgcolor="#cceeff" style="width:62.2%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">TOTAL ASSETS</font></font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.22%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="width:.96%;border:none;

  border-bottom:double windowtext 1.5pt;background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">$</font></font></p>

  </td>

  <td width="15%" valign="bottom" bgcolor="#cceeff" style="width:15.0%;

  border:none;border-bottom:double windowtext 1.5pt;background:#CCEEFF;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">13,257,279</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.86%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="width:.96%;border:none;

  border-bottom:double windowtext 1.5pt;background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">$</font></font></p>

  </td>

  <td width="15%" valign="bottom" bgcolor="#cceeff" style="width:15.0%;

  border:none;border-bottom:double windowtext 1.5pt;background:#CCEEFF;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">19,220,011</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.8%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="62%" valign="top" style="width:62.2%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="width:2.22%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="width:15.96%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.86%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="width:15.96%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.8%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="98%" colspan="7" valign="top" bgcolor="#cceeff" style="width:98.2%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-weight:bold">LIABILITIES AND STOCKHOLDERS'

  EQUITY</font></font></b></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.8%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="62%" valign="top" style="width:62.2%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">CURRENT

  LIABILITIES</font></font></p>

  </td>

  <td width="2%" valign="bottom" style="width:2.22%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="width:15.96%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.86%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="width:15.96%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.8%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="62%" valign="top" bgcolor="#cceeff" style="width:62.2%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:30.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Accounts Payable</font></font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.22%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="width:.96%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">$</font></font></p>

  </td>

  <td width="15%" valign="bottom" bgcolor="#cceeff" style="width:15.0%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">161,428</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.86%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="width:.96%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">$</font></font></p>

  </td>

  <td width="15%" valign="bottom" bgcolor="#cceeff" style="width:15.0%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">584,786</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.8%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="62%" valign="top" style="width:62.2%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:30.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Accrued Payroll</font></font></p>

  </td>

  <td width="2%" valign="bottom" style="width:2.22%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="width:15.96%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">108,394</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.86%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="width:15.96%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">103,392</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.8%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="62%" valign="top" bgcolor="#cceeff" style="width:62.2%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:30.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Accrued

  Professional Services</font></font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.22%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:15.96%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">69,061</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.86%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:15.96%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">69,051</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.8%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="62%" valign="top" style="width:62.2%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:30.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Accrued Bonuses</font></font></p>

  </td>

  <td width="2%" valign="bottom" style="width:2.22%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="width:15.96%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">18,750</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.86%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="width:15.96%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">15,000</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.8%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="62%" valign="top" bgcolor="#cceeff" style="width:62.2%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:30.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Accrued Income

  Taxes</font></font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.22%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:15.96%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">---</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.86%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:15.96%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">912</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.8%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="62%" valign="top" style="width:62.2%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:30.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Accrued Vacation</font></font></p>

  </td>

  <td width="2%" valign="bottom" style="width:2.22%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="width:15.96%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">88,173</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.86%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="width:15.96%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">119,143</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.8%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="62%" valign="top" bgcolor="#cceeff" style="width:62.2%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:30.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Accrued Warranty

  Expense</font></font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.22%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:15.96%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">50,000</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.86%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:15.96%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">50,000</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.8%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="62%" valign="top" style="width:62.2%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:30.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Current Portion

  of Capital Lease Obligation</font></font></p>

  </td>

  <td width="2%" valign="bottom" style="width:2.22%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="width:15.96%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">52,935</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.86%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="width:15.96%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">51,695</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.8%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="62%" valign="top" bgcolor="#cceeff" style="width:62.2%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:30.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Other Accrued

  Liabilities</font></font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.22%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:15.96%;

  border:none;border-bottom:solid windowtext .5pt;background:#CCEEFF;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">87,957</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.86%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:15.96%;

  border:none;border-bottom:solid windowtext .5pt;background:#CCEEFF;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">68,077</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.8%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="62%" valign="top" style="width:62.2%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:50.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Total Current

  Liabilities</font></font></p>

  </td>

  <td width="2%" valign="bottom" style="width:2.22%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="width:15.96%;border:none;

  border-bottom:solid windowtext .5pt;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">636,698</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.86%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="width:15.96%;border:none;

  border-bottom:solid windowtext .5pt;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">1,062,056</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.8%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="62%" valign="top" bgcolor="#cceeff" style="width:62.2%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.22%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:15.96%;

  border:none;background:#CCEEFF;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.86%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:15.96%;

  border:none;background:#CCEEFF;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.8%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="62%" valign="top" style="width:62.2%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">CAPITAL LEASE

  OBLIGATION AND OTHER</font></font></p>

  </td>

  <td width="2%" valign="bottom" style="width:2.22%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="width:15.96%;border:none;

  border-bottom:solid windowtext .5pt;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">37,258</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.86%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="width:15.96%;border:none;

  border-bottom:solid windowtext .5pt;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">68,703</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.8%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="62%" valign="top" bgcolor="#cceeff" style="width:62.2%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.22%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:15.96%;

  border:none;background:#CCEEFF;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.86%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:15.96%;

  border:none;background:#CCEEFF;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.8%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="62%" valign="top" style="width:62.2%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">STOCKHOLDERS'

  EQUITY</font></font></p>

  </td>

  <td width="2%" valign="bottom" style="width:2.22%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="width:15.96%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.86%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="width:15.96%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.8%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="62%" valign="top" bgcolor="#cceeff" style="width:62.2%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:30.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Common Stock,

  $.01 par value-</font></font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.22%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:15.96%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.86%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:15.96%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.8%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="62%" valign="top" style="width:62.2%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:40.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Authorized --

  20,000,000 shares</font></font></p>

  </td>

  <td width="2%" valign="bottom" style="width:2.22%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="width:15.96%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.86%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="width:15.96%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.8%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="62%" valign="top" bgcolor="#cceeff" style="width:62.2%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:40.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Issued and

  Outstanding &#150; 10,503,908 shares at September 30, 2001 and June 30, 2001</font></font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.22%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:15.96%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">105,039</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.86%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:15.96%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">105,039</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.8%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="62%" valign="top" style="width:62.2%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:30.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Additional

  Paid-in Capital</font></font></p>

  </td>

  <td width="2%" valign="bottom" style="width:2.22%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="width:15.96%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">27,682,657</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.86%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="width:15.96%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">27,682,657</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.8%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="62%" valign="top" bgcolor="#cceeff" style="width:62.2%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:30.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Accumulated

  Deficit</font></font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.22%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:15.96%;

  border:none;border-bottom:solid windowtext .5pt;background:#CCEEFF;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(15,204,373</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.86%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">)</font></font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:15.96%;

  border:none;border-bottom:solid windowtext .5pt;background:#CCEEFF;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(9,698,444</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.8%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">)</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="62%" valign="top" style="width:62.2%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:30.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Total

  Stockholders' Equity</font></font></p>

  </td>

  <td width="2%" valign="bottom" style="width:2.22%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="width:15.96%;border:none;

  border-bottom:solid windowtext .5pt;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">12,583,323</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.86%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" style="width:15.96%;border:none;

  border-bottom:solid windowtext .5pt;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">18,089,252</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.8%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="62%" valign="top" bgcolor="#cceeff" style="width:62.2%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.22%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:15.96%;

  border:none;background:#CCEEFF;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.86%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="15%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:15.96%;

  border:none;background:#CCEEFF;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.8%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="62%" valign="top" style="width:62.2%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">TOTAL

  LIABILITIES AND STOCKHOLDERS' EQUITY</font></font></p>

  </td>

  <td width="2%" valign="bottom" style="width:2.22%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="0%" valign="bottom" style="width:.96%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">$</font></font></p>

  </td>

  <td width="15%" valign="bottom" style="width:15.0%;border:none;border-bottom:

  double windowtext 1.5pt;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">13,257,279</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.86%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="0%" valign="bottom" style="width:.96%;border:none;border-bottom:

  double windowtext 1.5pt;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">$</font></font></p>

  </td>

  <td width="15%" valign="bottom" style="width:15.0%;border:none;border-bottom:

  double windowtext 1.5pt;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">19,220,011</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.8%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

</table>



<p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;

font-weight:bold">&nbsp;</font></font></b></p>



<b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-family:'Times New Roman';font-weight:bold"><br clear="all" style="page-break-before:

always">

</font></font></b>



<p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><a name="ConsolidatedStatementsOfOperations"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;

font-weight:bold">PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES</font></font></b></a></p>



<p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;

font-weight:bold">CONSOLIDATED STATEMENTS OF OPERATIONS</font></font></b></p>



<p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;

font-weight:bold">FOR THE THREE MONTHS ENDED</font></font></b></p>



<p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;

font-weight:bold">SEPTEMBER 30, 2001 AND SEPTEMBER 30, 2000</font></font></b></p>



<p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;

font-weight:bold">(UNAUDITED)</font></font></b></p>



<p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;

font-weight:bold">&nbsp;</font></font></b></p>



<table width="100%" style="width:100.0%;

 border-collapse:collapse;">

 <tr>

  <td width="63%" valign="bottom" style="width:63.14%;padding:0in .7pt .7pt .7pt">

  <p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-align:center;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="width:2.32%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="width:14.96%;border:none;

  border-bottom:solid windowtext .5pt;padding:0in .7pt .7pt .7pt">

  <p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-weight:bold">2001</font></font></b></p>

  </td>

  <td width="2%" valign="bottom" style="width:2.32%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="width:14.96%;border:none;

  border-bottom:solid windowtext .5pt;padding:0in .7pt .7pt .7pt">

  <p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-weight:bold">2000</font></font></b></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.8%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="63%" valign="top" bgcolor="#cceeff" style="width:63.14%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">REVENUES</font></font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.32%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="width:.92%;border:none;background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">$</font></font></p>

  </td>

  <td width="14%" valign="bottom" bgcolor="#cceeff" style="width:14.04%;

  border:none;border-top:solid windowtext .5pt;background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">491,096</font></font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.32%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="width:.92%;border:none;background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">$</font></font></p>

  </td>

  <td width="14%" valign="bottom" bgcolor="#cceeff" style="width:14.04%;

  border:none;border-top:solid windowtext .5pt;background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">888,299</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.0%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="63%" valign="top" style="width:63.14%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="width:2.32%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="width:14.96%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="width:2.32%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="width:14.96%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.0%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="63%" valign="top" bgcolor="#cceeff" style="width:63.14%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">COST OF GOODS

  SOLD</font></font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.32%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="14%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:14.96%;

  border:none;border-bottom:solid windowtext .5pt;background:#CCEEFF;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">1,496,184</font></font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.32%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="14%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:14.96%;

  border:none;border-bottom:solid windowtext .5pt;background:#CCEEFF;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">538,241</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.0%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="63%" valign="top" style="width:63.14%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="width:2.32%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="width:14.96%;border:none;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="width:2.32%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="width:14.96%;border:none;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.0%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="63%" valign="top" bgcolor="#cceeff" style="width:63.14%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Gross Profit

  (Loss)</font></font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.32%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="14%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:14.96%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(1,005,088</font></font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.32%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">)</font></font></p>

  </td>

  <td width="14%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:14.96%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">350,058</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.0%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="63%" valign="top" style="width:63.14%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="width:2.32%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="width:14.96%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="width:2.32%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="width:14.96%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.0%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="63%" valign="top" bgcolor="#cceeff" style="width:63.14%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">RESEARCH and

  DEVELOPMENT</font></font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.32%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="14%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:14.96%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">675,710</font></font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.32%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="14%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:14.96%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">565,172</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.0%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="63%" valign="top" style="width:63.14%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="width:2.32%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="width:14.96%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="width:2.32%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="width:14.96%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.0%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="63%" valign="top" bgcolor="#cceeff" style="width:63.14%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">SELLING, GENERAL

  AND ADMINISTRATIVE EXPENSES</font></font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.32%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="14%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:14.96%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">469,109</font></font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.32%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="14%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:14.96%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">447,517</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.0%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="63%" valign="top" style="width:63.14%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="width:2.32%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="width:14.96%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="width:2.32%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="width:14.96%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.0%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="63%" valign="top" bgcolor="#cceeff" style="width:63.14%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">PROVISION FOR

  ASSET IMPAIRMENT</font></font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.32%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="14%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:14.96%;

  border:none;border-bottom:solid windowtext .5pt;background:#CCEEFF;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">3,444,378</font></font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.32%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="14%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:14.96%;

  border:none;border-bottom:solid windowtext .5pt;background:#CCEEFF;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">-</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.0%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="63%" valign="top" style="width:63.14%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="width:2.32%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="width:14.96%;border:none;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="width:2.32%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="width:14.96%;border:none;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.0%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="63%" valign="top" bgcolor="#cceeff" style="width:63.14%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Total Operating

  Expenses</font></font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.32%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="14%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:14.96%;

  border:none;border-bottom:solid windowtext .5pt;background:#CCEEFF;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">4,589,197</font></font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.32%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="14%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:14.96%;

  border:none;border-bottom:solid windowtext .5pt;background:#CCEEFF;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">1,012,689</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.0%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="63%" valign="top" style="width:63.14%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="width:2.32%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="width:14.96%;border:none;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="width:2.32%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="width:14.96%;border:none;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.0%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="63%" valign="top" bgcolor="#cceeff" style="width:63.14%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Operating Loss</font></font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.32%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="14%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:14.96%;

  border:none;border-bottom:solid windowtext .5pt;background:#CCEEFF;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt;">(5,594,285</font></font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.32%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">)</font></font></p>

  </td>

  <td width="14%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:14.96%;

  border:none;border-bottom:solid windowtext .5pt;background:#CCEEFF;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(662,631</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.0%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">)</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="63%" valign="top" style="width:63.14%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="width:2.32%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="width:14.96%;border:none;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="width:2.32%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="width:14.96%;border:none;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.0%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="63%" valign="top" bgcolor="#cceeff" style="width:63.14%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">INTEREST EXPENSE</font></font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.32%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="14%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:14.96%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(1,928</font></font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.32%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">)</font></font></p>

  </td>

  <td width="14%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:14.96%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(3,943</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.0%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">)</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="63%" valign="top" style="width:63.14%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="width:2.32%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="width:14.96%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="width:2.32%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="width:14.96%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.0%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="63%" valign="top" bgcolor="#cceeff" style="width:63.14%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">INTEREST INCOME</font></font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.32%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="14%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:14.96%;

  border:none;border-bottom:solid windowtext .5pt;background:#CCEEFF;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">90,284</font></font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.32%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="14%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:14.96%;

  border:none;border-bottom:solid windowtext .5pt;background:#CCEEFF;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">230,584</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.0%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="63%" valign="top" style="width:63.14%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="width:2.32%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="width:14.96%;border:none;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="width:2.32%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="width:14.96%;border:none;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.0%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="63%" valign="top" bgcolor="#cceeff" style="width:63.14%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Loss Before

  Provision for Income Taxes</font></font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.32%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="14%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:14.96%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(5,505,929</font></font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.32%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">)</font></font></p>

  </td>

  <td width="14%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:14.96%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(435,990</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.0%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">)</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="63%" valign="top" style="width:63.14%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="width:2.32%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="width:14.96%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="width:2.32%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="width:14.96%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.0%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="63%" valign="top" bgcolor="#cceeff" style="width:63.14%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">PROVISION FOR

  INCOME TAXES</font></font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.32%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="14%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:14.96%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">----</font></font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.32%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="14%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:14.96%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">----</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.0%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="63%" valign="top" style="width:63.14%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="width:2.32%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="width:14.96%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="width:2.32%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="width:14.96%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.0%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="63%" valign="top" bgcolor="#cceeff" style="width:63.14%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Net Loss</font></font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.32%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="width:.92%;border:none;

  border-bottom:double windowtext 1.5pt;background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">$</font></font></p>

  </td>

  <td width="14%" valign="bottom" bgcolor="#cceeff" style="width:14.04%;

  border:none;border-bottom:double windowtext 1.5pt;background:#CCEEFF;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(5,505,929</font></font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.32%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">)</font></font></p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="width:.92%;border:none;

  border-bottom:double windowtext 1.5pt;background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">$</font></font></p>

  </td>

  <td width="14%" valign="bottom" bgcolor="#cceeff" style="width:14.04%;

  border:none;border-bottom:double windowtext 1.5pt;background:#CCEEFF;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(435,990</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.0%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">)</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="63%" valign="top" style="width:63.14%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="width:2.32%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="width:14.96%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="width:2.32%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="width:14.96%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.0%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="63%" valign="top" bgcolor="#cceeff" style="width:63.14%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Basic and

  Diluted Loss Per Share</font></font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.32%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="width:.92%;border:none;

  border-bottom:double windowtext 1.5pt;background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">$</font></font></p>

  </td>

  <td width="14%" valign="bottom" bgcolor="#cceeff" style="width:14.04%;

  border:none;border-bottom:double windowtext 1.5pt;background:#CCEEFF;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(0.52</font></font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.32%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">)</font></font></p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="width:.92%;border:none;

  border-bottom:double windowtext 1.5pt;background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">$</font></font></p>

  </td>

  <td width="14%" valign="bottom" bgcolor="#cceeff" style="width:14.04%;

  border:none;border-bottom:double windowtext 1.5pt;background:#CCEEFF;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(0.04</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.0%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">)</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="63%" valign="top" style="width:63.14%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="width:2.32%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="width:14.96%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="width:2.32%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="14%" colspan="2" valign="bottom" style="width:14.96%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.0%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="63%" valign="top" bgcolor="#cceeff" style="width:63.14%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Weighted Average

  Common Shares Outstanding</font></font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.32%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="14%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:14.96%;

  border:none;border-bottom:double windowtext 1.5pt;background:#CCEEFF;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">10,503,908</font></font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.32%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="14%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:14.96%;

  border:none;border-bottom:double windowtext 1.5pt;background:#CCEEFF;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">10,396,241</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.0%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

</table>



<p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-family:'Times New Roman';font-weight:bold"><br clear="all" style="page-break-before:

always">

</font></font></b>



<p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><a name="ConsolidatedStatementsOfCashFlows"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;

font-weight:bold">PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES</font></font></b></a></p>



<p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-weight:bold">CONSOLIDATED STATEMENTS OF CASH FLOWS</font></font></b></p>



<p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-weight:bold">FOR THE THREE MONTHS ENDED</font></font></b></p>



<p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-weight:bold">SEPTEMBER 30, 2001 AND SEPTEMBER 30,

2000</font></font></b></p>



<p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-weight:bold">(UNAUDITED)</font></font></b></p>



<p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-align:center;text-indent:-10.0pt;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-weight:bold">&nbsp;</font></font></b></p>



<table width="100%" style="width:100.0%;

 border-collapse:collapse;">

 <tr>

  <td width="70%" valign="bottom" style="width:70.16%;padding:0in .7pt .7pt .7pt">

  <p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-align:center;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.82%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="width:12.2%;border:none;

  border-bottom:solid windowtext .5pt;padding:0in .7pt .7pt .7pt">

  <p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-weight:bold">2001</font></font></b></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.82%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="width:12.2%;border:none;

  border-bottom:solid windowtext .5pt;padding:0in .7pt .7pt .7pt">

  <p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-weight:bold">2000</font></font></b></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.8%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="70%" valign="top" bgcolor="#cceeff" style="width:70.16%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">CASH FLOWS FROM

  OPERATING ACTIVITIES:</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.82%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:12.2%;

  border:none;background:#CCEEFF;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.82%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:12.2%;

  border:none;background:#CCEEFF;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.8%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="70%" valign="top" style="width:70.16%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:30.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Net Loss</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.82%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="0%" valign="bottom" style="width:.92%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">$</font></font></p>

  </td>

  <td width="11%" valign="bottom" style="width:11.28%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(5,505,929</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.82%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">)</font></font></p>

  </td>

  <td width="0%" valign="bottom" style="width:.92%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">$</font></font></p>

  </td>

  <td width="11%" valign="bottom" style="width:11.28%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(435,990</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.8%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">)</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="70%" valign="top" bgcolor="#cceeff" style="width:70.16%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.82%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:12.2%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.82%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:12.2%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.8%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="70%" valign="top" style="width:70.16%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:30.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Adjustments to

  Reconcile Net Loss to Net Cash (Used In) Provided by Operating Activities -</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.82%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="width:12.2%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.82%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="width:12.2%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.8%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="70%" valign="top" bgcolor="#cceeff" style="width:70.16%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:50.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Depreciation and

  Amortization</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.82%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:12.2%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">140,666</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.82%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:12.2%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">168,763</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.8%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="70%" valign="top" style="width:70.16%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:50.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Provision for

  Asset Impairment</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.82%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="width:12.2%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">3,444,378</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.82%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="width:12.2%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">---</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.8%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="70%" valign="top" bgcolor="#cceeff" style="width:70.16%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:30.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Non-Cash Stock

  Option Compensation</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.82%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:12.2%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(17,738</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.82%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">)</font></font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:12.2%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">---</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.8%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="70%" valign="top" style="width:70.16%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:60.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Changes in

  Assets and Liabilities-</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.82%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="width:12.2%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.82%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="width:12.2%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.8%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="70%" valign="top" bgcolor="#cceeff" style="width:70.16%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:60.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Accounts Receivable</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.82%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:12.2%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">750,699</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.82%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:12.2%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">176,280</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.8%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="70%" valign="top" style="width:70.16%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:60.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Inventories</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.82%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="width:12.2%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(375,842</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.82%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">)</font></font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="width:12.2%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(117,933</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.8%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">)</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="70%" valign="top" bgcolor="#cceeff" style="width:70.16%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:60.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Prepaid Expenses</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.82%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:12.2%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(191,820</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.82%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">)</font></font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:12.2%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(170,393</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.8%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">)</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="70%" valign="top" style="width:70.16%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:60.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Accounts Payable</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.82%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="width:12.2%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(423,358</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.82%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">)</font></font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="width:12.2%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(124,923</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.8%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">)</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="70%" valign="top" bgcolor="#cceeff" style="width:70.16%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:60.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Accrued Expenses</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.82%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:12.2%;

  border:none;border-bottom:solid windowtext .5pt;background:#CCEEFF;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(3,240</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.82%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">)</font></font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:12.2%;

  border:none;border-bottom:solid windowtext .5pt;background:#CCEEFF;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">67,777</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.8%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="70%" valign="top" style="width:70.16%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:60.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.82%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="width:12.2%;border:none;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.82%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="width:12.2%;border:none;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.8%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="70%" valign="top" bgcolor="#cceeff" style="width:70.16%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:60.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Net Cash Used In

  Operating Activities</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.82%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:12.2%;

  border:none;border-bottom:solid windowtext .5pt;background:#CCEEFF;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(1,430,500</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.82%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">)</font></font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:12.2%;

  border:none;border-bottom:solid windowtext .5pt;background:#CCEEFF;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(436,419</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.8%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">)</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="70%" valign="top" style="width:70.16%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.82%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="width:12.2%;border:none;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.82%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="width:12.2%;border:none;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.8%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="70%" valign="top" bgcolor="#cceeff" style="width:70.16%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">CASH FLOWS FROM

  FINANCING ACTIVITIES:</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.82%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:12.2%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.82%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:12.2%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.8%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="70%" valign="top" style="width:70.16%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:30.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Purchases

  of Propety and Equipment</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.82%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="width:12.2%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(32,199</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.82%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">)</font></font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="width:12.2%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(300,895</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.8%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">)</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="70%" valign="top" bgcolor="#cceeff" style="width:70.16%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:30.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Increase

  in Other Assets</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.82%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:12.2%;

  border:none;border-bottom:solid windowtext .5pt;background:#CCEEFF;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(5,063</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.82%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">)</font></font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:12.2%;

  border:none;border-bottom:solid windowtext .5pt;background:#CCEEFF;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(4,436</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.8%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">)</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="70%" valign="top" style="width:70.16%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:40.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Net

  Cash Used in Investing Activities</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.82%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="width:12.2%;border:none;

  border-bottom:solid windowtext .5pt;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(37,262</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.82%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">)</font></font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="width:12.2%;border:none;

  border-bottom:solid windowtext .5pt;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(305,331</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.8%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">)</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="70%" valign="top" bgcolor="#cceeff" style="width:70.16%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.82%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:12.2%;

  border:none;background:#CCEEFF;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.82%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:12.2%;

  border:none;background:#CCEEFF;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.8%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="70%" valign="top" style="width:70.16%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">CASH FLOWS FROM

  FINANCIANG ACTIVITIES:</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.82%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="width:12.2%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.82%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="width:12.2%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.8%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="70%" valign="top" bgcolor="#cceeff" style="width:70.16%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:30.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Repayment of

  Capital Lease Obligation(12,467)</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.82%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:12.2%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(12,467</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.82%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">)</font></font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:12.2%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(36,384</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.8%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">)</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="70%" valign="top" style="width:70.16%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:30.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Net Proceeds

  from litigation settlement</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.82%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="width:12.2%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">---</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.82%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="width:12.2%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">2,369,184</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.8%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="70%" valign="top" bgcolor="#cceeff" style="width:70.16%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:30.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Net Proceeds

  (Costs) From Private Placements of Common Stock</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.82%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:12.2%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">---</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.82%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:12.2%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(9,797</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.8%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">)</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="70%" valign="top" style="width:70.16%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:30.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Proceeds from

  Exercise of Options and Warrants</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.82%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="width:12.2%;border:none;

  border-bottom:solid windowtext .5pt;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">---</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.82%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="width:12.2%;border:none;

  border-bottom:solid windowtext .5pt;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">234,356</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.8%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="70%" valign="top" bgcolor="#cceeff" style="width:70.16%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:50.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Net Cash (Used

  In) Provided By Financing Activities</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.82%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:12.2%;

  border:none;border-bottom:solid windowtext .5pt;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(12,467</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.82%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">)</font></font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:12.2%;

  border:none;border-bottom:solid windowtext .5pt;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">2,557,359</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.8%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="70%" valign="top" style="width:70.16%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.82%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="width:12.2%;border:none;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.82%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="width:12.2%;border:none;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.8%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="70%" valign="top" bgcolor="#cceeff" style="width:70.16%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">NET (DECREASE)

  INCREASE IN CASH AND CASH EQUIVALENTS</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.82%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:12.2%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(1,480,229</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.82%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">)</font></font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:12.2%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">1,815,609</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.8%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="70%" valign="top" style="width:70.16%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.82%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="width:12.2%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.82%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="width:12.2%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.8%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="70%" valign="top" bgcolor="#cceeff" style="width:70.16%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">CASH AND CASH

  EQUIVALENTS AT BEGINNING OF PERIOD</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.82%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:12.2%;

  border:none;border-bottom:solid windowtext .5pt;background:#CCEEFF;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">10,530,298</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.82%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:12.2%;

  border:none;border-bottom:solid windowtext .5pt;background:#CCEEFF;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">15,128,750</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.8%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="70%" valign="top" style="width:70.16%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.82%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="width:12.2%;border:none;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.82%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="width:12.2%;border:none;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.8%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="70%" valign="top" bgcolor="#cceeff" style="width:70.16%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">CASH AND CASH

  EQUIVALENTS AT END OF PERIOD</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.82%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="width:.92%;border:none;

  border-bottom:double windowtext 1.5pt;background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">$</font></font></p>

  </td>

  <td width="11%" valign="bottom" bgcolor="#cceeff" style="width:11.28%;

  border:none;border-bottom:double windowtext 1.5pt;background:#CCEEFF;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">9,050,069</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.82%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="width:.92%;border:none;

  border-bottom:double windowtext 1.5pt;background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">$</font></font></p>

  </td>

  <td width="11%" valign="bottom" bgcolor="#cceeff" style="width:11.28%;

  border:none;border-bottom:double windowtext 1.5pt;background:#CCEEFF;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">16,944,359</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.8%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="70%" valign="top" style="width:70.16%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.82%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="width:12.2%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.82%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="width:12.2%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.8%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="70%" valign="top" bgcolor="#cceeff" style="width:70.16%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">SUPPLEMENTAL

  DISCLOSURE OF CASH FLOW INFORMATION:</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.82%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:12.2%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.82%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:12.2%;

  background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.8%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="70%" valign="top" style="width:70.16%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:30.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Cash Paid for-</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.82%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="width:12.2%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.82%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="12%" colspan="2" valign="bottom" style="width:12.2%;padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.8%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="70%" valign="top" bgcolor="#cceeff" style="width:70.16%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:40.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Interest</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.82%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="width:.92%;border:none;

  border-bottom:double windowtext 1.5pt;background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">$</font></font></p>

  </td>

  <td width="11%" valign="bottom" bgcolor="#cceeff" style="width:11.28%;

  border:none;border-bottom:double windowtext 1.5pt;background:#CCEEFF;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">1,928</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.82%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="0%" valign="bottom" bgcolor="#cceeff" style="width:.92%;border:none;

  border-bottom:double windowtext 1.5pt;background:#CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">$</font></font></p>

  </td>

  <td width="11%" valign="bottom" bgcolor="#cceeff" style="width:11.28%;

  border:none;border-bottom:double windowtext 1.5pt;background:#CCEEFF;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">3,943</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.8%;background:

  #CCEEFF;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="70%" valign="top" style="width:70.16%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:40.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Income Taxes</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.82%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="0%" valign="bottom" style="width:.92%;border:none;border-bottom:

  double windowtext 1.5pt;

  padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">$</font></font></p>

  </td>

  <td width="11%" valign="bottom" style="width:11.28%;border:none;border-bottom:

  double windowtext 1.5pt;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">912</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.82%;border:none;border-top:double windowtext 1.5pt;

  padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="0%" valign="bottom" style="width:.92%;border:none;border-bottom:

  double windowtext 1.5pt;

  padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">$</font></font></p>

  </td>

  <td width="11%" valign="bottom" style="width:11.28%;border:none;border-bottom:

  double windowtext 1.5pt;

  padding:0in .7pt .7pt .7pt">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">912</font></font></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.8%;padding:0in .7pt .7pt .7pt">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

</table>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-family:

'Times New Roman';"><br clear="all" style="page-break-before:always">

</font></font>



<p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;

font-weight:bold">PRECISION OPTICS CORPORATION, INC.</font></font></b></p>



<p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"></p>



<p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><a name="NotesToConsolidatedFinancialStatemen"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-weight:bold">NOTES

TO CONSOLIDATED FINANCIAL STATEMENTS</font></font></b></a></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:27.35pt;margin-right:0in;margin-top:0in;text-indent:.55pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:27.35pt;margin-right:0in;margin-top:0in;text-indent:-27.35pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">1.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>SUMMARY OF SIGNIFICANT ACCOUNTING

POLICIES</u></font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:27.35pt;margin-right:0in;margin-top:0in;text-indent:.55pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:28.1pt;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">The accompanying

consolidated financial statements include the accounts of Precision Optics

Corporation, Inc. and its wholly-owned subsidiaries.&#160; All significant intercompany accounts and transactions have been

eliminated in consolidation.</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:28.1pt;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:28.1pt;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">These financial

statements have been prepared by the Company, without audit, and reflect normal

recurring adjustments which, in the opinion of management, are necessary for a

fair statement of the results of the first quarter of the Company's fiscal year

2002.&#160; These financial statements do not

include all disclosures associated with annual financial statements and,

accordingly, should be read in conjunction with footnotes contained in the

Company's financial statements for the period ended June 30, 2001 together with

the auditors' report filed under cover of the Company's 2001 Annual Report on

Form 10-KSB.</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:28.1pt;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:28.1pt;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Basic loss per share is

computed by dividing net loss by the weighted average number of shares of

common stock outstanding during the period.&#160;

For the three months ended September 30, 2001 and 2000, the effect of

stock options and warrants was antidilutive; therefore, they were not included

in the computation of diluted (loss) earnings per share.&#160; The number of shares issuable upon the

exercise of outstanding stock options and warrants that were excluded from the

computation as their effect would be antidilutive were 1,260,098 and 1,195,348,

for the three months ended September 30, 2001 and 2000, respectively.</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:27.35pt;margin-right:0in;margin-top:0in;text-indent:.55pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:27.0pt;margin-right:0in;margin-top:0in;text-indent:-27.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">2.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>INVENTORIES</u></font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:27.0pt;margin-right:0in;margin-top:0in;text-indent:-27.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:28.1pt;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Inventories are stated at

the lower of cost (first-in, first-out) or market and consist of the following:</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:27.0pt;margin-right:0in;margin-top:0in;text-indent:-27.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<div align="center">



<table width="74%" style="width:74.88%;

 border-collapse:collapse;">

 <tr>

  <td width="51%" valign="bottom" style="width:51.16%;padding:0in 0in 0in 0in">

  <p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-align:center;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="width:2.08%;padding:0in 0in 0in 0in">

  <p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;">&nbsp;</p>

  </td>

  <td width="20%" colspan="2" valign="bottom" style="width:20.64%;border:none;

  border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in">

  <p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-align:center;text-indent:-10.0pt;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-weight:bold">September

  30, 2001</font></font></b></p>

  </td>

  <td width="3%" valign="bottom" style="width:3.14%;padding:0in 0in 0in 0in">

  <p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;">&nbsp;</p>

  </td>

  <td width="21%" colspan="2" valign="bottom" style="width:21.74%;border:none;

  border-bottom:solid windowtext .5pt;padding:0in 0in 0in 0in">

  <p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-weight:bold">June 30, 2001</font></font></b></p>

  </td>

  <td width="1%" valign="bottom" style="width:1.22%;padding:0in 0in 0in 0in">

  <p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:center;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="51%" valign="top" bgcolor="#cceeff" style="width:51.16%;background:

  #CCEEFF;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Raw Materials</font></font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.08%;background:

  #CCEEFF;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.24%;background:

  #CCEEFF;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">$</font></font></p>

  </td>

  <td width="19%" valign="bottom" bgcolor="#cceeff" style="width:19.4%;

  background:#CCEEFF;padding:0in 0in 0in 0in">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">512,797</font></font></p>

  </td>

  <td width="3%" valign="bottom" bgcolor="#cceeff" style="width:3.14%;background:

  #CCEEFF;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.24%;background:

  #CCEEFF;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">$</font></font></p>

  </td>

  <td width="20%" valign="bottom" bgcolor="#cceeff" style="width:20.5%;

  background:#CCEEFF;padding:0in 0in 0in 0in">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">777,269</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.22%;background:

  #CCEEFF;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="51%" valign="top" style="width:51.16%;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="width:2.08%;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="20%" colspan="2" valign="bottom" style="width:20.64%;padding:0in 0in 0in 0in">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="3%" valign="bottom" style="width:3.14%;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="21%" colspan="2" valign="bottom" style="width:21.74%;padding:0in 0in 0in 0in">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.22%;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="51%" valign="top" bgcolor="#cceeff" style="width:51.16%;background:

  #CCEEFF;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Work-In-Process</font></font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.08%;background:

  #CCEEFF;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="20%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:20.64%;

  background:#CCEEFF;padding:0in 0in 0in 0in">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">378,433</font></font></p>

  </td>

  <td width="3%" valign="bottom" bgcolor="#cceeff" style="width:3.14%;background:

  #CCEEFF;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="21%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:21.74%;

  background:#CCEEFF;padding:0in 0in 0in 0in">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">462,517</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.22%;background:

  #CCEEFF;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="51%" valign="top" style="width:51.16%;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="width:2.08%;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="20%" colspan="2" valign="bottom" style="width:20.64%;padding:0in 0in 0in 0in">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="3%" valign="bottom" style="width:3.14%;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="21%" colspan="2" valign="bottom" style="width:21.74%;padding:0in 0in 0in 0in">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.22%;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="51%" valign="top" bgcolor="#cceeff" style="width:51.16%;background:

  #CCEEFF;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Finished Goods

  and Components</font></font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.08%;background:

  #CCEEFF;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="20%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:20.64%;

  border:none;border-bottom:solid windowtext .5pt;background:#CCEEFF;

  padding:0in 0in 0in 0in">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">257,047</font></font></p>

  </td>

  <td width="3%" valign="bottom" bgcolor="#cceeff" style="width:3.14%;background:

  #CCEEFF;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="21%" colspan="2" valign="bottom" bgcolor="#cceeff" style="width:21.74%;

  border:none;border-bottom:solid windowtext .5pt;background:#CCEEFF;

  padding:0in 0in 0in 0in">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">284,333</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.22%;background:

  #CCEEFF;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="51%" valign="top" style="width:51.16%;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:10.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;">&nbsp;</p>

  </td>

  <td width="2%" valign="bottom" style="width:2.08%;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="20%" colspan="2" valign="bottom" style="width:20.64%;border:none;padding:0in 0in 0in 0in">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="3%" valign="bottom" style="width:3.14%;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="21%" colspan="2" valign="bottom" style="width:21.74%;border:none;padding:0in 0in 0in 0in">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" style="width:1.22%;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="51%" valign="top" bgcolor="#cceeff" style="width:51.16%;background:

  #CCEEFF;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:30.0pt;margin-right:0in;margin-top:0in;text-indent:-10.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Total

  Inventories</font></font></p>

  </td>

  <td width="2%" valign="bottom" bgcolor="#cceeff" style="width:2.08%;background:

  #CCEEFF;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.24%;border:

  none;border-bottom:double windowtext 1.5pt;background:#CCEEFF;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">$</font></font></p>

  </td>

  <td width="19%" valign="bottom" bgcolor="#cceeff" style="width:19.4%;

  border:none;border-bottom:double windowtext 1.5pt;background:#CCEEFF;

  padding:0in 0in 0in 0in">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">1,148,277</font></font></p>

  </td>

  <td width="3%" valign="bottom" bgcolor="#cceeff" style="width:3.14%;background:

  #CCEEFF;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.24%;border:

  none;border-bottom:double windowtext 1.5pt;background:#CCEEFF;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">$</font></font></p>

  </td>

  <td width="20%" valign="bottom" bgcolor="#cceeff" style="width:20.5%;

  border:none;border-bottom:double windowtext 1.5pt;background:#CCEEFF;

  padding:0in 0in 0in 0in">

  <p align="right" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-align:right;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">1,524,119</font></font></p>

  </td>

  <td width="1%" valign="bottom" bgcolor="#cceeff" style="width:1.22%;background:

  #CCEEFF;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>

  </td>

 </tr>

</table>



</div>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:27.0pt;margin-right:0in;margin-top:0in;text-indent:-27.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<u><font size="2" face="Times New Roman"><font style="font-size:10.0pt;

font-family:'Times New Roman';"><br clear="all" style="page-break-before:always">

</font></font></u>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:27.0pt;margin-right:0in;margin-top:0in;text-indent:-27.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">3.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>PROVISION FOR ASSET IMPAIRMENT</u></font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:27.35pt;margin-right:0in;margin-top:0in;text-indent:.55pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:28.1pt;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">The sharp reduction in

demand and industry-wide excess inventory levels of passive telecommunications

components has hampered the Company&#146;s ability to obtain new orders for its DWDM

products.&#160; Earlier in the calendar year,

the Company announced that two major customers for DWDM filters had canceled

the balance of orders placed with the Company.</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:28.1pt;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:28.1pt;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Revenues from DWDM

filters and test instrumentation in the quarter ended September 30, 2001 were

sharply lower than the previous quarter.&#160;

Current business prospects in this marketplace continue to remain

uncertain because of the lack of visibility concerning future spending levels

for telecommunications equipment and further softness in the overall economy

following the events of September 11.</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:28.1pt;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:28.1pt;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">In accordance with

Statement of Financial Accounting Standards (&#147;SFAS&#148;) No. 121: <i><font style="font-style:italic">Accounting for the Impairment of Long-Lived Assets

and&#160; For Long-Lived Assets to be

Disposed of,</font></i> the Company reviews the&#160; recoverability of its long-lived assets when changes in

circumstances indicate the carrying value of the asset may not be

recoverable.&#160; As a result of the

business conditions noted above, the Company concluded such an assessment was

required for the assets invested in its optical thin films business.&#160; The Company assesses recoverability of its

assets based upon cumulative expected undiscounted cash flows of the related

product lines.&#160; As a result of this

test, the Company has concluded that the costs invested in certain property,

plant and equipment of the Company&#146;s optical thin film coating business are not

recoverable and, under generally accepted accounting principles, should be

written down to the lower of carrying value or fair market value.&#160; Fair market value was determined by an

independent appraisal.</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:28.1pt;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:28.1pt;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Consequently, in the

quarter ended September 30, 2001, the Company recorded a pretax non-cash charge

of $3,444,378 for the impairment in value of certain of its optical thin film

coating property, plant and equipment.</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:45.0pt;margin-right:0in;margin-top:0in;text-indent:-27.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:27.0pt;margin-right:0in;margin-top:0in;text-indent:-27.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">4.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>PROVISION FOR INVENTORY WRITE-DOWN</u></font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:27.35pt;margin-right:0in;margin-top:0in;text-indent:.55pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:28.1pt;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Also as a result of the

business conditions noted above, the Company determined that certain

inventories of DWDM filters and filter test instrumentation may not be sold

within the Company&#146;s business cycle or the products&#146; life cycle.&#160; Consequently, the Company recorded, in cost

of goods sold, a provision for excess and obsolete inventory of approximately

$540,000 in the quarter ended September 30, 2001.</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:27.35pt;margin-right:0in;margin-top:0in;text-indent:.55pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<u><font size="2" face="Times New Roman"><font style="font-size:10.0pt;

font-family:'Times New Roman';"><br clear="all" style="page-break-before:always">

</font></font></u>



<p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:27.35pt;margin-right:0in;margin-top:0in;text-align:center;text-indent:.55pt;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-weight:bold">PRECISION OPTICS CORPORATION, INC.

AND SUBSIDIARIES</font></font></b></p>



<p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:27.35pt;margin-right:0in;margin-top:0in;text-align:center;text-indent:.55pt;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-weight:bold">&nbsp;</font></font></b></p>



<p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:27.35pt;margin-right:0in;margin-top:0in;text-align:center;text-indent:.55pt;"><a name="ManagementsDiscussionAndAnalysisOf"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-weight:bold">Management's Discussion and Analysis

of Financial</font></font></b></a></p>



<p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:27.0pt;margin-right:0in;margin-top:0in;text-align:center;text-indent:-27.0pt;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-weight:bold">Condition and Results of Operations</font></font></b></p>



<p align="center" style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:27.0pt;margin-right:0in;margin-top:0in;text-align:center;text-indent:-27.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:27.35pt;margin-right:0in;margin-top:0in;text-indent:-27.35pt;"><u><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Important Factors

Regarding Forward-Looking Statements</font></font></u></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:27.35pt;margin-right:0in;margin-top:0in;text-indent:-27.35pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-indent:.5in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">When used in this discussion, the words

&quot;believes&quot;, &quot;anticipates&quot;, &quot;intends to&quot;, and

similar expressions are intended to identify forward-looking statements.&#160; Such statements are subject to certain risks

and uncertainties which could cause actual results to differ materially from

those projected.&#160; These risks and

uncertainties, many of which are not within the Company&#146;s control, include, but

are not limited to, uncertainty of future demand for the Company&#146;s products,

the uncertainty and timing of the successful development of the Company&#146;s new

products, particularly in the optical thin films area; the risks associated

with reliance on a few key customers; the Company&#146;s ability to attract and

retain personnel with the necessary scientific and technical skills; the timing

and completion of significant orders; the timing and amount of the Company&#146;s

research and development expenditures; the timing and level of market

acceptance of customers&#146; products for which the Company supplies components;

the level of market acceptance of competitors&#146; products; the ability of the

Company to control costs associated with performance under fixed price

contracts; the performance and reliability of the Company&#146;s vendors; and the

continued availability to the Company of essential supplies, materials and

services.&#160; Readers are cautioned not to

place undue reliance on these forward-looking statements, which speak only as

of the date hereof.&#160; The Company

undertakes no obligation to publicly release the result of any revision to

these forward-looking statements which may be made to reflect events or

circumstances after the date hereof or to reflect the occurrence of

unanticipated events.</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:27.35pt;margin-right:0in;margin-top:0in;text-indent:-27.35pt;"><u><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Liquidity and

Capital Resources</font></font></u></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-indent:.5in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">For the three months ended September 30, 2001, the

Company's cash and cash equivalents decreased by approximately $1,480,000 to

$9,050,000.&#160; The decrease in cash and

cash equivalents was due to cash used by operating activities of approximately

$1,431,000, capital expenditures of approximately $32,000, repayment of debt of

approximately $12,000, and an increase in other assets (primarily patents) of

approximately $5,000.</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-indent:.5in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">The Company intends to continue devoting resources to

internally-funded research and development spending on both new products and

the improvement of existing products.&#160;

The Company also intends to devote resources to the marketing and

product support of its medical and optical thin films product lines. These

investments may temporarily result in negative cash flow, but the Company

anticipates that the result of these efforts will translate into increased

revenues and profits.</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-family:

'Times New Roman';"><br clear="all" style="page-break-before:always">

</font></font>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-indent:.5in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">The Company&#146;s cash and cash equivalents are considered

sufficient to support working capital and investment needs for at least the next

twelve months.</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:27.35pt;margin-right:0in;margin-top:0in;text-indent:-27.35pt;"><u><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Results of

Operations</font></font></u></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-indent:.5in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Total revenues for the three months ended September

30, 2001 (the first quarter of fiscal year 2002) decreased by approximately

$397,000, or 44.7%, from the same period in the prior year.&#160; The decrease was due primarily to lower

sales of medical products (down by approximately $365,000), and lower sales of

Dense Wavelength Division Multiplexer (DWDM) filters used in telecommunications

systems (down by approximately $95,000).&#160;

DWDM filter sales represented 21.8% of total revenues during the quarter

ended September 30, 2001, and decreased by approximately $512,000, or 83%

sequentially from the record high&#160; DWDM

filter revenues for the quarter ended June 30, 2001.&#160; Sales of medical products were lower due primarily to significantly

lower&#160; shipments of stereo endoscopes

and cameras.</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-indent:.5in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Revenues from the Company&#146;s four largest customers

were approximately 21%, 19%, 16% and 12%, respectively, of total revenues for

the quarter ended September 30, 2001.&#160;

Revenues from the Company&#146;s largest customer were approximately 46% of

total revenues for the quarter ended September 30, 2000.&#160; No other customers accounted for more than

10% of the Company&#146;s revenues during those periods.</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-indent:.5in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Gross profit for the quarter ended September 30, 2001

was negative and reflected an unfavorable change of approximately $1,355,000

compared to the quarter ended September 30, 2000. Gross profit as a percentage

of revenues decreased from 39.4% in fiscal year 2001 to a negative 204.7% in

the current quarter. The unfavorable change in gross profit was due primarily

to (1) a provision for excess and obsolete inventories of DWDM filters and DWDM

filter test instrumentation of approximately $540,000; and (2) higher fixed

manufacturing costs resulting from&#160; the

commencement of operations in the Company&#146;s optical thin film technology

facility in fiscal year 2001, and to the significant reduction in sales of

higher margin stereo endoscopes and cameras.</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-indent:.5in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Research and development expenses increased by

approximately $110,000, or 19.6%, for the quarter ended September 30, 2001

compared to the same period last year.&#160;

During both years, internal research and development expenses consisted

primarily of development efforts related to DWDM filters used in

telecommunications systems.&#160; The

increase was due to more resources being devoted to the DWDM filter project and

also to the development of new endoscope products.</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-indent:.5in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Selling, general and administrative expenses increased

by approximately $22,000, or 4.8%, for the quarter ended September 30, 2001

compared to the same period last year.&#160;

The increase was due primarily to higher sales and marketing expenses,

partially offset by lower costs for professional services and employee

recruiting.</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-indent:.5in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">The provision for asset impairment of approximately

$3,444,000 represents a writedown to the lower of carrying value or fair market

value of certain of the Company&#146;s property, plant and equipment invested in its

optical thin films coating business, as more fully described in Note 3 of Notes

to Consolidated Financial Statements.</font></font></p>



<font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-family:

'Times New Roman';"><br clear="all" style="page-break-before:always">

</font></font>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-indent:.5in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Interest expense relates primarily to capital lease

obligations.</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-indent:.5in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Interest income decreased by approximately $140,000

during the quarter ended September 30, 2001 compared to the previous year.&#160; The decrease was due to the lower base of

cash and cash equivalents and to lower interest rates.</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-indent:.5in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">No income tax provision was recorded in the first

quarter of fiscal year 2002 or 2001 because of the losses generated in those

periods.</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:27.35pt;margin-right:0in;margin-top:0in;text-indent:-27.35pt;"><u><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Trends and

Uncertainties That May Affect Future Results</font></font></u></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">On August 1, 2001 the Company announced that it had reduced its

workforce by approximately 30%, or 24 employees, and indicated it would be

monitoring marketplace conditions to determine whether additional costs savings

measures would be necessary.</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">The Company has taken additional measures to reflect the lower revenue

expectations in its telecommunications business by a further reduction in its

workforce in November, 2001, and by recording provisions for employee severance

and costs of idle leased space in its Optical Thin Films Technology

Center.&#160; This latest workforce reduction

affected 13 employees, or 24% of the existing workforce.&#160; As part of this restructuring, Dr. James D.

Rancourt, Senior Vice President, Optical Thin Film Technology, will be leaving

the Company effective December 1, 2001.</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">As a result of these actions, the Company expects to record a

non-recurring pretax charge to earnings in the range of $575,000 to $675,000 in

the second quarter ending December 31, 2001.&#160;

This charge will include a large non-cash element in the range of

$425,000 to $500,000 for idle leased space costs.</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><b><u><font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-weight:bold">Outlook</font></font></u></b></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">The asset impairment and restructuring measures mentioned above, along

with the previously announced workforce reduction in August 2001, are expected

to result in a reduction in future annual expenses in the range of $3.0 million

to $3.5 million.&#160; This reduction

includes actual cash savings in the range of $2.3 million to $2.8 million per

year.</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">Revenues from DWDM filters and test instrumentation in the quarter

ended September 30, 2001 were sharply lower than the previous quarter.&#160; Current business prospects in this

marketplace continue to remain uncertain because of the lack of visibility

concerning future spending levels for telecommunications equipment and further

softness in the overall economy following the events of September 11.</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-family:

'Times New Roman';"><br clear="all" style="page-break-before:always">

</font></font>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">Capital equipment expenditures during the quarter ended September 30,

2001 were approximately $32,000, down 89% from the same period last year, and

down 89% sequentially from the quarter ended June 30, 2001.&#160; It is anticipated that the level of capital

spending for the balance of fiscal year 2002 will continue to be substantially

lower than last year.</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">The Company believes that downward trends in the selling prices of DWDM

filters may continue because of existing inventory surpluses, increased

competitive pressure, and softening demand experienced by telecommunications

equipment providers. For these reasons, the Company is proceeding cautiously in

this market, conserving cash and other vital resources while evaluating

potential courses of action during this period of market slowdown. However, the

Company has retained its core DWDM capabilities in order to be positioned to

capitalize on potential future opportunities in this market.</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">Meanwhile, the Company is pursuing advances on several fronts in the

medical area and certain non-medical applications. Among these initiatives are

improvements in medical instrument lens coatings, a new 30&#186; line of sight

version of the successful 5 mm laparoscope, new instruments such as otoscopes

(for use in diagnosis and treatment of ear and hearing ailments), and other new

products. The Company has made significant progress in autoclavable seal

technology, which is expected to result in new endoscope products that can be

sterilized by autoclaving.&#160; Recent

achievement of ISO 9001 and CE Mark certification, as recently announced, is

also expected to support increased sales opportunities for the Company&#146;s medical

products.</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



<font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-family:

'Times New Roman';"><br clear="all" style="page-break-before:always">

</font></font>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><b><font size="2" face="Times New Roman"><font style="font-size:10.0pt;font-weight:bold">PART II.</font></font></b>&#160;&#160;&#160;&#160;&#160;&#160; <b><font style="font-weight:bold">OTHER INFORMATION</font></b></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><u><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Item 1-5</font></font></u>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; Not Applicable.</p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><u><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Item 6</font></font></u>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; Exhibits and Reports on Form 8-K</p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:102.0pt;margin-right:0in;margin-top:0in;text-indent:-24.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(a)&#160;&#160;&#160;&#160;&#160; Exhibits &#150; None</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:102.0pt;margin-right:0in;margin-top:0in;text-indent:-24.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">(b)&#160;&#160;&#160;&#160;&#160; Reports on Form 8-K &#150; The Company filed

two Current Reports on Form 8-K during the quarter ended September 30, 2001 as

follows:&#160;&#160; (i) On August 1, 2001 the

Company reported a press release issued the same date reporting that it had

reduced its workforce by approximately 30%, or 24 employees. (ii)&#160; On August 22, 2001, the Company reported a

press release issued on August 21, 2001, reporting its operating results for the

fiscal year and fourth quarter ended June 30, 2001.</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:1.75in;margin-right:0in;margin-top:0in;text-indent:-117.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-indent:.5in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">In accordance with the requirements 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></font></p>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:1.75in;margin-right:0in;margin-top:0in;text-indent:-117.0pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">&nbsp;</font></font></p>



<table width="100%" style="width:100.0%;

 border-collapse:collapse;">

 <tr>

  <td width="58%" valign="top" style="width:58.8%;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="41%" colspan="2" valign="top" style="width:41.2%;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">PRECISION OPTICS CORPORATION, INC.</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="58%" valign="top" style="width:58.8%;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="3%" valign="top" style="width:3.4%;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="37%" valign="top" style="width:37.8%;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="58%" valign="top" style="width:58.8%;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="3%" valign="top" style="width:3.4%;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="37%" valign="top" style="width:37.8%;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

 </tr>

 <tr>

  <td width="58%" valign="top" style="width:58.8%;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">DATE:&#160;

  November&#160; 13, 2001</font></font></p>

  </td>

  <td width="3%" valign="top" style="width:3.4%;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">BY:</font></font></p>

  </td>

  <td width="37%" valign="top" style="width:37.8%;border:none;border-bottom:solid windowtext .5pt;

  padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">/S/&#160; Jack P.

  Dreimiller</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="58%" valign="top" style="width:58.8%;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="3%" valign="top" style="width:3.4%;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="37%" valign="top" style="width:37.8%;border:none;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-indent:2.85pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Jack P. Dreimiller</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="58%" valign="top" style="width:58.8%;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="3%" valign="top" style="width:3.4%;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="37%" valign="top" style="width:37.8%;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-indent:2.85pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Senior Vice President,

  Finance,</font></font></p>

  </td>

 </tr>

 <tr>

  <td width="58%" valign="top" style="width:58.8%;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="3%" valign="top" style="width:3.4%;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;">&nbsp;</p>

  </td>

  <td width="37%" valign="top" style="width:37.8%;padding:0in 0in 0in 0in">

  <p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;text-indent:2.85pt;"><font size="2" face="Times New Roman"><font style="font-size:10.0pt">Chief Financial Officer

  and Clerk</font></font></p>

  </td>

 </tr>

</table>



<p style="font-size:10.0pt;margin-bottom:.0001pt;margin-left:0in;margin-right:0in;margin-top:0in;"><font size="2" face="Times New Roman"><font style="font-size:

10.0pt">&nbsp;</font></font></p>



</div>



</body>



</html>


</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
