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<SEC-DOCUMENT>0000897101-08-000736.txt : 20080331
<SEC-HEADER>0000897101-08-000736.hdr.sgml : 20080331
<ACCEPTANCE-DATETIME>20080331110317
ACCESSION NUMBER:		0000897101-08-000736
CONFORMED SUBMISSION TYPE:	10KSB
PUBLIC DOCUMENT COUNT:		7
CONFORMED PERIOD OF REPORT:	20071231
FILED AS OF DATE:		20080331
DATE AS OF CHANGE:		20080331

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			ELECTRO SENSORS INC
		CENTRAL INDEX KEY:			0000351789
		STANDARD INDUSTRIAL CLASSIFICATION:	INDUSTRIAL INSTRUMENTS FOR MEASUREMENT, DISPLAY, AND CONTROL [3823]
		IRS NUMBER:				410943459
		STATE OF INCORPORATION:			MN
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10KSB
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-09587
		FILM NUMBER:		08722182

	BUSINESS ADDRESS:	
		STREET 1:		6111 BLUE CIRCLE DR
		CITY:			MINNETONKA
		STATE:			MN
		ZIP:			55343-9108
		BUSINESS PHONE:		9529300100

	MAIL ADDRESS:	
		STREET 1:		6111 BLUE CIRCLE DR
		CITY:			MINNETONKA
		STATE:			MN
		ZIP:			55343
</SEC-HEADER>
<DOCUMENT>
<TYPE>10KSB
<SEQUENCE>1
<FILENAME>electro081390s1_10ksb.htm
<DESCRIPTION>FORM 10-KSB FOR FISCAL YEAR ENDED DECEMBER 31, 2007
<TEXT>
<HTML>
<HEAD>
<TITLE>Electro-Sensors, Inc. Form 10-KSB for fiscal year ended December 31, 2007 </TITLE>
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<BODY bgcolor="#ffffff" style='font-family:"Times New Roman"'>

<P ALIGN=LEFT><FONT SIZE=2><A HREF="#toc">Table of Contents</A> </FONT></P>

<DIV STYLE="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>
<DIV STYLE="width: 100%; border-bottom: 1pt solid black; font-size: 1pt">&nbsp;</DIV>
<BR>



<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><B><font SIZE=4>UNITED STATES</font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><B><font SIZE=4>SECURITIES AND EXCHANGE COMMISSION</font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><b><font size=2>Washington, DC 20549</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<HR WIDTH=20% NOSHADE COLOR=BLACK>
<p style=' margin-bottom:6pt; margin-top:6pt;text-align:center;'><b><font size=6>Form 10-KSB</font></b></p>
<HR WIDTH=20% NOSHADE COLOR=BLACK>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<div align=center>
<table border="0" cellspacing=0 cellpadding=0 width="100%" style='border-collapse:collapse'>
    <tr >
        <td width="7%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font face=wingdings size=3>x</font></p> </td>
        <td width="93%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=3>ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</font></b></p> </td> </tr>
    <tr >
        <td width="7%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="93%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td  colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><b><font size=3>For the fiscal year ended December 31, 2007</font></b></p> </td> </tr>
    <tr >
        <td width="7%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="93%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr >
        <td width="7%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font face=Wingdings size=3>o</font></p> </td>
        <td width="93%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=3>TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</font></b></p> </td> </tr>
    <tr >
        <td width="7%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="93%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr>
        <td  colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><b><font size=3>Commission file number 0-9587</font></b></p> </td> </tr></table>
</div>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<HR WIDTH=20% NOSHADE COLOR=BLACK>

<p style=' margin-bottom:0pt; margin-top:12pt;text-align:center;'><B><font SIZE=6>ELECTRO-SENSORS, INC.</font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>(Name of small business issuer in its charter)</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<div align=center>
<table border="0" cellspacing=0 cellpadding=0 width="100%" style='border-collapse:collapse'>
    <tr >
        <td width="48%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><b><font size=3>Minnesota</font></b></p> </td>
        <td width="2%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="48%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><b><font size=3>41-0943459</font></b></p> </td> </tr>
    <tr >
        <td width="48%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>(State or other jurisdiction of incorporation or organization)</font></p> </td>
        <td width="2%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="48%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>(IRS Employer Identification No.)</font></p> </td> </tr>
    <tr >
        <td width="48%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="48%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td  colspan="3" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><b><font size=3>6111 Blue Circle Drive</font></b><br> <b><font size=3>Minnetonka, Minnesota 55343-9108</font></b></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td  colspan="3" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>(Address of principal executive offices, including zip code)</font></p> </td> </tr>
    <tr >
        <td width="48%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="48%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td  colspan="3" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><b><font size=3>(952) 930-0100</font></b></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td  colspan="3" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>(Issuer&#146;s telephone number)</font></p> </td> </tr>
    <tr >
        <td width="48%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="48%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td  colspan="3" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=3>Securities registered under Section 12(b) of the Exchange Act:  </font></p>
<p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><b><font size=3>Common Stock, $0.10 par value, registered on the NASDAQ (Capital) Market</font></b></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td  colspan="3" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=3>Securities registered under Section 12(g) of the Exchange Act: </font><b><font size=3>None</font></b></p> </td> </tr></table>
</div>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<HR WIDTH=20% NOSHADE COLOR=BLACK>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=3>Check whether the issuer is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act.&nbsp;&nbsp;&nbsp;</font><font face=Wingdings>o</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=3>Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.&nbsp;&nbsp;Yes&nbsp;</font><font face=Wingdings size=3>x</font>&nbsp;&nbsp;&nbsp;No&nbsp;<font face=Wingdings size=3>o</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:6%;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=3>Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B is contained in this form, and no disclosure will be contained, to the best of registrant&#146;s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB.&nbsp;&nbsp;&nbsp;</font><font face=Wingdings>o</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=3>Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).&nbsp;&nbsp;</font><font face=Wingdings size=3>o</font>&nbsp;Yes&nbsp;&nbsp;&nbsp;<font face=Wingdings size=3>x</font>&nbsp;No&nbsp;</p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=3>The issuer&#146;s revenues for the fiscal year ended December 31, 2007 were $7,092,044.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=3>The aggregate market value of the voting stock held by non-affiliates (persons other than officers, directors, or holders of more than 5% of the outstanding stock) of the registrant was approximately $8,873,000 based upon the closing price of the Common Stock as reported on The Nasdaq Stock Market&reg; on March 21, 2008.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=3>The number of shares outstanding of the registrant&#146;s Common Stock, $0.10 par value, on March 21, 2008 was 3,366,125.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><B><font SIZE=3>DOCUMENTS INCORPORATED BY REFERENCE</font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=3>Certain information called for by Part III of this Form 10-KSB is incorporated by reference from the registrant&#146;s Definitive Proxy Statement which will be filed pursuant to Regulation 14A not later than 120 days after the end of the fiscal year covered by this report.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:6%;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=3>Transitional Small Business Disclosure Format (check one):&nbsp;&nbsp;Yes&nbsp;</font><font face=Wingdings size=3>o</font>&nbsp;&nbsp;&nbsp;No&nbsp;<font face=Wingdings size=3>x</font></p>

<BR>
<DIV STYLE="width: 100%; border-bottom: 1pt solid black; margin-top: 10pt; font-size: 1pt">&nbsp;</DIV>
<DIV STYLE="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>

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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><B><font SIZE=2><A NAME="toc"></A>ELECTRO-SENSORS, INC. AND SUBSIDIARIES</font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><b><font size=2>Form 10-KSB for the Year Ended December 31, 2007</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><B><font SIZE=2>TABLE OF CONTENTS</font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>&nbsp;</font></p>


<div align=left>

<table border="0" cellspacing=0 cellpadding=0 width="100%" style='border-collapse:collapse'>
    <tr >
        <TD WIDTH="8%" VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><B><font SIZE=2>PART I</font></B></p> </td>
        <TD VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="8%" VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><B><font SIZE=2>PAGE</font></B></p> </td></tr>
    <tr >
        <TD WIDTH="8%" VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Item 1</font></p> </td>
        <TD VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2><A HREF="#business">Description of Business</A></font></p> </td>
        <TD WIDTH="8%" VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>3</font></p> </td></tr>
    <tr >
        <TD WIDTH="8%" VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Item 2</font></p> </td>
        <TD VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2><A HREF="#property">Description of Property</A></font></p> </td>
        <TD WIDTH="8%" VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>8</font></p> </td></tr>
    <tr >
        <TD WIDTH="8%" VALIGN="TOP" >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Item 3</font></p> </td>
        <TD VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2><A HREF="#legal">Legal Proceedings</A></font></p> </td>
        <TD WIDTH="8%" VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>8</font></p> </td></tr>
    <tr >
        <TD WIDTH="8%" VALIGN="TOP" >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Item 4</font></p> </td>
        <TD VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2><A HREF="#submission">Submission of Matters to a Vote of Security Holders</A></font></p> </td>
        <TD WIDTH="8%" VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>8</font></p> </td> </tr>
    <tr >
        <TD WIDTH="8%" VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="8%" VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr >
        <TD WIDTH="8%" VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><B><font SIZE=2>PART II</font></B></p> </td>
        <TD VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="8%" VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr >
        <TD WIDTH="8%" VALIGN="TOP" >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Item 5</font></p> </td>
        <TD VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2><A HREF="#market">Market for Common Equity and Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities</A></font></p> </td>
        <TD WIDTH="8%" VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>9</font></p> </td></tr>
    <tr >
        <TD WIDTH="8%" VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Item 6</font></p> </td>
        <TD VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2><A HREF="#managements">Management&#146;s Discussion and Analysis or Plan of Operation</A></font></p> </td>
        <TD WIDTH="8%" VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>9</font></p> </td></tr>
    <tr >
        <TD WIDTH="8%" VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Item 7</font></p> </td>
        <TD VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2><A HREF="#fins">Financial Statements</A></font></p> </td>
        <TD WIDTH="8%" VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>13</font></p> </td></tr>
    <tr >
        <TD WIDTH="8%" VALIGN="TOP" >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Item 8</font></p> </td>
        <TD VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2><A HREF="#changes">Changes In and Disagreements with Accountants on Accounting and Financial Disclosure</A></font></p> </td>
        <TD WIDTH="8%" VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>31</font></p> </td></tr>
    <tr >
        <TD WIDTH="8%" VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Item 8A(T)</font></p> </td>
        <TD VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2><A HREF="#controls">Controls and Procedures</A></font></p> </td>
        <TD WIDTH="8%" VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>31</font></p> </td></tr>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Item 8B</font></p> </td>
        <TD VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2><A HREF="#other_info">Other Information</A></font></p> </td>
        <TD WIDTH="8%" VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>31</font></p> </td></tr>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="8%" VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td></tr>
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        <TD WIDTH="8%" VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><B><font SIZE=2>PART III</font></B></p> </td>
        <TD VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="8%" VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Item 9</font></p> </td>
        <TD VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2><A HREF="#directors">Directors, Executive Officers, Promoters, Control Persons and Corporate Governance; Compliance with Section 16(a) of the Exchange Act</A></font></p> </td>
        <TD WIDTH="8%" VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>32</font></p> </td></tr>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Item 10</font></p> </td>
        <TD VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2><A HREF="#executive">Executive Compensation</A></font></p> </td>
        <TD WIDTH="8%" VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>32</font></p> </td></tr>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Item 11</font></p> </td>
        <TD VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2><A HREF="#security">Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters</A></font></p> </td>
        <TD WIDTH="8%" VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>32</font></p> </td></tr>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Item 12</font></p> </td>
        <TD VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2><A HREF="#certain">Certain Relationships and Related Transactions, and Director Independence</A></font></p> </td>
        <TD WIDTH="8%" VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>33</font></p> </td></tr>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Item 13</font></p> </td>
        <TD VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2><A HREF="#exhibits">Exhibits</A></font></p> </td>
        <TD WIDTH="8%" VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>33</font></p> </td></tr>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Item 14</font></p> </td>
        <TD VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2><A HREF="#fees">Principal Accountant Fees and Services</A></font></p> </td>
        <TD WIDTH="8%" VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>33</font></p> </td></tr>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="8%" VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><B><font SIZE=2><A HREF="#signatures">SIGNATURES</A></font></B></p> </td>
        <TD VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>34</font></p> </td> </tr> </table>
</div>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'>

<BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><font size=2>2</font></p>




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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><B><font SIZE=3><A NAME="business"></A>PART I</font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=3>Item 1&#151;Description of Business</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-align:left;'><i><b><font size=2>Introduction</font></b></i></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Electro-Sensors, Inc. (&#147;we&#148;, &#147;us&#148;, &#147;our&#148;, the &#147;Company&#148; or &#147;ESI&#148;) is engaged in two distinct operating segments: (1) the manufacture and distribution of industrial production monitoring and process control systems through its Controls Division, and (2) the development and distribution of PC-based software for both automated survey processing and hand printed character recognition through its AutoData Systems Division. The operating segments are based on the markets that we serve and the products that we provide to those markets.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>In addition, through our subsidiary ESI Investment Company, we periodically make strategic investments in other businesses and companies, primarily when we believe that such investments will facilitate development of technology complementary to our existing products. Although we invest in other businesses and companies through our subsidiary ESI Investment Company, we do not intend to become an investment company and intend to remain primarily an operating company. Our primary investments are 343,267 shares of Rudolph Technologies, Inc. and 551,759 shares of PPT Vision, Inc. The PPT Vision investment is accounted for under the equity method of accounting.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Unless indicated otherwise, the terms &#147;Company&#148; and &#147;ESI&#148; when used herein, includes Electro-Sensors, Inc. and its consolidated subsidiaries.   As of December 31, 2007, ESI had two consolidated subsidiaries: ESI Investment Company and Senstar Corporation. Senstar Corporation does not have any business transactions.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>ESI, incorporated in Minnesota in July 1968, has executive offices located at 6111 Blue Circle Drive, Minnetonka, Minnesota, 55343 and telephone number (952) 930-0100.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><i><b><font size=2>Operating Segments/Principal Products/Markets</font></b></i></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><u><i><font size=2>Production Monitoring Systems&#151;Controls Division</font></i></u></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Our Controls Division manufactures and sells several different types of monitoring systems that measure actual machine production and operation rates, as well as systems that regulate the speed of related machines in production processes.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><i><font size=2>Speed Monitoring Systems. </font></i><font size=2>Our original products, speed monitoring systems, compare machine revolutions per minute or speed against acceptable rates as determined by the customer. The monitors generally have the same relative operating principle and use a non-contacting sensing head that translates the speed of a rotating shaft into analog readouts. The systems include a signal-generating pulser disc or wrap that attaches to a rotating shaft, the sensing device, and a control unit. The systems vary in complexity, from a simple system that detects slow-downs or stoppages, to more sophisticated systems that warn of deviations from precise tolerances and that permit various subsidiary operations to be determined through monitoring the shaft speed.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The speed monitoring systems include a line of digital products that translate sensor impulses from its production monitoring systems into digital readouts indicating production counts or rates, such as parts, gallons, or board feet. The speed monitoring systems also include alarm systems, tachometers, and other devices that translate impulses from the sensors into alarm signals, computer inputs, or digital displays that are usable by the customer.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Three production monitoring devices that do not operate by measuring shaft speeds are also in the speed monitoring systems product line. These devices are the tilt switch, vibration monitor, and slide gate position monitor. A tilt switch is designed to alert the operator when a storage bin or production system reaches a certain capacity (e.g., when grain fills a silo). A vibration monitor will alert an operator when the vibration of a machine in a production system exceeds or is below a specified level. The slide gate position monitor is used in plant operations to provide feedback of the position of a slide gate. As part of our Electro-Sentry Hazard Monitoring system, we also have three temperature sensors that are used to monitor bearing temperature and belt misalignment.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:6%;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><i><font size=2>Drive Control Systems</font></i><font size=2>. In 1987, we expanded our speed monitoring systems product line to include products that regulate and synchronize machine speeds. Drive control system products not only monitor machine operation levels, but also regulate the speed of motors on related machines in a production sequence to ensure that the performances of various operations are coordinated. In the past, these distinct features allowed the Company to market these products under the Drive Control Systems name. The product line consists of a line of digital control products for motors that require a complete closed loop PID (Proportional Integral Derivative) control. The closed loop controllers coordinate production speed among process motors and reduce waste.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><font size=2>3</font></p>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>In 1988, we entered into a sales agreement with Motrona GmbH (formerly  MKS Maschinen Kontroll Systeme GmbH , the West German manufacturer of a Synchronous Drive Controller (&#147;SDC&#148;) product line, giving us exclusive rights to distribute in the United States the drive control products manufactured by Motrona GmbH. The SDC product line manufactured by Motrona GmbH coordinates motors in a production machine with other parts of the machine process. The SDC products were designed for use as a precision speed reference for use with variable speed drives and enable manufacturers to match speed/velocity and phase/position of independently driven machines so they operate together. Applications include synchronizing overhead and floor conveyors and load sharing of multiple motors. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>We believe that significant savings in both time and materials can be achieved by manufacturing companies by adding drive control technology to existing manufacturing processes to coordinate operation of related machines. We intend to continue to market our products in this &#147;retro-fit&#148; market and also to companies building new manufacturing machinery or processing systems.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>We expect to continue to expend resources in development and marketing of our various Production Monitoring Systems throughout 2008.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><u><i><font size=2>Character Recognition Systems&#151;AutoData Systems Division</font></i></u></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>We initially began development of the AutoData Systems
Division as a development project chartered to create opportunities using proprietary pattern recognition technology. The current
outcome of the project is two Microsoft<sup>&reg;</sup> Windows<sup>&reg;</sup> based software programs that automate the collection
of data from surveys and other forms. AutoData software reads hand-printed characters, checkmarks, and barcodes from images of
scanned forms. The newest program also collects data from forms filled out online.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>By automatically extracting information from paper forms and converting it into a format compatible with most computer databases, the AutoData system offers an alternative to manual data entry. This intelligent data entry alternative saves time, strain, and money compared to the method of manual data entry. The basis of the handprint reading capability is Associative Pattern Memory&#153; (APM), a patented pattern recognition algorithm. APM is a trainable, neural network based memory that was incorporated in a Dynamic Link Library (DLL) and is used in the products currently sold by the AutoData Systems Division.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:6%;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>AutoData Systems became an operating segment in January 1993. The first software package, AutoData<sup>&reg;</sup> Pro&#153;, was released in May 1993. This software package was designed for the end user. AutoData Pro served as a utility software package designed to process only checkmark and handprint information from scanned forms. The software allowed the user to export the data in an ASCII file format.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:6%;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>In September 1993, AutoData Pro II&#153; was released as an upgrade, along with AutoData SDK&#153;. The SDK allowed Windows developers to embed the AutoData DLL into their applications in order to provide automated data collection from scanned or faxed forms. Pro II software evolved into the AutoData PRO&#153; product.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:6%;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>In 1996, AutoData Survey&#153; was released. Survey was AutoData&#146;s first software package to include an analysis and report generation feature, greatly enhancing the salability of AutoData technology. This product was directed at the healthcare market, where it gained a foothold in patient satisfaction measurement. AutoData released two upgrades to the original Survey software, AutoData  Survey Plus&#153; and AutoData Survey Plus 2000&#153;.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:6%;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>AutoData Systems released AutoData Scannable Office&#153; software in March 2000. Scannable Office was the product replacement for PRO and provided an upgrade path for PRO customers. Scannable Office offered a key enhancement: integration with the Microsoft<sup> </sup>Office Suite. Scannable Office allows the user to create scannable forms in Microsoft Word. The software reads data from images of completed forms and automatically places the extracted data directly into Microsoft<sup>&reg; </sup>Excel, Access, or any ODBC-compliant database, setting data up for analysis. Scannable Office has the widest recognition capabilities of the AutoData end-user products; it contains hand print (ICR), optical character (OCR), optical mark (OMR) and barcode recognition engines, and image capture capability.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:6%;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>In December 2002, the company released AutoData ExpertScan&#153; software to its customer base. ExpertScan has hand print (ICR), optical mark (OMR) and barcode recognition engines, and image capture capability. Like Survey Plus 2000, ExpertScan automates survey and form processing, as well as tabulation of results. The product offers several form design and reporting enhancements. It has also been sold as an upgrade to Survey Plus 2000, which was retired in January 2005. ExpertScan provides a mid-range option for AutoData prospects, and the most recent software NetE-nable&#153;, a web add-on to ExpertScan released in August 2007, rounds out the company&#146;s product offerings. AutoData expects NetE-nable to be a successful addition to its product line, both to new and existing customers.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>NetE-nable provides a more convenient way for people to respond on a survey or form to what an organization needs to know, in ways the customer or respondent might not if provided with only paper forms.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><font size=2>4</font></p>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>A major advantage of this powerful new product is that it allows data from both paper and electronic forms to be collected by the same software in one easy-to-use package. Another big advantage is that no additional hardware is needed. Online forms are stored on the NetE-nable server in a secure environment along with any data that is collected.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The NetE-nable Wizard permits the user to transform any survey or form already created in ExpertScan into an online form. It only takes about 7 clicks of the mouse to complete the process of publishing a form or survey to the Web. In 4 clicks, NetE-nable retrieves the data from the online form into the Access database that ExpertScan built automatically when the form was originally designed. Paper and Web form data automatically populates the same Access database, and the ExpertScan reports generator analyzes that data and creates a variety of reports.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The typical customer for NetE-nable is any current AutoData ExpertScan customer, as well as any future customers of ExpertScan software, which is a prerequisite for purchasing NetE-nable. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><i><b><font size=2>Marketing and Distribution</font></b></i></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><i><font size=2>Controls Division. </font></i><font size=2>The Controls Division sells its products primarily through home office sales people who deal directly with customers and a number of manufacturer&#146;s representatives with exclusive territories and non-exclusive distributors located throughout the United States, Mexico, China, Korea, Canada, Peru, Chile, Bolivia, Thailand, Israel, Malaysia, Singapore, Great Britain, and South Africa. The sensing and control units are sold under the Electro-Sensors, Inc. brand as a range of products from simple sensors to complex motor speed controllers. These products are sold to businesses in all major standard industrial classifications, including grain, feed, biofuels, food processing, chemicals, agricultural, mining, utility, forest products, steel, tire, glass and electronics. Any business that uses machinery with a rotating shaft is a potential customer.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>For marketing, we advertise in national industrial periodicals that cover a wide range of industrial products and attend several national and international tradeshows designated for the industry throughout the year. A corporate website and other related industry websites are also used for advertising and marketing purposes. We expect to continue to market our products in this and related markets.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><i><font size=2>AutoData<sup> </sup>Systems Division. </font></i><font size=2>The AutoData Systems Division markets its products primarily through home office sales personnel who deal directly with end-users and a limited number of Value-Added Resellers (VARs). This division primarily sells in the United States, Canada and Western Europe, and currently actively markets only in the U.S.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-align:left;'><i><b><font size=2>Competition</font></b></i></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><i><font size=2>Controls Division. </font></i><font size=2>Competition for our monitoring products arises from a broad range of industrial and commercial businesses. Design, quality and multiplicity of application, rather than price, are the focus of competition in selling these products. We have substantial competition for our production monitoring systems. Many of these competitors are well established and larger in terms of total sales volume. Among the larger competitors are: Danaher Controls, Red Lion Controls, Control Concepts, 4B Elevator Components Ltd., Durant Corporation, and Contrex, Inc. We believe our competitive advantages include that our products are sold as ready-to-install units and that our products have a wide range of applications. Our major disadvantages include the fact that our major competitors are much larger, have a broader variety of sensing instruments, and have larger sales forces and established names.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><i><font size=2>AutoData<sup> </sup>Systems. </font></i><font size=2>Competition for the market segment primarily ranges from substitute products such as Data Entry suppliers, to directly competitive software suppliers, and more recently, suppliers of web-based survey software and services. We believe that few direct competitors have as sophisticated recognition capabilities as our AutoData Systems products. However, our AutoData products face direct competition from both ends of the spectrum: larger competitors offering a broader array of software products and services, and firms similar in size to our AutoData Systems Division that offer a low-price, more limited product.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The market is segmented based primarily on price and capabilities, with the larger firms, notably Cardiff Software and Captiva Software, offering enterprise-wide systems with broad information capture capabilities. Our AutoData products are focused on desktop, rather than enterprise-wide, solutions, positioning our products as most appropriate to small offices and departments of larger organizations.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Because price is a primary competitive factor, we are subject to increasing pressures to make price adjustments to remain competitive. Such downward price adjustments, if any, may have an adverse impact on our results of operations if not offset by an increase in revenues and/or a reduction in expenses.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><i><b><font size=2>Suppliers</font></b></i></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><i><font size=2>Controls Division. </font></i><font size=2>The Controls Division purchases parts and materials for its production monitoring systems from various manufacturers and distributors. In some instances, these materials are manufactured in accordance with proprietary designs. Multiple sources of these supplies and materials are readily available, and the Controls Division is not dependent on any single source for these supplies and materials. This Division has not experienced any problem of short supply or delays from its suppliers.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><font size=2>5</font></p>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><i><font size=2>AutoData<sup> </sup>Systems. </font></i><font size=2>The AutoData Systems Division purchases a variety of supplies and materials from various vendors and is not dependent upon any one source. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>We purchase a variety of parts, components, and other supplies from a variety of vendors for both of our operating divisions. While we usually have more than a single source of supply for those various parts, components and supplies, it is possible occasionally that there will be only one supplier for any single part, component or supply. Should a supplier be unwilling or unable to supply such an item in a timely manner, our business could be materially adversely affected.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><i><b><font size=2>Customers</font></b></i></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>We are not dependent upon a single or a few customers for a material (10% or more) portion of our sales in any of our operating divisions.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-align:left;'><i><b><font size=2>Patents, Trademarks and Licenses</font></b></i></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The names &#147;Electro-Sensors&#148; and &#147;AutoData&#148; are trademarks registered with the U.S. Patent and Trademark Office, respectively as Reg. No. 1,142,310 and Reg. No. 1,874,543. We believe our trademarks have been and will continue to be useful in developing and protecting market recognition for our products.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>We hold two patents relating to our Production Monitoring Systems, and have obtained six patents related to our Character Recognition technology. We have also entered into an open ended license agreement with Motrona GmbH, a manufacturer of a Synchronous Drive Controller (&#147;SDC&#148;) product line, which grants us rights to distribute in the United States the drive control products manufactured by Motrona GmbH.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>PPT Vision, Inc. has granted us an exclusive open ended license that allows us to incorporate a patented neural network algorithm in our products. The initial use of this algorithm has been in our AutoData Systems Division. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-align:left;'><i><b><font size=2>Governmental Approvals</font></b></i></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>We are not required to obtain governmental approval of our products.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-align:left;'><i><b><font size=2>Effect of Governmental Regulations</font></b></i></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>We do not believe that any existing or proposed governmental regulations will have a material effect on our business.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-align:left;'><i><b><font size=2>Research and Development</font></b></i></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>We invest in research and development programs to develop new products in related markets and to integrate state of the art technology into existing products.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Research and development expense (by division) during the past two fiscal years was: </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><i><font size=2>Controls Division:</font></i></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>2007: $370,000</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>2006: $348,000</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Our development projects for this division are undertaken based upon the identified specific needs of our customer base. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><i><font size=2>AutoData Systems:</font></i></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>2007: $202,000</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>2006: $219,000</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>We have continued to fund the AutoData Systems Division&#146;s development activities. The goal is to create low-cost software-based systems that enable accurate reading of hand-printed characters and other form elements used on paper forms, as well as software that allows creation of forms that are completed online when participants click on a URL generated by the software, with storing of the form data on an AutoData secure server and retrieval by the software to a database for built-in reports and analysis.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Our future success is dependent in part upon our ability to develop new products in our varying segments. Difficulties or delays in our ability to develop, produce, test and market new products could have a material adverse effect on future sales growth.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'>&nbsp;</p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><font size=2>6</font></p>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><i><b><font size=2>Compliance with Environmental Laws</font></b></i></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Compliance with federal, state and local environmental provisions has only a nominal effect on current or anticipated capital expenditures and has had no material effect on earnings or on our competitive position.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-align:left;'><i><b><font size=2>Employees</font></b></i></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-align:left;'><font size=2>As of March 4, 2008, we had 33 employees, of which 32 are full-time and 1 is part-time. We believe that our relations with our employees are good.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Our ability to maintain a competitive position and to continue to develop and market new products depends, in part, on our ability to retain key employees and qualified personnel. If we are unable to retain and/or recruit key employees, product development, marketing and sales could be negatively impacted.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><i><b><font size=2>Fluctuations in Operating Results. </font></b></i><font size=2>We have experienced fluctuations in our operating results in the past, and may experience fluctuations in the future, which may affect the market price of our Common Stock. Sales can fluctuate as a result of a variety of factors, many of which are beyond our control. Some of theses factors are: product competition and acceptance, timing of customer orders, cancellation of orders, the mix of products sold, downturns in the market and economic disruptions. Because fluctuations can happen, we caution investors that results of our operations for preceding periods may not be indicative of how we will perform in the future. There can be no assurance that we will experience continued earnings growth.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Further, investments held by our subsidiary, ESI Investment Company, are subject to significant positive and negative changes in value. In particular, significant investments in PPT Vision, Inc. and Rudolph Technologies, Inc. have experienced substantial value fluctuations, both negative and positive, which are expected to continue. Our current intention is to continue to gradually liquidate our investment securities to finance our working capital needs as required. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><i><b><font size=2>Expending Funds for Changes in Industry Standards, Customer Preferences or Technology. </font></b></i><font size=2>Our business depends upon periodically introducing new and enhanced products and solutions for customer needs. The development of products requires us to commit financial resources, personnel and time, usually in advance of significant market demand for such products. In order to compete, we must anticipate both future demand and the technology available to meet that demand. There can be no assurance that our research and development efforts will lead to new products or product innovations that can be made available to or will be accepted by the market.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-align:left;'><i><b><font size=2></font></b></i><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-align:left;'><i><b><font size=2>Cautionary Statements</font></b></i></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by us or on our behalf. We have made, and may continue to make, forward-looking statements with respect to our business and financial matters, including statements contained in this document, other filings with the Securities and Exchange Commission, and reports to shareholders. Forward-looking statements generally include discussion of current expectations or forecasts of future events and can be identified by the use of terminology such as &#147;believe,&#148; &#147;estimate,&#148; &#147;expect,&#148; &#147;intend,&#148; &#147;may,&#148; &#147;could,&#148; &#147;will,&#148; and similar words or expressions. Any statement that does not relate solely to historical fact should be considered forward-looking. Our forward-looking statements generally relate to our growth strategy, future financial
results, product development and sales efforts. Forward-looking statements are made throughout this Annual Report, but primarily in this Item 1 and Item 6 -</font><i><b><font size=2> </font></b><font size=2>Management&#146;s Discussion and Analysis or Plan of Operation</font></i><font size=2>, and include statements relating to management&#146;s intentions that we not become an investment company, our expectations and intentions with respect to growth, marketing and product development, our expectations and beliefs with respect to the value of our intellectual property, our intention with respect to gradually liquidating our investment securities to finance working capital needs, the adequacy of our facilities, expansion of the number of our manufacturers&#146; representatives and exclusive distributors, our intention to develop new products, our expectations with respect to our cash requirements and use of cash, and our expectations with respect to the continuance of our quarterly
dividend payments. Forward-looking statements cannot be guaranteed and actual results may vary materially due to the uncertainties and risks, known and unknown, associated with such statements, including our ability to successfully develop new products and manage our cash requirements. We undertake no obligations to update any forward-looking statements. We wish to caution investors that the following important factors, among others, in some cases have affected and in the future could affect our actual results of operations and cause such results to differ materially from those anticipated in forward-looking statements made in this document and elsewhere by us or on our behalf. It is not possible to foresee or identify all factors that could cause actual results to differ from expected or historical results. As such, investors should not consider any list of such factors to be an exhaustive statement of all risks, uncertainties or potentially inaccurate assumptions. These factors
include:</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>our ability to successfully develop new products; </font></p> </td> </tr></table>
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<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.4%;text-align:left;'><font size=2>&nbsp;</font></p>


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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>&#149;</font></p> </td>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>our ability to quickly and successfully adapt to&nbsp;changing industry technological standards; </font></p> </td> </tr></table>
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<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.4%;text-align:left;'><font size=2>&nbsp;</font></p>


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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>&#149;</font></p> </td>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>our ability to comply with existing and changing industry regulations; </font></p> </td> </tr></table>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><font size=2>7</font></p>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>&#149;</font></p> </td>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>our ability to manage cash requirements; </font></p> </td> </tr></table>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>&#149;</font></p> </td>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>our ability to attract and retain new manufacturers&#146; representatives and exclusive distributors; </font></p> </td> </tr></table>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>&#149;</font></p> </td>
        <td  valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>our ability to attract and retain key personnel, including senior management; </font></p> </td> </tr></table>
</div>


<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.4%;text-align:left;'><font size=2>&nbsp;</font></p>


<div align=left>

<table border="0" cellspacing=0 cellpadding=0 width="100%" style='border-collapse:collapse'>
    <tr >
        <td width="3%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>&#149;</font></p> </td>
        <td  valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>our ability to adapt to changing economic conditions and manage&nbsp;downturns in the economy in general; and</font></p> </td> </tr></table>
</div>


<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.4%;text-align:left;'><font size=2>&nbsp;</font></p>


<div align=left>

<table border="0" cellspacing=0 cellpadding=0 width="100%" style='border-collapse:collapse'>
    <tr >
        <td width="3%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>&#149;</font></p> </td>
        <td  valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>our ability to keep pace with competitors, some of whom are much larger and have substantially greater resources than us. </font></p> </td> </tr></table>
</div>


<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=3><A NAME="property"></A>Item 2&#151;Description of Property</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>We own and occupy a 25,400 square foot facility at 6111 Blue Circle Drive, Minnetonka, Minnesota 55343. All operating entities are located within this facility. The facility is in excellent condition and we continue to maintain and update the facility as necessary. The facility is anticipated to be adequate for our needs in 2008.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=3><A NAME="legal"></A>Item 3&#151;Legal Proceedings</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>We were not the subject of any legal proceedings as of the date of this filing. We are not aware of any threatened litigation.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=3><A NAME="submission"></A>Item 4&#151;Submission of Matters to a Vote of Security Holders</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>There were no matters submitted to a vote of security holders during the last quarter of the fiscal year ended December 31, 2007.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2></font></b><font size=2>&nbsp;</font></p>

<BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR>


<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><font size=2>8</font></p>
<BR><BR>
<HR SIZE=3 COLOR=GRAY NOSHADE>
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<P ALIGN=LEFT><FONT SIZE=2><A HREF="#toc">Table of Contents</A> </FONT></P>




<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><B><font SIZE=3><A NAME="market"></A>PART II</font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=3>Item 5&#151;Market for Common Equity and Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Our Common Stock trades on the Nasdaq Capital Market of The Nasdaq Stock Market&reg; under the symbol &#147;ELSE&#148;. The following table sets forth the quarterly high and low reported last sales prices for our Common Stock for each period indicated as reported on the Nasdaq system.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<div align=center>
<table border="0" cellspacing=0 cellpadding=0 width="80%" style='border-collapse:collapse'>
    <tr >
        <td width="11%" valign=bottom >
            <p style='margin-left:10.0pt;text-indent:-10.0pt;text-align:center;margin-top:1.0pt;margin-bottom:0in'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="35%" valign=bottom style='border-bottom: solid black 1.0pt; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><b><font size=1>Period</font></b></p> </td>
        <td width="3%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  colspan="2" valign=bottom style=' border-bottom:solid black 1.0pt; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><b><font size=1>High</font></b></p> </td>
        <td width="3%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  colspan="2" valign=bottom style=' border-bottom:solid black 1.0pt; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><b><font size=1>Low</font></b></p> </td>
        <td width="2%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr >
        <td width="11%" valign=top >
            <p style='margin-left:10.0pt;text-indent:-10.0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="35%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p> </td>
        <td  colspan="2" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p> </td>
        <td  colspan="2" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p> </td> </tr>
    <tr >
        <td width="11%" valign=top style='background:#D6F3E8'>
            <p style='margin-left:10.0pt;text-indent:-10.0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=2>2007</font></b></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="35%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>First Quarter</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="11%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>6.28</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="11%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>4.95</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p> </td> </tr>
    <tr >
        <td width="11%" valign=top >
            <p style='margin-left:10.0pt;text-indent:-10.0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="35%" valign=top >
            <p style='margin-left:10.0pt;text-indent:-10.0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Second Quarter</font></p> </td>
        <td width="3%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="11%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>6.94</font></p> </td>
        <td width="3%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="11%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>5.10</font></p> </td>
        <td width="2%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p> </td> </tr>
    <tr >
        <td width="11%" valign=top style='background:#D6F3E8'>
            <p style='margin-left:10.0pt;text-indent:-10.0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="35%" valign=top style='background:#D6F3E8'>
            <p style='margin-left:10.0pt;text-indent:-10.0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Third Quarter</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="11%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>6.66</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="11%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>3.00</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p> </td> </tr>
    <tr >
        <td width="11%" valign=top >
            <p style='margin-left:10.0pt;text-indent:-10.0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="35%" valign=top >
            <p style='margin-left:10.0pt;text-indent:-10.0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Fourth Quarter</font></p> </td>
        <td width="3%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="11%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>6.03</font></p> </td>
        <td width="3%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="11%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>5.45</font></p> </td>
        <td width="2%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p> </td> </tr>
    <tr >
        <td width="11%" valign=top >
            <p style='margin-left:10.0pt;text-indent:-10.0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="35%" valign=top >
            <p style='margin-left:10.0pt;text-indent:-10.0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="11%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="11%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr >
        <td width="11%" valign=top style='background:#D6F3E8'>
            <p style='margin-left:10.0pt;text-indent:-10.0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=2>2006</font></b></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="35%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>First Quarter</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="11%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>5.19</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="11%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>4.04</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p> </td> </tr>
    <tr >
        <td width="11%" valign=top >
            <p style='margin-left:10.0pt;text-indent:-10.0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="35%" valign=top >
            <p style='margin-left:10.0pt;text-indent:-10.0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Second Quarter</font></p> </td>
        <td width="3%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="11%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>11.55</font></p> </td>
        <td width="3%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="11%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>3.90</font></p> </td>
        <td width="2%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p> </td> </tr>
    <tr >
        <td width="11%" valign=top style='background:#D6F3E8'>
            <p style='margin-left:10.0pt;text-indent:-10.0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="35%" valign=top style='background:#D6F3E8'>
            <p style='margin-left:10.0pt;text-indent:-10.0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Third Quarter</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="11%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>4.87</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="11%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>3.67</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p> </td> </tr>
    <tr >
        <td width="11%" valign=top >
            <p style='margin-left:10.0pt;text-indent:-10.0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="35%" valign=top >
            <p style='margin-left:10.0pt;text-indent:-10.0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Fourth Quarter</font></p> </td>
        <td width="3%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="11%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>6.25</font></p> </td>
        <td width="3%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="11%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>3.97</font></p> </td>
        <td width="2%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p> </td> </tr></table>
</div>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Based on data provided by our transfer agent, management believes that as of March 6, 2008, the number of share owner accounts of record was approximately 127.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>We paid cash dividends on our Common Stock of $0.16 per share in 2007 and $1.16 per share in 2006. During 2006 $0.04 dividends were declared quarterly in addition to a one-time dividend of $1.00.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>From time to time, we may be required to repurchase some of our securities as a result of obligations described in Note 8 to our 2007 consolidated financial statements. We did not repurchase any equity securities during the year ended December 31, 2007.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2></font></b><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=3><A NAME="managements"></A>Item 6&#151;Management&#146;s Discussion and Analysis or Plan of Operation</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The preparation of our financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make decisions based upon estimates, assumptions, and factors it considers relevant to the circumstances. Such decisions include the selection of applicable accounting principles and the use of judgment in their application, the results of which impact reported amounts and disclosures. Changes in economic conditions or other business circumstances may affect the outcomes of management&#146;s estimates and assumptions. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><B><font SIZE=2>RESULTS OF OPERATIONS</font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2>Comparison of Fiscal Year 2007 vs. Fiscal Year 2006</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-align:left;'><i><b><font size=2>Net Revenues</font></b></i></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Net revenues for fiscal year 2007 increased $1,336,000 to $7,092,000, or 23.2% when compared to net revenues for fiscal year 2006. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:6%;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Of this increase, the Controls division contributed an increase in net revenues of $1,266,000, or 24.2% when comparing fiscal year 2007 to fiscal year 2006. Sales continued to grow to end user plant applications, manufacturers, and OEM equipment builders. In 2007, four new exclusive distributors were added internationally and two states were added to our  manufacturer&#146;s representative territories to continue to develop our sales and marketing channel. We have continued to expand the joint sales calls and training with all of our partners in order to increase their knowledge and effectiveness. Throughout 2008, we expect to continue to expand the number of manufacturers&#146; representatives and exclusive distributors. The corporate web sites provide significant information and product application knowledge to prospects and customers and also direct knowledge to our sales partners. New products developed
and added to the product line in 2007 include a shaft speed monitor with analog output for hazardous locations, a position monitor for clamshell gates, a discguard for our SCP speed switch, a shaft tach speed sensor, and new software for our TR400 tachometer that enables customers to test their underspeed shutdown operations with one touch.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>We will continue to develop new products that broaden the line and provide complete monitoring solutions to our customers. The customers for our Controls division have diverse applications for our products in the grain, feed, ethanol and biofuels, power generation, mining, chemical, and other processing areas. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><font size=2>9</font></p>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The AutoData Systems division had an increase in net revenues of $70,000 or 13.3% when comparing fiscal year 2007 to fiscal year 2006. This increase is primarily due to increased sales of the ExpertScan and Scannable Office software products, which were impacted by product enhancements and upgrades made to the existing products. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>NetE-nable, the web add-on to ExpertScan software, was released at the end of August 2007. ExpertScan with NetE-nable makes automated data collection faster, easier and more cost-effective. Because of a number of established online form competitors, sales of NetE-nable began slowly during the last four months of 2007 following its release. However, NetE-nable has the competitive advantage of offering one software program for both paper and electronic forms, and AutoData expects additional revenue from sales of NetE-nable to gradually increase during 2008, augmenting revenue from the ExpertScan and Scannable Office software programs.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><i><b><font size=2>Cost of Sales</font></b></i></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The Company&#146;s cost of sales increased from $2,059,000 to $2,569,000, a difference of $510,000 or 24.8% when comparing fiscal year 2007 to fiscal year 2006. Cost of sales increased in line with the sales increase. We continue our efforts to maintain or reduce production costs by manufacturing products in the most cost effective manner. We continually look for lower cost sources of raw materials and outsource PC Board assembly when appropriate.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-align:left;'><i><b><font size=2>Gross Margins</font></b></i></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Gross margins for the fiscal year 2007 were 63.8% versus 64.2% for the prior fiscal year. This slight decrease in margins is due to the higher material and shipping costs. Gross margin for the Controls Division for the fiscal year ending December 31, 2007 and 2006 totaled 62.5% and 62.7%, respectively.  Gross margin for the AutoData Systems Division  for the fiscal year ending December 31, 2007 and 2006 totaled 77.6% and 78.8%, respectively. The decrease is due to a larger hardware sales dollar volume in fiscal year 2007. Gross margins on hardware are smaller than the gross margins on software. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><i><b><font size=2>Operating Expenses</font></b></i></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Total operating expenses increased by $157,000, or 5.2% when comparing fiscal year 2007 to fiscal year 2006. Of this increase, the Controls Division contributed an increase in operating expenses of $128,000 or 5.0% when comparing fiscal year 2007 to fiscal year 2006. The AutoData Systems Division had an increase in operating expenses of $29,000 or 6.2% when comparing fiscal year 2007 to fiscal year 2006.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Selling and marketing costs increased by $127,000, or 10.2% when comparing fiscal year 2007 to fiscal year 2006. Of this increase, the Controls Division had an increase of $92,000 or 8.3%. The AutoData Systems Division had an increase of $35,000 or 24.5%. The increase from the Controls Division is due to increased efforts in marketing their product through manufacturer&#146;s representatives, additional advertising in trade publications and web sites, and trade shows and related marketing. We increased the number of sales trips to customers, including outside sales representatives when possible. We continue to grow our email product update notification in order to generate awareness and interest. The increase from the AutoData Systems Division is due to increased personnel in marketing. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>General and administrative costs increased by $25,000, or 2.1% in fiscal year 2007 compared to fiscal year 2006. Of this increase, the Controls Division had an increase of $15,000, or 1.4%. This increase is primarily due to contractor expenses, recruitment expenses, and accounting and other professional fees, including fees associated with Sarbanes Oxley (SOX) compliance. This is offset by decreases in wages and benefits due to full time permanent hires, a one time officer&#146;s bonus and director&#146;s fees. The AutoData Systems Division had an increase of $10,000 or 9.8%. The increase for the AutoData Systems Division is due to increased use of contract personnel and computer maintenance, related to the NetE-nable software, partially offset by a decrease in legal fees. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Research and development costs increased $5,000 or 0.9% in fiscal year 2007 when compared with fiscal year 2006. The Controls Division increased $22,000, or 6.3%, AutoData<sup>&reg;</sup> Systems Division had a decrease of $17,000 or 7.8%. The increase in research and development costs in the Controls Division is due to additional product testing costs at Underwriter&#146;s Laboratory (UL) and wage and benefit increases in the engineering department. The decrease in the AutoData Systems Division is due to a decrease in contract engineering. This was offset by an increase in wages and benefits in the software engineering and technical support department. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><font size=2>10</font></p>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><i><b><font size=2>Operating Income (Loss)</font></b></i></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The operating income for fiscal year 2007 was $1,351,000, compared to last year&#146;s operating income of $682,000, an increase of $669,000 or 98.1%.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The Controls division had an operating income of $1,380,000 compared to the income of $729,000 in 2006, an increase of $651,000. This increase in operating income is a result of increased sales and offset by increases in selling expenses, general and administrative expenses, and research and development costs.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The AutoData Systems Division had a 2007 operating loss of $29,000 compared to a loss of $47,000 for 2006, an increase of $18,000 or 38.8%. This reduction in loss is a result of increased sales.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><i><b><font size=2>Non-Operating Income</font></b></i></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>ESI Investment Company continues to provide us with an alternative source of earnings through investments in available for sale securities; however, our intent is to remain an operations-based company. Our investments in available for sale securities are subject to significant positive and negative changes in value. In addition to income from the sale of investments, we also realize interest income from our short-term holdings.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Investment income for the fiscal year 2007 decreased by $1,822,000 to $250,000. This decrease was primarily due to no stock purchases or sales during fiscal year 2007.  During fiscal year 2006, August Technology, Inc. was purchased by Rudolph Technologies, Inc on February 15, 2006. From this sale, we received $1,015,891 in cash and 347,224 shares of Rudolph Technologies, Inc. common stock. In November 2006, we also received $481,379 in proceeds for our shares of Encore Medical Corporation in the going private acquisition by Blackstone Capital Partners.  The decrease of 17.8% or $52,000 in interest income earned on temporary cash investments is a result of decreased Treasury Bill balances. In 2006, ESI paid a special cash dividend of $1 per share which caused a decrease in cash.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Available-for-sale securities are stated at fair value, and unrealized holding gains and losses, net of the related deferred tax effect, are reported as a separate component of stockholders&#146; equity. Dividends on marketable equity securities are recognized in income when declared. Investments in unregistered securities are reported at original cost.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Realized gains and losses, including losses from declines in value of specific securities determined by management to be other-than-temporary, are included in income. Realized gains and losses are determined on the basis of the specific securities sold.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><i><b><font size=2>Net Income After Tax</font></b></i></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>We reported net income after tax for fiscal year 2007 of $1,196,000 as compared to net income of $1,724,000 in 2006, a decrease of $528,000 or 30.6%. Income per share was $0.36 in 2007 compared to earnings per share of $0.52 in 2006. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><B><font SIZE=2>OFF-BALANCE SHEET ARRANGEMENTS</font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>We are not a party to any off-balance sheet transactions, arrangements or obligations that have, or are reasonably likely to have, a material effect on our financial condition, changes in the financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<BR><BR><BR><BR><BR><BR><BR><BR>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><font size=2>11</font></p>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><B><font SIZE=2>LIQUIDITY AND CAPITAL RESOURCES </font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The net increase in our cash and cash equivalents was $328,000 during fiscal year 2007. Cash from operating activities of $1,088,000&nbsp;for the twelve months ended December 31, 2007 was primarily a result of our net income adjusted for non-cash charges.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Cash used in investing activities was $269,000 for the twelve-month period ended December 31, 2007 compared to cash provided by investing activities of $1,816,000 for the year ended December 31, 2006. Cash used for capital expenditures was $269,000 and $6,000 for the twelve months ended December 31, 2007 and 2006, respectively. Proceeds from the sale of investments for the twelve months ended December 31, 2007 and 2006 were $0 and $1,822,000, respectively.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:6%;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Cash used in financing activities was $491,000&nbsp;and $3,603,000 for the twelve months ended December 31, 2007 and 2006, respectively. During the twelve months ended December 31, 2007 and 2006, we paid aggregate dividends of $538,000 and $3,874,000, respectively. We paid a $1 dividend during fiscal year 2006 which did not occur during fiscal year 2007.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Our ongoing cash requirements will be primarily for capital expenditures, research and development and working capital. Management believes that cash on hand and any cash provided by operations will be sufficient to meet our cash requirements through at least the next 12 months. We anticipate that the quarterly dividends will be paid in 2008 at the same rate as in 2007.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Our primary investments are 343,267 shares of Rudolph Technologies, Inc. and 551,759 shares of PPT Vision, Inc. The PPT Vision investment is accounted for under the equity method of accounting. The fair value of the Rudolph Technologies, Inc. investment totaled $3,886,000 and $5,465,000 as of December 31, 2007 and 2006, respectively. The fair value of the PPT Vision investment totaled $66,000 and $182,000 as of December 31, 2007 and 2006, respectively.  These stocks are subject to fluctuations in price and could have a negative effect on our liquidity. Liquid securities are periodically sold as deemed appropriate by management. The market value of PPT Vision stock as of February 29, 2008 was $66,000.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><B><font SIZE=2>CRITICAL ACCOUNTING ESTIMATES</font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Management uses estimates and assumptions in preparing our financial statements in accordance with generally accepted accounting principles. These estimates affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. There are no significant accounting estimates described in the notes to the financial statements which are critical at this time. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<BR><BR><BR><BR><BR><BR><BR><BR><BR><BR>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><font size=2>12</font></p>
<BR><BR>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=3><A NAME="fins"></A>Item 7&#151;Financial Statements </font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><B><font SIZE=2>INDEX TO CONSOLIDATED FINANCIAL STATEMENTS</font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<div align=left>

<table border="0" cellspacing=0 cellpadding=0 width="100%" style='border-collapse:collapse'>
    <tr >
        <td width="88%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2><A HREF="#report">Report of Registered Independent Public Accounting Firm</A></font></p> </td>
        <td width="11%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>14</font></p> </td> </tr>
    <tr >
        <td width="88%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Financial Statements</font></p> </td>
        <td width="11%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr >
        <td width="88%" valign=top >
            <p style='margin-left:20.0pt;text-indent:-10.0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2><A HREF="#balance">Consolidated Balance Sheet</A></font></p> </td>
        <td width="11%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>15</font></p> </td> </tr>
    <tr >
        <td width="88%" valign=top >
            <p style='margin-left:0pt;text-indent:9.0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2><A HREF="#operations">Consolidated Statements of Operations</A></font></p> </td>
        <td width="11%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>16</font></p> </td> </tr>
    <tr >
        <td width="88%" valign=top >
            <p style='margin-left:20.0pt;text-indent:-10.0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2><A HREF="#equity">Consolidated Statements of Changes in Stockholders&#146; Equity</A></font></p> </td>
        <td width="11%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>17</font></p> </td> </tr>
    <tr >
        <td width="88%" valign=top >
            <p style='margin-left:20.0pt;text-indent:-10.0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2><A HREF="#cash_flows">Consolidated Statements of Cash Flows</A></font></p> </td>
        <td width="11%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>18</font></p> </td> </tr>
    <tr >
        <td width="88%" valign=top >
            <p style='margin-left:20.0pt;text-indent:-10.0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2><A HREF="#notes">Notes to Consolidated Financial Statements</A></font></p> </td>
        <td width="11%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>19</font></p> </td> </tr></table>
</div>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><font size=2>13</font></p>
<BR><BR>
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<A NAME="report"></A>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><img src="img2.jpg"></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font SIZE=2>REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Board of Directors</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Electro-Sensors, Inc. and Subsidiaries </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Minnetonka, Minnesota</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>We have audited the accompanying consolidated balance sheet of Electro-Sensors, Inc. and Subsidiaries as of December 31, 2007, and the related statements of operations, changes in stockholders&#146; equity, and cash flows for the fiscal years ended December 31, 2007 and 2006. These financial statements are the responsibility of the Company&#146;s management. Our responsibility is to express an opinion on these financial statements based on our audit.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the Company&#146;s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Electro-Sensors, Inc. and Subsidiaries as of December 31, 2007, and the results of their operations and their cash flows for the years ended December 31, 2007 and 2006, in conformity with U.S. generally accepted accounting principles.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:60%;text-align:left;'><font size=2>/s/ Boulay, Heutmaker, Zibell &amp; Co. P.L.L.P.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:60%;text-align:left;'><font size=2>Certified Public Accountants</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>Minneapolis, Minnesota</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>March 25, 2008</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<BR><BR><BR><BR><BR><BR><BR><BR>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><font size=2>14</font></p>
<BR><BR>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><B><font SIZE=2><A NAME="balance"></A>ELECTRO-SENSORS, INC. AND SUBSIDIARIES</font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><b><font size=2>CONSOLIDATED BALANCE SHEETS</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<div align=left>

<table border="0" cellspacing=0 cellpadding=0 width="100%" style='border-collapse:collapse'>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align: left;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td colspan="2" valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>December 31,</font></b><br> <b><font size=1>2007</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='border-top:solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><b><font size=2>Assets</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><b><font size=2>Current Assets</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:25.3pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:.45in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Cash and cash equivalents</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><b><font size=2>$</font></b></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>5,779,000</font></b></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.45in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Available for sale securities</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>3,892,000</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:.45in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Trade receivables, less allowance for doubtful accounts, $17,000</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>818,000</font></b></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.45in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Inventories</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>1,027,000</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:.45in;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=2>Other current assets</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>91,000</font></b></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><b><font size=2>Total Current Assets</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>11,607,000</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><b><font size=2>Property and Equipment, net</font></b></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>1,458,000</font></b></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><b><font size=2>Total Assets</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: double black 2.25pt;background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><b><font size=2>$</font></b></p> </td>
        <td width="8%" valign=bottom style='border-bottom: double black 2.25pt;background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>13,065,000</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><b><font size=2>Liabilities and Stockholders&#146; Equity</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><b><font size=2>Current Liabilities</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:25.3pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:.45in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Accounts payable</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><b><font size=2>$</font></b></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>107,000</font></b></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.45in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Accrued expenses</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>270,000</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:.45in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Deferred revenue</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>83,000</font></b></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.45in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Deferred income tax</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>1,373,000</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:.45in;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=2>Income taxes payable</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>345,000</font></b></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><b><font size=2>Total Current Liabilities</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>2,178,000</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><b><font size=2>Commitments and Contingencies (notes</font></b><font size=2>&nbsp;</font><b><font size=2>6 and 8)</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><b><font size=2>Stockholders&#146; Equity</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:25.3pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:.45in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Common stock, par value $0.10 per share; authorized 10,000,000 shares; issued 3,365,463 shares</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>337,000</font></b></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.45in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Additional paid-in capital</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>1,507,000</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:.45in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Retained earnings</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>6,716,000</font></b></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.45in;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=2>Accumulated other comprehensive income</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>2,327,000</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><b><font size=2>Total Stockholders&#146; Equity</font></b></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>10,887,000</font></b></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><b><font size=2>Total Liabilities and Stockholders&#146; Equity</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: double black 2.25pt;background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><b><font size=2>$</font></b></p> </td>
        <td width="8%" valign=bottom style='border-bottom: double black 2.25pt;background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>13,065,000</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr></table>
</div>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>See Notes to Consolidated Financial Statements</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><font size=2>15</font></p>
<BR><BR>
<HR SIZE=3 COLOR=GRAY NOSHADE>
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<P ALIGN=LEFT><FONT SIZE=2><A HREF="#toc">Table of Contents</A> </FONT></P>




<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><B><font SIZE=2><A NAME="operations"></A>ELECTRO-SENSORS, INC. AND SUBSIDIARIES</font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><B><font SIZE=2>CONSOLIDATED STATEMENTS OF OPERATIONS</font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<div align=left>

<table border="0" cellspacing=0 cellpadding=0 width="100%" style='border-collapse:collapse'>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td colspan="5" valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>Years ended December</font></b><font size=1>&nbsp;</font><b><font size=1>31,</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td colspan="2" valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>2007</font></b></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td colspan="2" valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>2006</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='border-top:solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='border-top:solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><b><font size=2>Net Sales</font></b></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><b><font size=2>$</font></b></p> </td>
        <td width="7%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>7,092,000</font></b></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="7%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>5,756,000</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><b><font size=2>Cost of Goods Sold</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>2,569,000</font></b></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>2,059,000</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><b><font size=2>Gross Profit</font></b></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>4,523,000</font></b></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>3,697,000</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><b><font size=2>Operating Expenses</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:25.3pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:28.3pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Selling and marketing</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>1,376,000</font></b></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>1,249,000</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:28.3pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>General and administrative</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>1,224,000</font></b></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>1,199,000</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:28.3pt;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=2>Research and development</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>572,000</font></b></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>567,000</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><b><font size=2>Total Operating Expenses</font></b></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>3,172,000</font></b></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>3,015,000</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><b><font size=2>Operating Income </font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>1,351,000</font></b></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>682,000</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><b><font size=2>Non-operating Income (Expense):</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:25.3pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:28.3pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Gain on sale of investment securities</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>0</font></b></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>1,767,000</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:28.3pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Interest income</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>240,000</font></b></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>292,000</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:28.3pt;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=2>Other Income</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>10,000</font></b></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>14,000</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><b><font size=2>Total Non-operating Income</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>250,000</font></b></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>2,073,000</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><b><font size=2>Income before Income Taxes</font></b></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>1,601,000</font></b></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>2,755,000</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><b><font size=2>Federal and State Income Taxes</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>405,000</font></b></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>1,031,000</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><b><font size=2>Net Income</font></b></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: double black 2.25pt;background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><b><font size=2>$</font></b></p> </td>
        <td width="7%" valign=bottom style='border-bottom: double black 2.25pt;background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>1,196,000</font></b></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: double black 2.25pt;background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="7%" valign=bottom style='border-bottom: double black 2.25pt;background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>1,724,000</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><b><font size=2>Net Income per share data</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><b><font size=2>Basic</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:25.3pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:28.3pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Net income per share</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><b><font size=2>$</font></b></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>.36</font></b></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>0.52</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:28.3pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Weighted average shares</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>3,361,663</font></b></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>3,314,518</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><b><font size=2>Diluted</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:25.3pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:28.3pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Net income per share</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><b><font size=2>$</font></b></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>.35</font></b></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>0.51</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:28.3pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Weighted average shares</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>3,395,903</font></b></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>3,360,248</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:25.3pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><b><font size=2>Dividends paid per common share</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>0.16</font></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>1.16</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr></table>
</div>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>See Notes to Consolidated Financial Statements</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><font size=2>16</font></p>
<BR><BR>
<HR SIZE=3 COLOR=GRAY NOSHADE>
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<P ALIGN=LEFT><FONT SIZE=2><A HREF="#toc">Table of Contents</A> </FONT></P>




<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><B><font SIZE=2><A NAME="equity"></A>ELECTRO-SENSORS, INC. AND SUBSIDIARIES</font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><b><font size=2>CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS&#146; EQUITY</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=1>&nbsp;</font></p>


<div align=left>

<table border="0" cellspacing=0 cellpadding=0 width="100%" style='border-collapse:collapse'>
    <tr style='page-break-inside:avoid; height:30.6pt'>
        <td rowspan=2 valign=top style='background:white; height:30.6pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" ROWSPAN="2" VALIGN="BOTTOM" STYLE="background:white; height:30.6pt">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td colspan="4" valign=bottom style='border-bottom:solid black 1.0pt; background:white;height:30.6pt;'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>Common Stock Issued </font></b></p> </td>
        <TD WIDTH="2%" ROWSPAN="2" VALIGN="BOTTOM" STYLE="background:white; height:30.6pt">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td colspan="2" rowspan=2 valign=bottom style=' background:white;height:30.6pt;border-bottom: 1px solid black'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>Additional</font></b><br> <b><font size=1>paid-in</font></b><br> <b><font size=1>capital</font></b></p> </td>
        <TD WIDTH="2%" ROWSPAN="2" VALIGN="BOTTOM" STYLE="background:white; height:30.6pt">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td colspan="2" rowspan=2 valign=bottom style=' background:white;height:30.6pt;border-bottom: 1px solid black'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>Retained</font></b><br> <b><font size=1>earnings</font></b></p> </td>
        <TD WIDTH="2%" ROWSPAN="2" VALIGN="BOTTOM" STYLE="background:white; height:30.6pt">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td colspan="2" rowspan=2 valign=bottom style=' background:white;height:30.6pt;border-bottom: 1px solid black'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>Comprehensive</font></b><br> <b><font size=1>income/(loss)</font></b></p> </td>
        <TD WIDTH="2%" ROWSPAN="2" VALIGN="BOTTOM" STYLE="background:white; height:30.6pt">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td colspan="2" rowspan=2 valign=bottom style=' background:white;height:30.6pt;border-bottom: 1px solid black'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>Accumulated</font></b><br> <b><font size=1>other</font></b><br> <b><font size=1>comprehensive</font></b><br> <b><font size=1>income</font></b></p> </td>
        <TD WIDTH="2%" ROWSPAN="2" VALIGN="BOTTOM" STYLE="background:white; height:30.6pt">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td colspan="2" rowspan=2 valign=bottom style=' background:white;height:30.6pt;border-bottom: 1px solid black'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>Total</font></b><br> <b><font size=1>Stockholders&#146;</font></b><br> <b><font size=1>equity</font></b></p> </td>
        <td width="1%" rowspan=2 valign=bottom style='background:white; height:30.6pt'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td width="7%" valign=bottom style='background:white;border-bottom: 1px solid black'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>Shares</font></b></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td colspan="2" valign=bottom style=' background:white;border-bottom: 1px solid black'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>Amount</font></b></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="6%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><b><font size=2>Balance, January 1, 2006</font></b></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>3,252,116</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="6%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>325,000</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="7%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>1,192,000</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>8,208,000</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>3,998,000</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><b><font size=2>$</font></b></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>13,723,000</font></b></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:25.3pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="6%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:25.3pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Exercise of stock options</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>91,920</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="6%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>9,000</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>244,000</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>253,000</font></b></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:25.3pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Unrealized gains (losses) on investments net of reclassification adjustment and taxes</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="6%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>(691,000</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=2>)</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>(691,000</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=2>)</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>(691,000</font></b></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2"><B>)</B> </FONT></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:25.3pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Stock issued through the employee stock purchase plan</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>1,603</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="6%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>1,000</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>17,000</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>18,000</font></b></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:25.3pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Dividend on common stock</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="6%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>(3,874,000</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=2>)</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>(3,874,000</font></b></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><b><font size=2>)</font></b></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:25.3pt;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=2>Net income</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="6%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>1,724,000</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>1,724,000</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>1,724,000</font></b></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:33.65pt;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><b><font size=2>Total comprehensive income</font></b></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="6%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: solid black 1.0pt;background: #D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><b><font size=2>$</font></b></p> </td>
        <td width="8%" valign=bottom style='border-bottom: solid black 1.0pt;background: #D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>1,033,000</font></b></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="6%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><b><font size=2>Balance, December 31, 2006</font></b></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>3,345,639</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="6%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>335,000</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>1,453,000</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>6,058,000</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>3,307,000</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>11,153,000</font></b></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:25.3pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="6%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:25.3pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Exercise of stock options</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>18,450</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="6%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>2,000</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>39,000</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>41,000</font></b></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:25.3pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Stock option grants</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="6%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>9,000</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>9,000</font></b></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:25.3pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Unrealized gains (losses) on investments net of reclassification adjustment and taxes</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="6%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>(980,000</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=2>)</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>(980,000</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=2>)</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>(980,000</font></b></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2"><B>)</B> </FONT></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:25.3pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Stock issued through the employee stock purchase plan</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>1,374</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="6%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>0</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>6,000</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>6,000</font></b></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:25.3pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Dividend on common stock</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="6%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>(538,000</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=2>)</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>(538,000</font></b></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2"><B>)</B> </FONT></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:25.3pt;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=2>Net income</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="6%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>1,196,000</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>1,196,000</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>1,196,000</font></b></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:33.65pt;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><b><font size=2>Total comprehensive income</font></b></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="6%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: solid black 1.0pt;background: #D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><b><font size=2>$</font></b></p> </td>
        <td width="8%" valign=bottom style='border-bottom: solid black 1.0pt;background: #D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>216,000</font></b></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><b><font size=2>Balance, December 31, 2007</font></b></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='border-bottom: double black 2.25pt;background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>3,365,463</font></b></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: double black 2.25pt;background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><b><font size=2>$</font></b></p> </td>
        <td width="6%" valign=bottom style='border-bottom: double black 2.25pt;background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>337,000</font></b></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: double black 2.25pt;background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><b><font size=2>$</font></b></p> </td>
        <td width="7%" valign=bottom style='border-bottom: double black 2.25pt;background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>1,507,000</font></b></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: double black 2.25pt;background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><b><font size=2>$</font></b></p> </td>
        <td width="8%" valign=bottom style='border-bottom: double black 2.25pt;background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>6,716,000</font></b></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.5pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.5pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: double black 2.25pt;background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><b><font size=2>$</font></b></p> </td>
        <td width="8%" valign=bottom style='border-bottom: double black 2.25pt;background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>2,327,000</font></b></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: double black 2.25pt;background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><b><font size=2>$</font></b></p> </td>
        <td width="8%" valign=bottom style='border-bottom: double black 2.25pt;background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>10,887,000</font></b></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr></table>
</div>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>See Notes to Consolidated Financial Statements</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><font size=2>17</font></p>
<BR><BR>
<HR SIZE=3 COLOR=GRAY NOSHADE>
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<P ALIGN=LEFT><FONT SIZE=2><A HREF="#toc">Table of Contents</A> </FONT></P>




<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><B><font SIZE=2><A NAME="cash_flows"></A>ELECTRO-SENSORS, INC. AND SUBSIDIARIES</font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><b><font size=2>CONSOLIDATED STATEMENTS OF CASH FLOWS</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<div align=left>
<table border="0" cellspacing=0 cellpadding=0 width="100%" style='border-collapse:collapse'>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align: left;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td colspan="5" valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>Years ended</font></b><br> <b><font size=1>December 31,</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align: left;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td colspan="2" valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>2007</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td colspan="2" valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>2006</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=bottom style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><b><font size=2>Cash flows from operating activities</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='border-top:solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='border-top:solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=bottom style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><b><font size=2>Net Income</font></b></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><b><font size=2>$</font></b></p> </td>
        <td width="7%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>1,196,000</font></b></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>1,724,000</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=bottom style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=bottom style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Adjustments to reconcile net income to net cash from operating activities:</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=bottom style='background:white'>
            <p style='margin-left:25.3pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=bottom style='background:white'>
            <p style='margin-left:.45in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Depreciation</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>82,000</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>76,000</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:.45in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Realized gain on sale of investments</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>0</font></b></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>(1,767,000</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=2>)</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=bottom style='background:white'>
            <p style='margin-left:.45in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Loss on disposal of fixed assets</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>3,000</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>0</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:.45in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Issuance of stock options</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>9,000</font></b></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>0</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=bottom style='background:white'>
            <p style='margin-left:.45in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Deferred income taxes</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>(88,000</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><b><font size=2>)</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>60,000</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=bottom style='background:white'>
            <p style='margin-left:.45in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>(Increase)/decrease in:</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:.65in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Trade receivables</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>(221,000</font></b></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><b><font size=2>)</font></b></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>(34,000</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=2>)</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=bottom style='background:white'>
            <p style='margin-left:.65in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Inventory</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>(28,000</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><b><font size=2>)</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>(205,000</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=2>)</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:.65in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Other current assets</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>(16,000</font></b></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><b><font size=2>)</font></b></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>(4,000</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=2>)</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=bottom style='background:white'>
            <p style='margin-left:.45in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Increase/(decrease) in:</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=2>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=2>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=bottom style='background:white'>
            <p style='margin-left:.65in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Accounts payable</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>(32,000</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><b><font size=2>)</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>82,000</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:.65in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Accrued expenses</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>109,000</font></b></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>6,000</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=bottom style='background:white'>
            <p style='margin-left:.65in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Deferred revenue</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>18,000</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>13,000</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:.65in;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=2>Accrued income taxes</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>56,000</font></b></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>227,000</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=bottom style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=bottom style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=2>Net cash from operating activities</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: double black 2.25pt;background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='border-bottom: double black 2.25pt;background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>1,088,000</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: double black 2.25pt;background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='border-bottom: double black 2.25pt;background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>178,000</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=bottom style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=bottom style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Cash flows from investing activities:</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=bottom style='background:white'>
            <p style='margin-left:25.3pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:.45in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Proceeds from sale of investments</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>0</font></b></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>1,822,000</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=bottom style='background:white'>
            <p style='margin-left:.45in;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=2>Purchase of property and equipment</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>(269,000</font></b></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid white 1.0pt;background:white; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><b><font size=2>)</font></b></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>(6,000</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid white 1.0pt;background:white; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=2>)</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=bottom style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=2>Net cash provided by (used in) investing activities</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: double black 2.25pt;background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='border-bottom: double black 2.25pt;background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>(269,000</font></b></p> </td>
        <td width="2%" valign=bottom style='border-bottom: double #D6F3E8 2.25pt;background:#D6F3E8'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><b><font size=2>)</font></b></p> </td>
        <td width="2%" valign=bottom style='border-bottom: double black 2.25pt;background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='border-bottom: double black 2.25pt;background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>1,816,000</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=bottom style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=bottom style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Cash flows from financing activities:</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=bottom style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=bottom style='background:white'>
            <p style='margin-left:.45in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Proceeds from issuance of stock</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>47,000</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>271,000</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:.45in;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=2>Dividends paid</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>(538,000</font></b></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid #D6F3E8 1.0pt;background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><b><font size=2>)</font></b></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>(3,874,000</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid #D6F3E8 1.0pt;background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=2>)</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=bottom style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=bottom style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=2>Net cash used in financing activities</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: double black 2.25pt;background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='border-bottom: double black 2.25pt;background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>(491,000</font></b></p> </td>
        <td width="2%" valign=bottom style='border-bottom: double white 2.25pt;background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><b><font size=2>)</font></b></p> </td>
        <td width="2%" valign=bottom style='border-bottom: double black 2.25pt;background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='border-bottom: double black 2.25pt;background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>(3,603,000</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: double white 2.25pt;background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=2>)</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=bottom style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Net increase/(decrease) in cash and cash equivalents</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>328,000</font></b></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>(1,609,000</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=2>)</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=bottom style='background:white'>
            <p style='margin-left:25.3pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=bottom style='background:white'>
            <p style='margin-left:.45in;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=2>Cash and cash equivalents, beginning</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>5,451,000</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>7,060,000</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:.45in;text-indent:-.25in;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=2>Cash and cash equivalents, ending</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: double black 2.25pt;background: #D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><b><font size=2>$</font></b></p> </td>
        <td width="7%" valign=bottom style='border-bottom: double black 2.25pt;background: #D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>5,779,000</font></b></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: double black 2.25pt;background: #D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="8%" valign=bottom style='border-bottom: double black 2.25pt;background: #D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>5,451,000</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=bottom style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=bottom style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><b><font size=2>Supplemental schedule of non-cash investing and financing activities</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=bottom style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Net change in unrealized gain on investments, net of tax</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><b><font size=2>$</font></b></p> </td>
        <td valign=bottom >
            <p style='margin-left:0pt;text-indent:6.75pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>980,000</font></b></p>  </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="8%" valign=bottom style=' background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>691,000</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>

    <tr style='page-break-inside:avoid'>
        <td valign=bottom style='background:#D6F3E8'>
            <p style='text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=2>Cash paid during the year for income taxes</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background: #D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><b><font size=2>$</font></b></p> </td>
        <td width="7%" valign=bottom style='background: #D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>440,000</font></b></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background: #D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="8%" valign=bottom style='background: #D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>745,000</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td></tr> </table>
</div>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>See Notes to Consolidated Financial Statements</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><font size=2>18</font></p>
<BR><BR>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><B><font SIZE=2><A NAME="notes"></A>ELECTRO-SENSORS, INC. AND SUBSIDIARIES</font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><b><font size=2>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2>Note 1. Nature of Business and Significant Accounting Policies</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2>Nature of business:</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The accompanying consolidated financial statements include the accounts of Electro-Sensors, Inc. and its wholly owned subsidiaries, ESI Investment Company and Senstar Corporation. Senstar has no operations. Intercompany accounts, transactions and earnings have been eliminated in consolidation. The consolidated entity is referred to as &#147;the Company&#148;.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Electro-Sensors, Inc. operates two distinct businesses. The first is the Controls Division, which manufactures and markets a complete line of speed monitoring and motor control systems for industrial machinery. The Controls Division utilizes leading-edge technology to continuously improve its products and make them easier to use. The Controls Division&#146;s goal is to manufacture the industry-preferred product for every market served. These products are sold through an internal sales staff, manufacturer&#146;s representatives, and distributors to a wide variety of manufacturers, OEM&#146;s and processors to monitor process machinery operations. The Controls Division markets its products to a number of different industries located throughout the United States and abroad.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The second business is AutoData Systems (ADS). ADS designs and markets a desktop software based system that reads hand printed characters, checkmarks and bar code information from scanned or faxed forms. ADS products are designed to provide capabilities to automate data collection and are sold by internal sales staff to end users, resellers and developers in the United States, Canada, Europe and Asia.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:6%;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>In addition, through its subsidiary ESI Investment Company, the Company periodically makes strategic investments in other businesses and companies, primarily when the Company believes that such investments will facilitate development of technology complementary to the Company&#146;s products. Although ESI, through its subsidiary ESI Investment Company, invests in other businesses or companies, ESI does not intend to become an investment company and intends to remain primarily an operating company. The Company&#146;s primary investments are 343,267 shares of Rudolph Technologies, Inc. and 551,759 shares of PPT Vision, Inc. The PPT Vision investment is accounted for under the equity method of accounting. See Note 2 for additional information regarding its investments. The Company&#146;s investments in securities are subject to normal market risks.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2>Significant accounting policies of the Company are summarized below:</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2>Use of estimates</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2>Cash and cash equivalents</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. Cash equivalents are carried at cost plus accrued interest which approximates fair value.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The Company maintains its cash in bank deposit accounts, which, at times, may exceed federally insured limits. The Company has not experienced any losses on such accounts. The Company believes it is not exposed to any significant credit risk on cash.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2>Trade Receivables and credit policies</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Accounts receivable are uncollateralized customer obligations due under normal trade terms requiring payment within 30 days from the invoice date. Accounts receivables are stated at the amount billed to the customer. Customer account balances with invoices over 90 days are considered delinquent. The Company does not accrue interest on delinquent accounts receivable.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Payments of accounts receivable are allocated to the specific invoices identified on the customer&#146;s remittance advice or, if unspecified, are applied to the earliest unpaid invoices.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The carrying amount of accounts receivable is reduced by an allowance for doubtful accounts that reflects management&#146;s best estimate of the amounts that will not be collected. Management individually reviews all accounts receivable balances that exceed 90 days from the invoice date and based on an assessment of current creditworthiness, estimates the portion, if any, of the balance that will not be collected. Management uses this information to estimate the allowance.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><font size=2>19</font></p>
<BR><BR>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2>Available for sale securities</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The Company&#146;s investments consist of marketable equity securities, primarily common stocks, government debt securities, money market funds, and unregistered equity securities. The estimated fair value of marketable equity securities is based on quoted market prices and therefore subject to the inherent risk of market fluctuations.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Management determines the appropriate classification of securities at the date individual investments are acquired, and evaluates the appropriateness of such classification at each balance sheet date.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Since the Company does not buy and sell investments with the objective of generating profits on short-term fluctuations in market price, the investments in marketable equity securities have been classified as available-for-sale. Available-for-sale securities are stated at fair value, and unrealized holding gains and losses, net of the related deferred tax effect, are reported as separate component of stockholders&#146; equity. Dividends on marketable equity securities are recognized in income when declared. Investments in unregistered securities are reported at original cost.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Realized gains and losses, including losses from declines in value of specific securities determined by management to be other-than-temporary, are included in income. Realized gains and losses are determined on the basis of the specific securities sold.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2>Inventories</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Inventories include material, labor and overhead and are valued at the lower of cost (first-in, first-out) or market.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2>Fair value of financial instruments</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The Company&#146;s financial instruments consist of cash and cash equivalents, investments, short-term trade receivables and payables for which current carrying amounts approximate fair market value.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2>Property and equipment</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Property and equipment are recorded at cost. Expenditures for renewals and betterments are capitalized and repairs and maintenance costs are charged to expense as incurred. When items are disposed of, the cost and accumulated depreciation are eliminated from the accounts, and any gain or loss is reflected in the results of operations.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted future net cash flows expected to be generated by the assets. If these assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2>Software costs</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The Company capitalizes software production costs after technological feasibility has been established and prior to general release to clients. Annual amortization of capitalized software will be based on the greater amount computed using the straight-line method over the estimated 36-month economic product life or using the ratio that current gross revenue for the software product bears to the total of current and anticipated future gross revenues for that product. Software maintenance and modification costs are expensed as incurred.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2>Revenue recognition of production monitoring equipment</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The Company recognizes revenue from the sale of its products when persuasive evidence of an arrangement exists, the product has been delivered, the fee is fixed and determinable and collection of the resulting receivable is reasonably assured. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><font size=2>20</font></p>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2>Software revenue recognition</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The Company recognizes revenue upon shipment of its character recognition software. The product is sold to the end user and risk of loss is transferred, and the Company has no continuing obligations, once its products are delivered to the shipper. To recognize revenue, it must also be probable that the Company will collect the accounts receivable from its customers. In some situations, the Company receives advance payments from its customers. Revenue associated with these advance payments is deferred until the product is shipped. ADS customers pay an annual maintenance fee for software support, which is recognized as deferred revenue on the balance sheet and on a monthly basis, it is recognized in income over the life of the contract.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2>Advertising costs</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The Company expenses advertising costs as incurred. Total advertising expense was $201,000 and $187,000 for the years ended December 31, 2007 and 2006, respectively.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2>Research and development</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Expenditures for research and development are expensed as incurred.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2>Depreciation</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The cost of property and equipment is depreciated on the straight-line method over the estimated useful lives.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2>Estimated useful lives are as follows</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<div align=center>
<table border="0" cellspacing=0 cellpadding=0 width="60%" style='border-collapse:collapse'>
    <tr >
        <td width="85%" valign=bottom >
            <p style='margin-left:10.0pt;text-indent:-10.0pt;text-align:left;margin-top:1.0pt;margin-bottom: 0in'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="10%" valign=bottom style='border-bottom: solid black 1.0pt; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><b><font size=1>Years</font></b></p> </td>
        <td width="1%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr >
        <td width="85%" valign=bottom >
            <p style='margin-left:10.0pt;text-indent:-10.0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="10%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p> </td> </tr>
    <tr >
        <td width="85%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:10.0pt;text-indent:-10.0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Equipment</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="10%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>3-10</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p> </td> </tr>
    <tr >
        <td width="85%" valign=bottom >
            <p style='margin-left:10.0pt;text-indent:-10.0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Furniture and Fixtures</font></p> </td>
        <td width="3%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="10%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>3-10</font></p> </td>
        <td width="1%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p> </td> </tr>
    <tr >
        <td width="85%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:10.0pt;text-indent:-10.0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Building</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="10%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>7-40</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p> </td> </tr></table>
</div>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Depreciation expense for the years ended December 31, 2007 and 2006 was $82,000 and $76,000, respectively.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2>Income taxes</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Deferred income taxes are provided on an asset and liability approach to financial accounting and reporting for income taxes. The difference between the financial statement and tax bases of assets and liabilities is determined annually. Deferred income tax assets and liabilities are computed for those differences that have future tax consequences using the currently enacted tax laws and rates that apply to the periods in which they are expected to affect taxable income. Income tax expense is the current tax payable or refundable for the period plus or minus the net change in the deferred tax assets and liabilities, excluding the portion of the deferred liability allocated to other comprehensive income. Deferred taxes are reduced by a valuation allowance to the extent that realization of the related deferred tax asset is not assured.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><font size=2>21</font></p>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2>Net income per common share</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>EPS excludes dilution and is determined by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted EPS reflects the potential dilution that could occur if securities and other contracts to issue Common Stock were exercised or converted into Common Stock. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The following information presents the Company&#146;s computations of basic and diluted EPS for the periods presented in the statements of operations. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<div align=left>
<table border="0" cellspacing=0 cellpadding=0 width="100%" style='border-collapse:collapse'>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align: left;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td colspan="2" valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>Income</font></b></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="11%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>Shares</font></b></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td colspan="2" valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>Per share</font></b><br> <b><font size=1> amount</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="11%" valign=bottom style='border-top: solid black 1.0pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="11%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="11%" valign=bottom style='border-top: solid black 1.0pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><b><font size=2>2007:</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="11%" valign=bottom style='background:white; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="11%" valign=bottom style='background:white; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="11%" valign=bottom style='background:white; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Basic EPS</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="11%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>1,196,000</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="11%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>3,361,663</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="11%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>0.36</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=2>Effect of dilutive employee stock options</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="11%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="11%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>34,240</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="11%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=2>Diluted EPS</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: double black 2.25pt;background: #D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="11%" valign=bottom style='border-bottom: double black 2.25pt;background: #D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>1,196,000</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="11%" valign=bottom style='border-bottom: double black 2.25pt;background: #D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>3,395,903</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: double black 2.25pt;background: #D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="11%" valign=bottom style='border-bottom: double black 2.25pt;background: #D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>0.35</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="11%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="11%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="11%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><b><font size=2>2006:</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="11%" valign=bottom style='background:white; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="11%" valign=bottom style='background:white; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="11%" valign=bottom style='background:white; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Basic EPS</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="11%" valign=bottom style='background:white; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>1,724,000</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="11%" valign=bottom style='background:white; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>3,314,518</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="11%" valign=bottom style='background:white; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>0.52</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=2>Effect of dilutive employee stock options</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="11%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="11%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>45,730</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="11%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=2>Diluted EPS</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: double black 2.25pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="11%" valign=bottom style='border-bottom: double black 2.25pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>1,724,000</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="11%" valign=bottom style='border-bottom: double black 2.25pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>3,360,248</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: double black 2.25pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="11%" valign=bottom style='border-bottom: double black 2.25pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>0.51</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr></table>
</div>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2>Comprehensive income (loss)</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Comprehensive income includes the Company&#146;s net income plus other comprehensive income (loss) items that are excluded from net income. The Company&#146;s other comprehensive income consists of unrealized gains (losses), net of income taxes and reclassification adjustments for gains and losses included in net income. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<div align=center>

<table border="0" cellspacing=0 cellpadding=0 width="80%" style='border-collapse:collapse'>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align: left;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td colspan="5" valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>Years ended</font></b><br> <b><font size=1>December 31,</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align: left;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td colspan="2" valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>2007</font></b></p> </td>
        <td width="5%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td colspan="2" valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>2006</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0.5pt'><b><font size=2>Net income</font></b></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><b><font size=2>$</font></b></p> </td>
        <td width="9%" valign=bottom style='border-top:solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>1,196,000</font></b></p> </td>
        <td width="5%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="9%" valign=bottom style='border-top:solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>1,724,000</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="9%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="5%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="9%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0.5pt'><b><font size=2>Other comprehensive gain (loss):</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="9%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="5%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="9%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=2>Change in unrealized gain on investments, net of tax</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="9%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>(980,000</font></b></p> </td>
        <td width="5%" valign=bottom style='border-bottom: solid white 1.0pt;background:white; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><b><font size=2>)</font></b></p> </td>
        <td width="1%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="9%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>(691,000</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid white 1.0pt;background:white; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=2>)</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="9%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="5%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="9%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=2>Total comprehensive income</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: double black 2.25pt;background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><b><font size=2>$</font></b></p> </td>
        <td width="9%" valign=bottom style='border-bottom: double black 2.25pt;background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>216,000</font></b></p> </td>
        <td width="5%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: double black 2.25pt;background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="9%" valign=bottom style='border-bottom: double black 2.25pt;background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>1,033,000</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr></table>
</div>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The Company does not have any additional transactions or other economic events that qualify as comprehensive income as defined under SFAS No. 130.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><font size=2>22</font></p>
<BR><BR>
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<P ALIGN=LEFT><FONT SIZE=2><A HREF="#toc">Table of Contents</A> </FONT></P>




<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2>Stock Compensation</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>On January 1, 2006, the Company adopted SFAS No.&nbsp;123 (revised 2004) (&#147;SFAS No.&nbsp;123R&#148;), </font><i><font size=2>Share-Based Payment</font></i><font size=2>, which addresses the accounting for stock-based payment transactions in which an enterprise receives employee services in exchange for (a)&nbsp;equity instruments of the enterprise or (b)&nbsp;liabilities that are based on the fair value of the enterprise&#146;s equity instruments or that may be settled by the issuance of such equity instruments. In January&nbsp;2005, the SEC issued SAB No.&nbsp;107, which provides supplemental implementation guidance for SFAS No.&nbsp;123R. SFAS No.&nbsp;123R eliminates the ability to account for stock-based compensation transactions using the intrinsic value method under Accounting Principles Board (&#147;APB&#148;) Opinion No.&nbsp;25, </font><i><font size=2>Accounting for Stock Issued to
Employees</font></i><font size=2>, and instead generally requires that such transactions be accounted for using a fair-value-based method. In accordance with the modified-prospective transition method, the Company&#146;s financial statements for prior periods have not been restated to reflect the impact of SFAS No. 123R. The Company uses the Black-Scholes-Merton (&#147;BSM&#148;) option-pricing model to determine the fair-value of stock-based awards.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The Company records compensation expense for employee stock options based on the estimated fair value of the options on the date of grant using the BSM model with the assumptions included in the table below. The Company uses historical data among other factors to estimate the expected price volatility, the expected option life and the expected forfeiture rate. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for the estimated life of the option. At December 31, 2007, the Company had one stock-based employee compensation plan. There were no option grants during 2006. During the year ended December 31, 2007, the Company issued 5,000 common share options. During the year ended December 31, 2006, the Company cancelled 150,000 common share options under this plan and did not issue any common share options. The cancelled options were voluntarily forfeited by Mr.&nbsp;Slye
in February 2006, for no consideration from the Company. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The assumptions made in estimating the fair value of the options on the grant date based upon the BSM option-pricing model are as follows for 2007:</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<div align=center>

<table border="0" cellspacing=0 cellpadding=0 width="30%" style='border-collapse:collapse'>
    <tr >
        <td width="67%" valign=top style='background:#D6F3E8'>
            <p style='margin-left:10.5pt;text-indent:-10.5pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Dividend yield</font></p> </td>
        <td width="32%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>0.00%</font></p> </td> </tr>
    <tr >
        <td width="67%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Expected volatility</font></p> </td>
        <td width="32%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>36.74%</font></p> </td> </tr>
    <tr >
        <td width="67%" valign=top style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Risk free interest rate</font></p> </td>
        <td width="32%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>4.93%</font></p> </td> </tr>
    <tr >
        <td width="67%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Expected lives</font></p> </td>
        <td NOWRAP width="32%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>10 years</font></p> </td> </tr></table>
</div>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2>Recently Adopted Accounting Pronouncements</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>In June 2006, the Financial Accounting Standards Board (&#147;FASB&#148;) issued Interpretation No. 48, &#147;Accounting for Uncertainty in Income Taxes &#151; an Interpretation of</font><font color="#0000FF"><font size=2> </font></font><font size=2>SFAS No. 109&#148; (&#147;FIN 48&#148;). The </font><font COLOR="#0000FF"><font SIZE=2>I</font></font><font size=2>nterpretation creates a single model to address accounting for uncertainty in tax positions. Specifically, the pronouncement prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Interpretation also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition of certain tax positions.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The Company adopted the provisions of FIN 48 effective January 1, 2007. The adoption of this accounting principle did not have an effect on the Company&#146;s financial statements at, and for the two</font><font color="#0000FF"><font size=2> </font></font><font size=2>years ended December 31, 2007</font><font color="#000080"><font size=2>. </font></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2>Recent accounting standards</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Management has reviewed recently issued, but not yet effective, accounting pronouncements and does not expect the implementation of these pronouncements to have a significant effect on the Company&#146;s financial statements.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>In February 2007, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 159, (SFAS 159), The Fair Value Option for Financial Assets and Financial Liabilities &#150; Including an amendment of FASB Statement No. 115 (Accounting for Certain Investments in Debt and Equity Securities). SFAS 159 provides companies with an option to report selected financial assets and liabilities at fair value and is effective for fiscal years beginning after November 15, 2007 with early adoption permitted. The Company is evaluating the effect, if any, that the adoption of SFAS 159 will have on its results of operations, financial position, and the related disclosures.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>In December 2007, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 160 (SFAS 160), Noncontrolling Interests in Consolidated Financial Statements &#150; an amendment of ARB No. 51(Consolidated Financial Statements). SFAS 160 establishes accounting and reporting standards for a noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. In addition, SFAS 160 requires certain consolidation procedures for consistency with the requirements of SFAS 141, Business Combinations. SFAS 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008 with earlier adoption prohibited. The Company is evaluating the effect, if any, that the adoption of SFAS 160 will have on its results of operations, financial position, and the related disclosures.</font><b><font size=2> </font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><font size=2>23</font></p>
<BR><BR>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2>Note 2. Investments</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The cost and estimated fair value of the investments (other than an investment accounted for under the equity method of accounting) are as follows: </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<div align=left>

<table border="0" cellspacing=0 cellpadding=0 width="100%" style='border-collapse:collapse'>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="3%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td colspan="2" valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>Cost</font></b></p> </td>
        <TD WIDTH="3%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td colspan="2" valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>Gross</font></b><br> <b><font size=1>unrealized</font></b><br> <b><font size=1>gain</font></b></p> </td>
        <TD WIDTH="3%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td colspan="2" valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>Gross</font></b><br> <b><font size=1>unrealized</font></b><br> <b><font size=1>loss</font></b></p> </td>
        <TD WIDTH="3%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td colspan="2" valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>Fair</font></b><br> <b><font size=1>value</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><b><font size=2>December 31, 2007</font></b></p> </td>
        <TD WIDTH="3%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='border-top:solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="3%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='border-top:solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="3%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="7%" VALIGN="BOTTOM" STYLE="border-top:solid black 1.0pt; background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="3%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='border-top:solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Treasury Bills</font></p> </td>
        <TD WIDTH="3%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="7%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>3,904,000</font></p> </td>
        <TD WIDTH="3%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="7%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>0</font></p> </td>
        <TD WIDTH="3%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <TD WIDTH="7%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>0</font></p> </td>
        <TD WIDTH="3%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="7%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>3,904,000</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Money Market Funds</font></p> </td>
        <TD WIDTH="3%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>1,365,000</font></p> </td>
        <TD WIDTH="3%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>0</font></p> </td>
        <TD WIDTH="3%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="7%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>0</font></p> </td>
        <TD WIDTH="3%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>1,365,000</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=2>Equity Securities</font></p> </td>
        <TD WIDTH="3%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>139,000</font></p> </td>
        <TD WIDTH="3%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>3,846,000</font></p> </td>
        <TD WIDTH="3%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="7%" VALIGN="BOTTOM" STYLE="border-bottom: solid black 1.0pt; background:#D6F3E8">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>(93,000</font></p> </td>
        <TD WIDTH="3%" VALIGN="BOTTOM" STYLE="border-bottom: solid #D6F3E8 1.0pt;background:#D6F3E8;">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=2>)</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>3,892,000</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="3%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>5,408,000</font></p> </td>
        <TD WIDTH="3%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>3,846,000</font></p> </td>
        <TD WIDTH="3%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="7%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>(93,000</font></p> </td>
        <TD WIDTH="3%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=2>)</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>9,161,000</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=2>Less Cash Equivalents</font></p> </td>
        <TD WIDTH="3%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>5,269,000</font></p> </td>
        <TD WIDTH="3%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>0</font></p> </td>
        <TD WIDTH="3%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="7%" VALIGN="BOTTOM" STYLE="border-bottom: solid black 1.0pt; background:#D6F3E8">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>0</font></p> </td>
        <TD WIDTH="3%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>5,269,000</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><b><font size=2>Total Investments, December 31, 2007</font></b></p> </td>
        <TD WIDTH="3%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: double black 2.25pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="7%" valign=bottom style='border-bottom: double black 2.25pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>139,000</font></p> </td>
        <TD WIDTH="3%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: double black 2.25pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="7%" valign=bottom style='border-bottom: double black 2.25pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>3,846,000</font></p> </td>
        <TD WIDTH="3%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: double black 2.25pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <TD WIDTH="7%" VALIGN="BOTTOM" STYLE="border-bottom: double black 2.25pt;background: white">
            <p style='margin-left:0pt;text-indent:2.25pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>(93,000</font></p> </td>
        <TD WIDTH="3%" VALIGN="BOTTOM" STYLE="border-bottom: double white 2.25pt;background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=2>)</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: double black 2.25pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="7%" valign=bottom style='border-bottom: double black 2.25pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>3,892,000</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr></table>
</div>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Realized gains and losses on investments are as follows:</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<div align=center>

<table border="0" cellspacing=0 cellpadding=0 width="80%" style='border-collapse:collapse'>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td colspan="5" valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>December 31,</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td colspan="2" valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>2007</font></b></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td colspan="2" valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>2006</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="11%" valign=bottom style='border-top: solid black 1.0pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="11%" valign=bottom style='border-top: solid black 1.0pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Gross Realized Gains</font></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><b><font size=2>$</font></b></p> </td>
        <td width="11%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>0</font></b></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="11%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>1,767,000</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=2>Gross Realized Losses</font></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="11%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>0</font></b></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="11%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>0</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><b><font size=2>Net Realized Gain</font></b></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: double black 2.25pt;background: #D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><b><font size=2>$</font></b></p> </td>
        <td width="11%" valign=bottom style='border-bottom: double black 2.25pt;background: #D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>0</font></b></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: double black 2.25pt;background: #D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="11%" valign=bottom style='border-bottom: double black 2.25pt;background: #D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>1,767,000</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr></table>
</div>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Prior to February 15, 2006, the Company&#146;s significant investment in equity securities consisted of 569,615 shares of common stock of August Technology Corporation (&#147;August&#148;), which had an approximate cost of $57,000. Rudolph Technologies, Inc. (&#147;Rudolph&#148;) acquired August on February 15, 2006. As a result of Rudolph&#146;s acquisition of August, the Company received 347,224 shares of Rudolph common stock and $1,015,891 in cash. At December 31, 2007 and 2006, the Company&#146;s significant investment in equity securities is 343,267 shares of Rudolph. As of December 31, 2007, the aggregate value of the Company&#146;s Rudolph shares as reported on the Nasdaq Stock Exchange was approximately $3,886,000 with an approximate cost of $45,000.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2>Investment Reported on Equity Method</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>At December 31, 2007, the Company owned 551,759 shares of PPT, which is 5.6% (3.7% as of March 11, 2008) of PPT&#146;s outstanding common stock. The fair value of its holdings based on the quoted market price at December 31, 2007 was approximately $66,000 with an approximate cost of $2,434,000.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Since the Company owns approximately 5.6% of PPT&#146;s outstanding stock and one of the PPT directors is an officer in the Company, it has been determined that the Company has &#147;significant influence&#148; over the operations of PPT, and as a result its ownership interest should be reported using the equity method of accounting for investments.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Under the equity method of accounting, the Company&#146;s proportionate share of PPT net income or loss through December 31, 2007 is not included in the Company&#146;s net income (loss) with a corresponding increase or decrease in the carrying value of its investment as of 2004, the Company has exhausted it&#146;s investment in PPTV with our share of the loss. All losses in excess of invested amounts are not recognized in the financial statements, but rather are suspended and applied against future equity in earnings for the investee until exhausted. At December 31, 2007, the Company had approximately $1,443,000 in suspended losses from its investment in PPT that will be used to offset future recognition of equity method earnings from the investment.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><font size=2>24</font></p>
<BR><BR>
<HR SIZE=3 COLOR=GRAY NOSHADE>
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<P ALIGN=LEFT><FONT SIZE=2><A HREF="#toc">Table of Contents</A> </FONT></P>




<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2>Note 3. Inventories</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Inventories used in the determination of cost of goods sold are as follows: </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<div align=center>

<table border="0" cellspacing=0 cellpadding=0 width="80%" style='border-collapse:collapse'>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align: left;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td colspan="2" valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>December 31,</font></b><br> <b><font size=1>2007</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Raw Materials</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="10%" valign=bottom style='border-top: solid black 1.0pt;background: #D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>694,000</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Work In Process</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="10%" valign=bottom style='background:white; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>170,000</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=2>Finished Goods</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="10%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>163,000</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><b><font size=2>Total Inventories</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: double black 2.25pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><b><font size=2>$</font></b></p> </td>
        <td width="10%" valign=bottom style='border-bottom: double black 2.25pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>1,027,000</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr></table>
</div>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2>Note 4. Property and Equipment</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The following is a summary of property and equipment:</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<div align=center>

<table border="0" cellspacing=0 cellpadding=0 width="80%" style='border-collapse:collapse'>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align: left;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td colspan="2" valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>December 31,</font></b><br> <b><font size=1>2007</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Equipment</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="10%" valign=bottom style='border-top: solid black 1.0pt;background: #D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>316,000</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Furniture and Fixtures</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="10%" valign=bottom style='background:white; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>501,000</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Building</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="10%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>1,370,000</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=2>Land</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="10%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>415,000</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="10%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>2,602,000</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=2>Less Accumulated Depreciation</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="10%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>1,144,000</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><b><font size=2>Total Property and Equipment</font></b></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: double black 2.25pt;background: #D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><b><font size=2>$</font></b></p> </td>
        <td width="10%" valign=bottom style='border-bottom: double black 2.25pt;background: #D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>1,458,000</font></b></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr></table>
</div>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2>Note 5. Accrued Expenses</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Accrued expenses include the following:</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<div align=center>

<table border="0" cellspacing=0 cellpadding=0 width="80%" style='border-collapse:collapse'>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align: left;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td colspan="2" valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>December 31,</font></b><br> <b><font size=1>2007</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="10%" valign=bottom style='border-top: solid black 1.0pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Wages and Commissions</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="10%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>219,000</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=2>Other</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="10%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>51,000</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><b><font size=2>Total Accrued Expenses</font></b></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: double black 2.25pt;background: #D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><b><font size=2>$</font></b></p> </td>
        <td width="10%" valign=bottom style='border-bottom: double black 2.25pt;background: #D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>270,000</font></b></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr></table>
</div>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2>Note 6. Commitments</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2>Lease commitments</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The Company is leasing office equipment under operating leases expiring at various dates through 2010.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Minimum lease payments required under non-cancelable operating leases are as follows:</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<div align=center>

<table border="0" cellspacing=0 cellpadding=0 width="80%" style='border-collapse:collapse'>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white;border-bottom: 1px solid black'>
            <p style='margin-left:0pt;text-indent:0pt;text-align: left;margin-top:0in;margin-bottom:0pt'><b><font size=1>Year</font></b></p> </td>
        <td width="4%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <TD COLSPAN="2" VALIGN="BOTTOM" STYLE="background:white;border-bottom: 1px solid black" WIDTH="2%">
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>Amount</font></b></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="4%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="10%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>2008</font></p> </td>
        <td width="4%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <TD WIDTH="10%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>32,000</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>2009</font></p> </td>
        <td width="4%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="10%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>21,000</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>2010</font></p> </td>
        <td width="4%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;border-bottom: solid black 1.0pt; ">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="10%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;border-bottom: solid black 1.0pt; ">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>21,000</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><b><font size=2>Total Minimum Lease Payments</font></b></p> </td>
        <td width="4%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="border-bottom: double black 2.25pt;background: white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><b><font size=2>$</font></b></p> </td>
        <TD WIDTH="10%" VALIGN="BOTTOM" STYLE="border-bottom: double black 2.25pt;background: white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>74,000</font></b></p> </td>
        <TD WIDTH="2%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr></table>
</div>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Rental expense charged to operations was $32,000 and $33,000 for years ended December 31, 2007 and 2006, respectively.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><font size=2>25</font></p>
<BR><BR>
<HR SIZE=3 COLOR=GRAY NOSHADE>
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<P ALIGN=LEFT><FONT SIZE=2><A HREF="#toc">Table of Contents</A> </FONT></P>





<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2>Note 7. Common Stock Options and Stock Purchase Plan</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2>Stock-based compensation</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The Company has a stock option plan and an employee stock purchase and bonus plan. Under the 1997 Stock Option Plan, the Company is authorized to grant up to 450,000 shares of its Common Stock. The Company granted one stock option for 5,000 shares under this plan during 2007, and at December 31, 2007, 30,780 shares were granted and exercisable under this plan. Under the Employee Stock Purchase and Bonus Plan, the Company is authorized to sell and issue up to 150,000 shares of its Common Stock to its full-time employees. During 2007 and 2006, shares of 1,374 and 1,603 respectively, were issued under this plan. At December 31, 2007, shares of 87,905 were available for future issuance.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2>Stock options</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The 1997 Stock Option Plan includes both nonqualified and incentive stock options. Payment for the shares may be made in cash, shares of the Company&#146;s Common Stock or a combination thereof. Under the terms of the plan, incentive stock options are granted at 100% of fair market value on the date of grant and may be exercised at various times depending upon the terms of the option. The nonqualified stock options were granted to directors to purchase shares of the Company&#146;s Common Stock. All existing options expire 10 years from the date of grant or one year from the date of death.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<div align=left>

<table border="0" cellspacing=0 cellpadding=0 width="65%" style='border-collapse:collapse'>
    <tr >
        <td width="100%" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>The following table summarizes the activity for outstanding incentive stock options:</font></p> </td> </tr></table>
</div>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<div align=left>

<table border="0" cellspacing=0 cellpadding=0 width="100%" style='border-collapse:collapse'>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td colspan="9" valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>Options Outstanding</font></b></p> </td>
        <td  valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='border-bottom: solid black 1.0pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>Number of</font></b><br> <b><font size=1>Shares</font></b></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td colspan="2" valign=bottom style='border-top:solid black 1.0pt; border-left:none;border-bottom:solid black 1.0pt;border-right:none;  background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>Weighted-</font></b><br> <b><font size=1>Average</font></b><br> <b><font size=1>Exercise</font></b><br> <b><font size=1>Price</font></b></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='border-top:solid black 1.0pt; border-left:none;border-bottom:solid black 1.0pt;border-right:none;  background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>Weighted-</font></b><br> <b><font size=1>Average</font></b><br> <b><font size=1>Remaining</font></b><br> <b><font size=1>Contractual</font></b><br> <b><font size=1>Term</font></b><br> <b><font size=1>(in years)</font></b></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td colspan="2" valign=bottom style='border-top:solid black 1.0pt; border-left:none;border-bottom:solid black 1.0pt;border-right:none;  background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>Aggregate</font></b><br> <b><font size=1>Intrinsic Value</font></b><br> <b><font size=1>(1)</font></b></p> </td>
        <td  valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0.5pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="7%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="6%" valign=bottom style='border-top:solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="8%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="9%" valign=bottom style='border-top:solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td  valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0.5pt'><FONT SIZE="2">Balance at January 1, 2006 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="7%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">251,650 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">$ </FONT></p> </td>
        <td width="6%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">3.02 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">4.9 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="9%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td  valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
<p style='margin-left:0pt;text-indent:.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><FONT SIZE="2">Granted </FONT></p> </td>
        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="7%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">0 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="6%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">0 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="8%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="9%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td  valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><FONT SIZE="2">Exercised </FONT></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="7%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">(55,920 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">) </FONT></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="6%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">2.57 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">3.9 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="9%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td  valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
<p style='margin-left:0pt;text-indent:.25in;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><FONT SIZE="2">Canceled/forfeited/expired </FONT></p> </td>
        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="7%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">(150,000 </FONT></p> </td>
        <td width="3%" valign=bottom style='border-bottom: solid white 1.0pt;background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">) </FONT></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="6%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">4.16 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="8%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.0pt;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.0pt;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="9%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.0pt;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td  valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><FONT SIZE="2">&nbsp; </FONT></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0.5pt'><FONT SIZE="2">Balance at December 31, 2006 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="7%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">45,730 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="6%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">2.77 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">3.9 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="9%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td  valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
<p style='margin-left:0pt;text-indent:.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><FONT SIZE="2">Granted </FONT></p> </td>
        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="7%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">0 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="6%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="8%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="9%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td  valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><FONT SIZE="2">Exercised </FONT></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="7%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">(18,450 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">) </FONT></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="6%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">2.22 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="9%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td  valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
<p style='margin-left:0pt;text-indent:.25in;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><FONT SIZE="2">Canceled/forfeited/expired </FONT></p> </td>
        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="7%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">(1,500 </FONT></p> </td>
        <td width="3%" valign=bottom style='border-bottom: solid white 1.0pt;background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">) </FONT></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="6%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">2.44 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="8%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.0pt;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.0pt;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="9%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.0pt;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td  valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><FONT SIZE="2">&nbsp; </FONT></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><FONT SIZE="2">Balance at December 31, 2007 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="7%" valign=bottom style='border-bottom: double black 2.25pt;background: #D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">25,780 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='border-bottom: double black 2.25pt;background: #D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">$ </FONT></p> </td>
        <td width="6%" valign=bottom style='border-bottom: double black 2.25pt;background: #D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">3.19 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.5pt;margin-bottom:0pt'><FONT SIZE="2">5.2 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0pt'><FONT SIZE="2">$ </FONT></p> </td>
        <td width="9%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.5pt;margin-bottom:0pt'><FONT SIZE="2">69,614 </FONT> </p> </td>
        <td  valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><FONT SIZE="2">&nbsp; </FONT></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
<p style='margin-left:0pt;text-indent:.125in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><FONT SIZE="2">Vested and exercisable as of December 31, 2007 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="7%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">25,780 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">$ </FONT></p> </td>
        <td width="6%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">3.19 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="8%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">5.2 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">$ </FONT></p> </td>
        <td width="9%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">69,614 </FONT></p> </td>
        <td  valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:.125in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><FONT SIZE="2">Vested and expected to vest as of December 31, 2007 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="7%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">25,780 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">$ </FONT></p> </td>
        <td width="6%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">3.19 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">5.2 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">$ </FONT></p> </td>
        <td width="9%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">69,614 </FONT></p> </td>
        <td  valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td> </tr></table>
</div>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<div align=left>

<table border="0" cellspacing=0 cellpadding=0 width="100%" style='border-collapse:collapse'>
    <tr >
        <td width="3%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>(1)</font></p> </td>
        <td width="96%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>The aggregate intrinsic value is calculated as approximately the difference between the weighted average exercise price of the underlying awards and the Company&#146;s estimated current fair market value at December 31, 2007. </font></p> </td> </tr></table>
</div>


<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><font size=2>26</font></p>
<BR><BR>
<HR SIZE=3 COLOR=GRAY NOSHADE>
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<P ALIGN=LEFT><FONT SIZE=2><A HREF="#toc">Table of Contents</A> </FONT></P>





<div align=left>
<table border="0" cellspacing=0 cellpadding=0 width="64%" style='border-collapse:collapse'>
    <tr >
        <td width="100%" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>The following table summarizes the activity for outstanding director stock options:</font></p> </td> </tr></table>
</div>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<div align=left>

<table border="0" cellspacing=0 cellpadding=0 width="100%" style='border-collapse:collapse'>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td colspan="9" valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>Options Outstanding</font></b></p> </td>
        <td  valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="8%" valign=bottom style='border-bottom: solid black 1.0pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>Number of</font></b><br> <b><font size=1>Shares</font></b></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td colspan="2" valign=bottom style='border-top:solid black 1.0pt; border-left:none;border-bottom:solid black 1.0pt;border-right:none;  background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>Weighted-</font></b><br> <b><font size=1>Average</font></b><br> <b><font size=1>Exercise</font></b><br> <b><font size=1>Price</font></b></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="9%" valign=bottom style='border-top:solid black 1.0pt; border-left:none;border-bottom:solid black 1.0pt;border-right:none;  background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>Weighted-</font></b><br> <b><font size=1>Average</font></b><br> <b><font size=1>Remaining</font></b><br> <b><font size=1>Contractual</font></b><br> <b><font size=1>Term</font></b><br> <b><font size=1>(in years)</font></b></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td colspan="2" valign=bottom style='border-top:solid black 1.0pt; border-left:none;border-bottom:solid black 1.0pt;border-right:none;  background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>Aggregate</font></b><br> <b><font size=1>Intrinsic Value</font></b><br> <b><font size=1>(1)</font></b></p> </td>
        <td  valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0.5pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="8%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="6%" valign=bottom style='border-top:solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="9%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="9%" valign=bottom style='border-top:solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td  valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0.5pt'><FONT SIZE="2">Balance at January 1, 2006 </FONT></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">36,000 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">$ </FONT></p> </td>
        <td width="6%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">2.98 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="9%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">4.9 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="9%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td  valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
<p style='margin-left:0pt;text-indent:.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><FONT SIZE="2">Granted </FONT></p> </td>
        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="8%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">0 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="6%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">0 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="9%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="9%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td  valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><FONT SIZE="2">Exercised </FONT></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">(36,000 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">) </FONT></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="6%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">2.98 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="9%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">4.9 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="9%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td  valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
<p style='margin-left:0pt;text-indent:.25in;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><FONT SIZE="2">Canceled/forfeited/expired </FONT></p> </td>
        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="8%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">0 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="6%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">0 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="9%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.0pt;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.0pt;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="9%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.0pt;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td  valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><FONT SIZE="2">&nbsp; </FONT></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><FONT SIZE="2">Balance at December 31, 2006 </FONT></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">0 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="6%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">0 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="9%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="9%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td  valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
<p style='margin-left:0pt;text-indent:.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><FONT SIZE="2">Granted </FONT></p> </td>
        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="8%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">5,000 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="6%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">5.36 </FONT> </p> </td>
        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="9%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">9.3 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="9%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td  valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><FONT SIZE="2">Exercised </FONT></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">0 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="6%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">0 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="9%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="9%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td  valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
<p style='margin-left:0pt;text-indent:.25in;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><FONT SIZE="2">Canceled/forfeited/expired </FONT></p> </td>
        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="8%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">0 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="6%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">0 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="9%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.0pt;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.0pt;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="9%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.0pt;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td  valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><FONT SIZE="2">&nbsp; </FONT></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><FONT SIZE="2">Balance at December 31, 2007 </FONT></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="8%" valign=bottom style='border-bottom: double black 2.25pt;background: #D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">5,000 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='border-bottom: double black 2.25pt;background: #D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">$ </FONT></p> </td>
        <td width="6%" valign=bottom style='border-bottom: double black 2.25pt;background: #D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">5.36 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="9%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.5pt;margin-bottom:0pt'><FONT SIZE="2">9.3 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0pt'><FONT SIZE="2">$ </FONT></p> </td>
        <td width="9%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.5pt;margin-bottom:0pt'><FONT SIZE="2">2,650 </FONT></p> </td>
        <td  valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><FONT SIZE="2">&nbsp; </FONT></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
<p style='margin-left:0pt;text-indent:.125in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><FONT SIZE="2">Vested and exercisable as of December 31, 2007 </FONT></p> </td>
        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="8%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">5,000 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">$ </FONT></p> </td>
        <td width="6%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">5.36 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="9%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">$ </FONT></p> </td>
        <td width="9%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">2,650 </FONT></p> </td>
        <td  valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:.125in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><FONT SIZE="2">Vested and expected to vest as of December 31, 2007 </FONT></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="8%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">5,000 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">$ </FONT></p> </td>
        <td width="6%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">5.36 </FONT></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="9%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">$ </FONT></p> </td>
        <td width="9%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">2,650 </FONT></p> </td>
        <td  valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td> </tr></table>
</div>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<div align=left>

<table border="0" cellspacing=0 cellpadding=0 width="100%" style='border-collapse:collapse'>
    <tr >
        <td width="3%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>(1)</font></p> </td>
        <td width="96%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>The aggregate intrinsic value is calculated as approximately the difference between the weighted average exercise price of the underlying awards and the Company&#146;s estimated current fair market value at December 31, 2007. </font></p> </td> </tr></table>
</div>


<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The Company recognized stock-based compensation expense of approximately $9,000 and $8,000 during the year ending December&nbsp;31, 2007 and 2006, respectively, as a result of the adoption of SFAS No.&nbsp;123R. As of December 31, 2007 and 2006, respectively there was no unrecognized compensation cost related to stock options that is expected to be recognized over a period of 1-2 years. To the extent the forfeiture rate is different than we have anticipated, stock-based compensation related to these awards will be different from our expectations.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2>Stock purchase plan</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The Employee Stock Purchase and Bonus Plan (the &#147;Employee Stock Plan&#148;) allows employees to set aside up to 10% of their earnings for the purchase of shares of the Company&#146;s Common Stock. The purchase price is the lower of 85% of the market value at the date of the grant or the exercise date, which is six months from the date of the grant.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><font size=2>27</font></p>
<BR><BR>
<HR SIZE=3 COLOR=GRAY NOSHADE>
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<P ALIGN=LEFT><FONT SIZE=2><A HREF="#toc">Table of Contents</A> </FONT></P>



<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2>Note 8. Benefit Plans</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2>Employee stock ownership plan</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The Company sponsors an employee stock ownership plan (&#147;ESOP&#148;) that covers substantially all employees who work 1,000 or more hours during the year. The ESOP has, at various times, secured financing from the Company to purchase the Company&#146;s shares on the open market. When the Plan purchases shares with the proceeds of the Company loans, the shares are pledged as collateral for its debt. The shares are maintained in a suspense account until released and allocated to participant accounts. The Plan owns 141,088 shares of the Company&#146;s stock at December 31, 2007. All shares held by the Plan have been released and allocated. The dividends paid by the Company on shares held by the Plan are allocated to the participant accounts. The Plan had no debt to the Company at December 31, 2007.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>ESOP compensation expense was $18,000 for both years ended December 31, 2007 and 2006.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>In the event a terminated ESOP participant desires to sell his or her shares of the Company&#146;s stock and the shares are not readily tradable, the Company may be required to purchase the shares from the participant at their fair market value. At December 31, 2007, 141,088 shares of the Company&#146;s stock, with an aggregate fair market value of approximately $831,000, are held by ESOP participants who, if terminated, would be subject to the repurchase requirement.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2>Profit sharing plan and savings plan</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The Company has a salary reduction and profit sharing plan which conforms to IRS provisions for 401(k) plans. The Company may make profit sharing contributions with the approval of the Board of Directors. The Board of Directors decided to make no contribution for the years 2007 and 2006 other than its matching of 401(k) salary reductions, which totaled $52,000 and $50,000 for 2007 and 2006, respectively.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><font size=2>28</font></p>
<BR><BR>
<HR SIZE=3 COLOR=GRAY NOSHADE>
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<P ALIGN=LEFT><FONT SIZE=2><A HREF="#toc">Table of Contents</A> </FONT></P>




<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2>Note 9. Income Taxes</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The components of the income tax provision for the years ended December 31, 2007 and 2006 are as follows:</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<div align=center>
<table border="0" cellspacing=0 cellpadding=0 width="80%" style='border-collapse:collapse'>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align: left;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td colspan="2" valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>2007</font></b></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td colspan="2" valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>2006</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
<p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <TD WIDTH="10%" VALIGN="BOTTOM" STYLE="border-top:solid black 1.0pt; background:white">
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
<p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="10%" valign=bottom style='border-top: solid black 1.0pt;background: white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:white'>
<p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><FONT SIZE="2">Current: </FONT></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
<p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <TD WIDTH="10%" VALIGN="BOTTOM" STYLE="background:white">
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
<p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="10%" valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:white'>
<p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
<p style='margin-left:25.3pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><FONT SIZE="2">Federal </FONT></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
<p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2"><B>$</B> </FONT></p> </td>
        <TD WIDTH="10%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2"><B>469,000</B> </FONT></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
<p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">$ </FONT></p> </td>
        <td width="10%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">869,000 </FONT></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
<p style='margin-left:25.3pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><FONT SIZE="2">State </FONT></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
<p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <TD WIDTH="10%" VALIGN="BOTTOM" STYLE="background:white">
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2"><B>24,000</B> </FONT></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
<p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="10%" valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">102,000 </FONT></p> </td>
        <td width="2%" valign=bottom style='background:white'>
<p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><FONT SIZE="2">Deferred: </FONT></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
<p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <TD WIDTH="10%" VALIGN="BOTTOM" STYLE="background:white">
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
<p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="10%" valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:white'>
<p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
<p style='margin-left:25.3pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><FONT SIZE="2">Federal </FONT></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
<p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <TD WIDTH="10%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2"><B>(88,000</B> </FONT></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
<p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2"><B>)</B> </FONT></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="10%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">60,000 </FONT></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
<p style='margin-left:25.3pt;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><FONT SIZE="2">State </FONT></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <TD WIDTH="10%" VALIGN="BOTTOM" STYLE="border-bottom: solid black 1.0pt; background:white">
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="10%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">0 </FONT></p> </td>
        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><FONT SIZE="2">&nbsp; </FONT></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><FONT SIZE="2"><B>Total Federal and State Income Taxes</B> </FONT></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt;background: #D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2"><B>$</B> </FONT></p> </td>
        <TD WIDTH="10%" VALIGN="BOTTOM" STYLE="border-bottom: solid black 1.0pt;background: #D6F3E8">
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2"><B>405,000</B> </FONT></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt;background: #D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">$ </FONT></p> </td>
        <td width="10%" valign=bottom style='border-bottom: solid black 1.0pt;background: #D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2"><B>1,031,000</B> </FONT></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><FONT SIZE="2">&nbsp; </FONT></p> </td> </tr></table>
</div>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The provision for income taxes for the years ended December 31, 2007 and 2006 differs from the amount obtained by applying the U.S. federal income tax rate to pretax income due to the following: </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<div align=center>

<table border="0" cellspacing=0 cellpadding=0 width="80%" style='border-collapse:collapse'>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align: left;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td colspan="2" valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>2007</font></b></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td colspan="2" valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>2006</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
<p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <TD WIDTH="10%" VALIGN="BOTTOM" STYLE="border-top:solid black 1.0pt; background:white">
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
<p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="10%" valign=bottom style='border-top: solid black 1.0pt;background: white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:white'>
<p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><FONT SIZE="2">Computed &#147;Expected&#148; Tax Expense </FONT></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
<p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">$ </FONT></p> </td>
        <TD WIDTH="10%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">496,000 </FONT></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
<p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">$ </FONT></p> </td>
        <td width="10%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">895,000 </FONT></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><FONT SIZE="2">Increase (Decrease) in Taxes Resulting From: </FONT></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
<p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <TD WIDTH="10%" VALIGN="BOTTOM" STYLE="background:white">
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
<p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="10%" valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:white'>
<p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
<p style='margin-left:25.3pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><FONT SIZE="2">State Income Taxes, net of Federal Benefit </FONT></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
<p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <TD WIDTH="10%" VALIGN="BOTTOM" STYLE="background:white">
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">31,000 </FONT></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
<p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="10%" valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">113,000 </FONT></p> </td>
        <td width="2%" valign=bottom style='background:white'>
<p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
<p style='margin-left:25.3pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><FONT SIZE="2">Credits </FONT></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
<p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <TD WIDTH="10%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">(34,000 </FONT></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
<p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">) </FONT></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="10%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">(37,000 </FONT></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">) </FONT></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
<p style='margin-left:25.3pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><FONT SIZE="2">Other </FONT> </p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
<p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt;background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <TD WIDTH="10%" VALIGN="BOTTOM" STYLE="border-bottom: solid black 1.0pt;background:white">
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">(88,000 </FONT></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:white">
<p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">) </FONT></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt;background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="10%" valign=bottom style='border-bottom: solid black 1.0pt;background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">60,000 </FONT></p> </td>
        <td width="2%" valign=bottom style='background:white'>
<p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><FONT SIZE="2">&nbsp; </FONT></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><FONT SIZE="2"><B>Total Federal and State Income Taxes</B> </FONT></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='border-bottom: double black 2.25pt;background: #D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">$ </FONT></p> </td>
        <TD WIDTH="10%" VALIGN="BOTTOM" STYLE="border-bottom: double black 2.25pt;background: #D6F3E8">
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">405,000 </FONT></p> </td>
        <TD WIDTH="4%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><FONT SIZE="2">&nbsp; </FONT></p> </td>
        <td width="2%" valign=bottom style='border-bottom: double black 2.25pt;background: #D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">$ </FONT></p> </td>
        <td width="10%" valign=bottom style='border-bottom: double black 2.25pt;background: #D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><FONT SIZE="2">1,031,000 </FONT></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><FONT SIZE="2">&nbsp; </FONT></p> </td> </tr></table>
</div>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The components of the net deferred tax asset (liability) consist of:</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<div align=center>

<table border="0" cellspacing=0 cellpadding=0 width="80%" style='border-collapse:collapse'>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align: left;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td colspan="2" valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>2007</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Deferred Tax Assets:</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="10%" valign=bottom style='border-top: solid black 1.0pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:25.3pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Vacation Disallowance</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="10%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>24,000</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:25.3pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Allowance for Doubtful Accounts</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="10%" valign=bottom style='background:white; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>7,000</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:25.3pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Investment in Equity Method Investee</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="10%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>927,000</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:25.3pt;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=2>Valuation Allowance</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="10%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>(927,000</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid white 1.0pt;background:white; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=2>)</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><b><font size=2>Total Deferred Tax Assets</font></b></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt;background: #D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="10%" valign=bottom style='border-bottom: solid black 1.0pt;background: #D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>31,000</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Deferred Tax Liabilities:</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="10%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:25.3pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Prepaid Expenses</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="10%" valign=bottom style='background:white; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>30,000</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:25.3pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Depreciation</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="10%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>66,000</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:25.3pt;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=2>Net Unrealized Gain on Investments</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="10%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>1,308,000</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><b><font size=2>Total Deferred Tax Liabilities</font></b></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: double black 2.25pt;background: #D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="10%" valign=bottom style='border-bottom: double black 2.25pt;background: #D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>1,404,000</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><b><font size=2>Net Deferred Tax Asset (Liability)</font></b></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: double black 2.25pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="10%" valign=bottom style='border-bottom: double black 2.25pt; background:white'>
            <p style='margin-left:0pt;text-indent:2.25pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>(1,373,000</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: double white 2.25pt;background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=2>)</font></p> </td> </tr></table>
</div>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>On January 1, the Company adopted the provisions of FIN 48, which requires that the Company recognize in its consolidated financial statements only those tax positions that are &#147;more-likely-than-not&#148; of being sustained as of the adoption date, based on the technical merits of the position. As a result of the implementation of FIN 48, the Company performed a comprehensive review of its material tax positions in accordance with recognition and measurement standards established by FIN 48.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The Company is subject to the following material taxing jurisdictions: U.S. and Minnesota. The tax years that remain open to examination by the Internal Revenue Service are 2004 through 2007. The tax years that remain open to examination by the Minnesota Department of Revenue are 2003 through 2007. </font><font color="#000080"><font size=2> </font></font><font size=2>Our policy is to recognize interest and</font><font color="#000080"><font size=2> </font></font><font size=2>penalties related to uncertain tax benefits in income tax expense. We have no accrued interest or penalties related to uncertain tax</font><font color="#000080"><font size=2> </font></font><font size=2>positions as of January 1, 2007 or December 31, 2007.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><font size=2>29</font></p>
<BR><BR>
<HR SIZE=3 COLOR=GRAY NOSHADE>
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<P ALIGN=LEFT><FONT SIZE=2><A HREF="#toc">Table of Contents</A> </FONT></P>





<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2>Note 10. Segment Information</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The Company has three reportable operating segments based on the nature of its product lines: Production Monitoring, Character Recognition, and Investments. The Production Monitoring Division manufactures and markets a complete line of speed monitoring and motor control systems for industrial machinery. The Character Recognition Division designs and markets a desktop software-based system that reads hand printed characters, checkmarks, and bar code information from scanned or faxed forms. Sales of this system include software and can include hardware. The Investments Division holds investments in marketable and non-marketable securities.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The accounting policies of the segments are the same as those described in Note 1. In evaluating segment performance, management focuses on sales and income before taxes. The Company has no inter-segment sales.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The following is financial information relating to the continuing operating segments: </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<div align=center>

<table border="0" cellspacing=0 cellpadding=0 width="80%" style='border-collapse:collapse'>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align: left;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td colspan="2" valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>2007</font></b></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td colspan="2" valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>2006</font></b></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='border-top: solid black 1.0pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='border-top:solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0.5pt'><b><font size=2>Net revenues</font></b></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='background:white; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:.2in;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Production monitoring</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><b><font size=2>$</font></b></p> </td>
        <td width="12%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>6,494,000</font></b></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="12%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>5,228,000</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.2in;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Character recognition</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='background:white; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>598,000</font></b></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>528,000</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:.2in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=2>Investments</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>0</font></b></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>0</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.2in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=2>Total</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='border-bottom: solid black 1.0pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='border-bottom: solid black 1.0pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>7,092,000</font></b></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='border-bottom: solid black 1.0pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='border-bottom: solid black 1.0pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>5,756,000</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0.5pt'><b><font size=2>Sales in foreign countries</font></b></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:.2in;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Production monitoring</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>397,000</font></b></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>357,000</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.2in;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Character recognition</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='background:white; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>30,000</font></b></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>19,000</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:.2in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=2>Investments</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>0</font></b></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>0</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.2in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=2>Total</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='border-bottom: solid black 1.0pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='border-bottom: solid black 1.0pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>427,000</font></b></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='border-bottom: solid black 1.0pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='border-bottom: solid black 1.0pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>376,000</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0.5pt'><b><font size=2>Interest income</font></b></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:.2in;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Production monitoring</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>44,000</font></b></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>68,000</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.2in;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Character recognition</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='background:white; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>0</font></b></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>0</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:.2in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=2>Investments</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>196,000</font></b></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>223,000</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.2in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=2>Total</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='border-bottom: solid black 1.0pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='border-bottom: solid black 1.0pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>240,000</font></b></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='border-bottom: solid black 1.0pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='border-bottom: solid black 1.0pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>292,000</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0.5pt'><b><font size=2>Depreciation expense</font></b></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:.2in;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Production monitoring</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>76,000</font></b></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>75,000</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.2in;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Character recognition</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='background:white; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>6,000</font></b></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>1,000</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:.2in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=2>Investments</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>0</font></b></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>0</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.2in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=2>Total</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='border-bottom: solid black 1.0pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='border-bottom: solid black 1.0pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>82,000</font></b></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='border-bottom: solid black 1.0pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='border-bottom: solid black 1.0pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>76,000</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0.5pt'><b><font size=2>Capital purchases</font></b></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:.2in;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Production monitoring</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>269,000</font></b></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>6,000</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.2in;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Character recognition</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='background:white; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>0</font></b></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>0</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:.2in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=2>Investments</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>0</font></b></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>0</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.2in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=2>Total</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='border-bottom: solid black 1.0pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='border-bottom: solid black 1.0pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>269,000</font></b></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='border-bottom: solid black 1.0pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='border-bottom: solid black 1.0pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>6,000</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0.5pt'><b><font size=2>Total assets</font></b></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:.2in;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Production monitoring</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>2,271,000</font></b></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>3,994,000</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.2in;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Character recognition</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='background:white; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>0</font></b></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>0</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:.2in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=2>Investments</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>10,794,000</font></b></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>9,876,000</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.2in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=2>Total</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='border-bottom: solid black 1.0pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='border-bottom: solid black 1.0pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>13,065,000</font></b></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='border-bottom: solid black 1.0pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='border-bottom: solid black 1.0pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>13,870,000</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0.5pt'><b><font size=2>Income before income taxes</font></b></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:.2in;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Production monitoring</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>1,638,000</font></b></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>1,098,000</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.2in;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0.5pt'><font size=2>Character recognition</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='background:white; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>(29,000</font></b></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><b><font size=2>)</font></b></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>(47,000</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=2>)</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:.2in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=2>Investments</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>(8,000</font></b></p> </td>
        <td width="3%" valign=bottom style='border-bottom: solid #D6F3E8 1.0pt;background:#D6F3E8; '>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><b><font size=2>)</font></b></p> </td>
        <td width="3%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>1,704,000</font></p> </td>
        <td width="3%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.2in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=2>Total</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='border-bottom: solid black 1.0pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='border-bottom: solid black 1.0pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><b><font size=2>1,601,000</font></b></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom style='border-bottom: solid black 1.0pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" valign=bottom style='border-bottom: solid black 1.0pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>2,755,000</font></p> </td>
        <td width="3%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr></table>
</div>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><font size=2>30</font></p>
<BR><BR>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=3><A NAME="changes"></A>Item 8&#151;Changes In and Disagreements with Accountants on Accounting and Financial Disclosure</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=3>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>None.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=3><A NAME="controls"></A>Item 8A(T)&#151;Controls and Procedures</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><i><b><font size=2>Management&#146;s Report on Internal Control over Financial Reporting</font></b></i></p>

<p style=' margin-bottom:5pt; margin-top:0pt;text-align:left;'><font size=2>Under Section 404 of the Sarbanes-Oxley Act of 2002, our management is required to assess the effectiveness of the Company&#146;s internal control over financial reporting as of the end of each fiscal year and report, based on that assessment, whether the Company&#146;s internal control over financial reporting is effective. </font></p>

<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=2>Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The Company&#146;s internal control over financial reporting is designed to provide reasonable assurance as to the reliability of the Company&#146;s financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. </font></p>

<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=2>Internal control over financial reporting, no matter how well designed, has inherent limitations. Therefore, internal control over financial reporting determined to be effective can provide only reasonable assurance with respect to financial statement preparation and may not prevent or detect all misstatements. Moreover, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. </font></p>

<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=2>The Company&#146;s management has assessed the effectiveness of the Company&#146;s internal control over financial reporting as of December 31, 2007. In making this assessment, the Company used the criteria established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in &#147;Internal Control-Integrated Framework.&#148; These criteria are in the areas of control environment, risk assessment, control activities, information and communication, and monitoring. The Company&#146;s assessment included extensive documenting, evaluating and testing the design and operating effectiveness of its internal control over financial reporting. </font></p>

<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=2>Based on the Company&#146;s processes and assessment, as described above, management has concluded that, as of December 31, 2007, the Company&#146;s internal control over financial reporting was effective. </font></p>

<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=2>This annual report does not include an attestation report of the Company&#146;s registered public accounting firm regarding internal control over financial reporting. Management&#146;s report was not subject to the attestation by the Company&#146;s registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management&#146;s report in this annual report.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><i><b><font size=2>Changes in Internal Control over Financial Reporting</font></b></i></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>There was no change in the Company&#146;s internal control over financial reporting during the Company&#146;s most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company&#146;s internal control over financial reporting.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=3><A NAME="other_info"></A>Item 8B&#151;Other Information</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>None.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><font size=2>31</font></p>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><B><font SIZE=3><A NAME="directors"></A>PART III</font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Certain information required by Part III is incorporated by reference to the Company&#146;s Definitive Proxy Statement pursuant to Regulation 14A (the &#147;Proxy Statement&#148;) for its Annual Meeting of Shareholders to be held April 23, 2008 (&#147;Annual Meeting&#148;).</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=3>Item 9&#151;Directors, Executive Officers, Promoters, Control Persons and Corporate Governance; Compliance with Section 16(a) of the Exchange Act</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The information required by Item 9 is incorporated herein by reference to the sections entitled &#147;Election of Directors,&#148; &#147;Section 16(a) Beneficial Ownership Reporting Compliance,&#148; &#147;Corporate Governance &#150; Code of Ethics and Business Conduct&#148; and &#147;Corporate Governance &#150; Audit Committee&#148; that appear in the Company&#146;s Definitive Proxy Statement for its Annual Meeting. Information concerning executive officers Bradley D. Slye and Peter R. Peterson is included in the sections referred to above.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=3><A NAME="executive"></A>Item 10&#151;Executive Compensation</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The information required by Item 10 is incorporated herein by reference to the section entitled &#147;Executive Compensation&#148; that appears in the Company&#146;s Definitive Proxy Statement for its Annual Meeting.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=3><A NAME="security"></A>Item 11&#151;Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The information required by Item 11 relating to security ownership of certain beneficial owners and management is incorporated herein by reference to the section entitled &#147;Security Ownership of Certain Beneficial Owners and Management&#148; that appears in the Company&#146;s Definitive Proxy Statement for its Annual Meeting.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The following table provides information as of December 31, 2007 about the Company&#146;s equity compensation plans.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><b><font size=2>Equity Compensation Plan Information</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<div align=left>

<table border="0" cellspacing=0 cellpadding=0 width="100%" style='border-collapse:collapse'>
    <tr style='page-break-inside:avoid'>
        <td nowrap valign=top >
            <p style='margin-left:.25in;text-indent:-.25in;text-align: center;margin-top:1.0pt;margin-bottom:0in'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" nowrap valign=bottom >
            <p style='margin-left:0in;text-indent:0pt;text-align:center;margin-top:1.0pt;margin-bottom:0in'><font size=1>&nbsp;</font></p> </td>
        <td width="6%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:2pt;margin-bottom:0pt'><b><font size=1>Number</font></b><font size=1>&nbsp;</font><b><font size=1>of</font></b><font size=1>&nbsp;</font><b><font size=1>securities</font></b><br> <b><font size=1>to</font></b><font size=1>&nbsp;</font><b><font size=1>be</font></b><font size=1>&nbsp;</font><b><font size=1>issued</font></b><font size=1>&nbsp;</font><b><font size=1>upon</font></b><br> <b><font size=1>exercise</font></b><font size=1>&nbsp;</font><b><font size=1>of</font></b><font size=1>&nbsp;</font><br> <b><font size=1>outstanding</font></b><font size=1>&nbsp;</font><b><font size=1>options,</font></b><font size=1>&nbsp;</font><br> <b><font size=1>warrants</font></b><font size=1>&nbsp;</font><b><font size=1>and</font></b><font size=1>&nbsp;</font><b><font size=1>rights</font></b><br> <b><font size=1>(a)</font></b></p> </td>
        <TD WIDTH="8%" NOWRAP VALIGN="BOTTOM">
            <p style='margin-left:0in;text-indent:0pt;text-align:center;margin-top:1.0pt;margin-bottom:0in'><font size=1>&nbsp;</font></p> </td>
        <TD NOWRAP COLSPAN="2" VALIGN="BOTTOM" STYLE=" border-bottom:solid black 1.0pt;">
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:2pt;margin-bottom:0pt'><b><font size=1>Weighted</font></b><font size=1>&nbsp;</font><b><font size=1>average</font></b><font size=1>&nbsp;</font><br> <b><font size=1>exercise</font></b><font size=1>&nbsp;</font><b><font size=1>price</font></b><font size=1>&nbsp;</font><b><font size=1>of</font></b><font size=1>&nbsp;</font><br> <b><font size=1>outstanding</font></b><font size=1>&nbsp;</font><b><font size=1>options,</font></b><br> <b><font size=1>warrants</font></b><font size=1>&nbsp;</font><b><font size=1>and</font></b><font size=1>&nbsp;</font><b><font size=1>rights</font></b><br> <b><font size=1>(b)</font></b></p> </td>
        <TD WIDTH="8%" NOWRAP VALIGN="BOTTOM">
            <p style='margin-left:0in;text-indent:0pt;text-align:center;margin-top:1.0pt;margin-bottom:0in'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:2pt;margin-bottom:0pt'><b><font size=1>Number</font></b><font size=1>&nbsp;</font><b><font size=1>of</font></b><font size=1>&nbsp;</font><b><font size=1>securities</font></b><br> <b><font size=1>remaining</font></b><font size=1>&nbsp;</font><b><font size=1>available</font></b><font size=1>&nbsp;</font><br> <b><font size=1>for</font></b><font size=1>&nbsp;</font><b><font size=1>future</font></b><font size=1>&nbsp;</font><b><font size=1>issuance</font></b><font size=1>&nbsp;</font><br> <b><font size=1>under</font></b><font size=1>&nbsp;</font><b><font size=1>equity</font></b><font size=1>&nbsp;</font><br> <b><font size=1>compensation</font></b><font size=1>&nbsp;</font><b><font size=1>plans</font></b><br> <b><font size=1>(excluding</font></b><font size=1>&nbsp;</font><b><font size=1>securities</font></b><br> <b><font
size=1>reflected</font></b><font size=1>&nbsp;</font><b><font size=1>in</font></b><font size=1>&nbsp;</font><b><font size=1>column</font></b><font size=1>&nbsp;</font><b><font size=1>(a))</font></b><br> <b><font size=1>(c)</font></b></p> </td>
        <td width="1%" nowrap valign=bottom >
            <p style='margin-left:0in;text-indent:0pt;text-align:center;margin-top:1.0pt;margin-bottom:0in'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top >
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom >
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="6%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="8%" VALIGN="BOTTOM">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="3%" VALIGN="BOTTOM">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="4%" valign=bottom style='border-top:solid black 1.0pt; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="8%" VALIGN="BOTTOM">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom >
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0.5pt'><font size=2>Equity compensation plans approved by security holders</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="6%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>30,780</font></p> </td>
        <TD WIDTH="8%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="3%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="4%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>3.54</font></p> </td>
        <TD WIDTH="8%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>102,990</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2><sup>(1)</sup></font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=2>Equity compensation plans not approved by security holders</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="6%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>&#151;</font></p> </td>
        <TD WIDTH="8%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="3%" VALIGN="BOTTOM" STYLE="border-bottom: solid black 1.0pt; background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="4%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>&#151;</font></p> </td>
        <TD WIDTH="8%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>&#151;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="6%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="8%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="3%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="4%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="8%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td valign=top style='background:#D6F3E8'>
            <p style='margin-left:52.55pt;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0.5pt'><font size=2>Total</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="6%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>30,780</font></p> </td>
        <TD WIDTH="8%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="3%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <td width="4%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>3.54</font></p> </td>
        <TD WIDTH="8%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="7%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>102,990</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2><sup>(1)</sup></font></p> </td> </tr></table>
</div>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:1.87%;text-align:left;'><font size=2><sup>(1) </sup> Includes 10,250 shares issuable pursuant to the 1997 Stock Option Plan and 92,740 shares issuable pursuant to the 1996 Employee Stock Option Plan.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><font size=2>32</font></p>
<BR><BR>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=3><A NAME="certain"></A>Item 12&#151;Certain Relationships and Related Transactions, and Director Independence</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The information required by Item 12 is incorporated herein by reference to the sections entitled &#147;Corporate Governance &#150; Independence,&#148; &#147;Election of Directors&#148; and &#147;Transactions with Related Persons, Promoters and Certain Control Persons&#148; that appear in the Company&#146;s Definitive Proxy Statement for its Annual Meeting.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-align:left;'><b><font size=3><A NAME="exhibits"></A>Item 13&#151;Exhibits</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>See &#147;Exhibit Index&#148; on the page following the signatures.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=3><A NAME="fees"></A>Item 14&#151;Principal Accountant Fees and Services</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The information required by Item 14 relating to principal accountant fees and services is incorporated herein by reference to the section entitled &#147;Disclosure of Fees Paid to Independent Auditors&#148; that appears in the Company&#146;s Definitive Proxy Statement for its Annual Meeting of Shareholders.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR><BR>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><font size=2>33</font></p>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><b><font size=3><a name="signatures"></a>SIGNATURES</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<div align=left>
<table border="0" cellspacing=0 cellpadding=0 width="90%" style='border-collapse:collapse'>
    <tr>
        <td width="65%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><B><font SIZE=2>ELECTRO-SENSORS, INC.</font></B><br> <font size=2>(&#147;Registrant&#148;)</font></p> </td> </tr>
    <tr >
        <td valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="32%" valign=top>
            <p style='text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr >
        <td valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0pt'><font size=2>By:</font></p> </td>
        <td valign=top style='border-bottom: solid black 1.0pt; '>
            <p style='text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>/s/ BRADLEY D. SLYE&#173;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p> </td> </tr>
    <tr >
        <td valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Bradley D. Slye</font></p> </td> </tr>
    <tr >
        <td valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><i><font size=2>President and Chief Executive Officer</font></i></p> </td> </tr>
    <tr >
        <td valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr >
        <td valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Date:&nbsp;&nbsp;&nbsp;</font></p> </td>
        <td valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>March 25, 2008</font></p> </td> </tr></table>
</div>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>(Power of Attorney)</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Each person whose signature appears below constitutes and appoints BRADLEY&nbsp;D. SLYE and PETER&nbsp;R. PETERSON as his true and lawful attorneys-in-fact and agents, each acting alone, with full power of substitution and re-substitution, for him and in his name, place and stead, in any and all capacities, to sign any or all amendments to this Annual Report on Form 10-KSB and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, each acting alone, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all said attorneys-in-fact and agents, each acting alone, or his substitute or substitutes, may
lawfully do or cause to be done by virtue thereof.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<div align=left>

<table border="0" cellspacing=0 cellpadding=0 width="100%" style='border-collapse:collapse'>
    <tr >
        <td width="25%" valign=top style='border-bottom:solid black 1.0pt; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=2>Signature</font></b></p> </td>
        <td width="4%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="40%" valign=top style='border-bottom:solid black 1.0pt; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><b><font size=2>Title</font></b></p> </td>
        <td width="4%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="15%" valign=top style='border-bottom:solid black 1.0pt; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><b><font size=2>Date</font></b></p> </td> </tr>
    <tr >
        <td width="25%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="4%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="40%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="4%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="15%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr >
        <td width="25%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>/s/ Bradley D. Slye</font></p> </td>
        <td width="4%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="40%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Chairman, President and Director (CEO and CFO)</font></p> </td>
        <td width="4%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="15%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>March 25, 2008</font></p> </td> </tr>
    <tr >
        <td width="25%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="4%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="40%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="4%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="15%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr >
        <td width="25%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>/s/ Peter R. Peterson</font></p> </td>
        <td width="4%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="40%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Director and Secretary</font></p> </td>
        <td width="4%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="15%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>March 25, 2008</font></p> </td> </tr>
    <tr >
        <td width="25%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="4%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="40%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="4%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="15%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr >
        <td width="25%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>/s/ Joseph A. Marino</font></p> </td>
        <td width="4%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="40%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Director</font></p> </td>
        <td width="4%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="15%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>March 25, 2008</font></p> </td> </tr>
    <tr >
        <td width="25%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="4%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="40%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="4%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="15%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr >
        <td width="25%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>/s/ Geoffrey W. Miller</font></p> </td>
        <td width="4%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="40%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Director</font></p> </td>
        <td width="4%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="15%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>March 25, 2008</font></p> </td> </tr>
    <tr >
        <td width="25%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="4%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="40%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="4%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="15%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr >
        <td width="25%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>/s/ Robert W. Heller</font></p> </td>
        <td width="4%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="40%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Director</font></p> </td>
        <td width="4%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="15%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>March 25, 2008</font></p> </td> </tr></table>
</div>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><font size=2>34</font></p>
<BR><BR>
<HR SIZE=3 COLOR=GRAY NOSHADE>
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<P ALIGN=LEFT><FONT SIZE=2><A HREF="#toc">Table of Contents</A> </FONT></P>


<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><B><font SIZE=2>SECURITIES AND EXCHANGE COMMISSION</font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><b><font size=2>Washington, DC 20549</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><B><font SIZE=2>EXHIBIT INDEX TO FORM 10-KSB</font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<div align=left>
<table border="0" cellspacing=0 cellpadding=0 width="100%" style='border-collapse:collapse'>
    <tr >
        <td width="50%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>For the Fiscal Year Ended</font><br> <font size=2>December 31, 2007</font></p> </td>
        <td width="50%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>Commission File No. 0-9587</font></p> </td> </tr></table>
</div>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<div align=left>

<table border="0" cellspacing=0 cellpadding=0 width="100%" style='border-collapse:collapse'>
    <tr >
        <td width="8%" valign=bottom style='border-bottom: solid black 1.0pt; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=2>Exhibit</font></b><br> <b><font size=2>Number</font></b></p> </td>
        <td width="3%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  valign=bottom style='border-bottom: solid black 1.0pt; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><b><font size=2>Exhibit Description</font></b></p> </td> </tr>
    <tr >
        <td width="8%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr >
        <td width="8%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>3.1</font></p> </td>
        <td width="3%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Registrant&#146;s Restated Articles of Incorporation, as amended&#151;incorporated by reference to Exhibit&nbsp;3.1 to the Company&#146;s 1991 Form&nbsp;10-K*</font></p> </td> </tr>
    <tr >
        <td width="8%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>3.2</font></p> </td>
        <td width="3%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Registrant&#146;s Bylaws, as amended to date&#151;incorporated by reference to Exhibit&nbsp;3.2 to the Company&#146;s 1997 Form&nbsp;10-KSB*</font></p> </td> </tr>
    <tr >
        <td width="8%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>**10.1</font></p> </td>
        <td width="3%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Electro-Sensors, Inc.&#146;s 1987 Stock Option Plan&#151;incorporated by reference to Exhibit&nbsp;A to the Company&#146;s Proxy Statement dated April&nbsp;21, 1987 for the Company&#146;s 1987 Annual Meeting of Shareholders*</font></p> </td> </tr>
    <tr >
        <td width="8%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>**10.2</font></p> </td>
        <td width="3%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Electro-Sensors, Inc.&#146;s 1997 Stock Option Plan and forms of Incentive and Nonqualified Stock Option Agreements thereunder&#151;incorporated by reference to Exhibit&nbsp;10.6 to the Company&#146;s 1997 Form&nbsp;10-KSB*</font></p> </td> </tr>
    <tr >
        <td width="8%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>21</font></p> </td>
        <td width="3%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Subsidiaries of Registrant (Name and State of Incorporation):</font><br> <font size=2>ESI Investment Company&#151;Minnesota</font><br> <font size=2>Senstar Corporation&#151;Minnesota</font></p> </td> </tr>
    <tr >
        <td width="8%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>24.1</font></p> </td>
        <td width="3%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Power of Attorney (see Signature page)</font></p> </td> </tr>
    <tr >
        <td width="8%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>31.1</font></p> </td>
        <td width="3%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 </font></p> </td> </tr>
    <tr >
        <td width="8%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>32.1</font></p> </td>
        <td width="3%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002</font></p> </td> </tr>
    <tr >
        <td width="8%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>99.1</font></p> </td>
        <td width="3%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Letter to Shareholders dated March 12, 2008</font></p> </td> </tr>
    <tr >
        <td width="8%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>99.2</font></p> </td>
        <td width="3%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Investor Information</font></p> </td> </tr>
    <tr >
        <td width="8%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr></table>
</div>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<div align=left>

<table border="0" cellspacing=0 cellpadding=0 width="100%" style='border-collapse:collapse'>
    <tr >
        <td width="6%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>*</font></p> </td>
        <td  valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Incorporated by reference to a previously filed report or document&#151;SEC File No.&nbsp;0-9587</font></p> </td> </tr></table>
</div>



<div align=left>

<table border="0" cellspacing=0 cellpadding=0 width="100%" style='border-collapse:collapse'>
    <tr >
        <td width="6%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>**</font></p> </td>
        <td  valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Management contract or compensatory plan or arrangement</font></p> </td> </tr></table>
</div>


<p style=' margin-bottom:0pt; margin-top:0pt; text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<BR><BR><BR><BR><BR><BR><BR><BR><BR><BR>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><font size=2>35</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
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`
end
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>3
<FILENAME>electro081390s1_ex31-1.htm
<DESCRIPTION>CERTIFICATION OF CEO/CFO PURSUANT TO SECTION 302
<TEXT>
<HTML>
<HEAD>
<TITLE>Exhibit 31.1 to Electro-Sensors, Inc. Form 10-KSB for fiscal year ended December 31, 2007 </TITLE>
</HEAD>
<BODY bgcolor="#ffffff" style='font-family:"Times New Roman"'>
<BR><BR>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><B><font SIZE=3>EXHIBIT 31.1</font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><B><font SIZE=3>CERTIFICATION PURSUANT TO</font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><B><font SIZE=3>SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002</font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>I, Bradley D. Slye, Chief Executive Officer and Chief Financial Officer of Electro-Sensors, Inc., certify that:</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<div align=left>

<table border="0" cellspacing=0 cellpadding=0 width="100%" style='border-collapse:collapse'>
    <tr >
        <td width="3%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>1.</font></p> </td>
        <td  valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>I have reviewed this report on Form 10-KSB of Electro-Sensors Inc.;</font></p> </td> </tr></table>
</div>


<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:6.67%; text-indent:-3.33%;text-align:left;'><font size=2>&nbsp;</font></p>


<div align=left>

<table border="0" cellspacing=0 cellpadding=0 width="100%" style='border-collapse:collapse'>
    <tr >
        <td width="3%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>2.</font></p> </td>
        <td  valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;</font></p> </td> </tr></table>
</div>


<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:6.67%; text-indent:-3.33%;text-align:left;'><font size=2>&nbsp;</font></p>


<div align=left>

<table border="0" cellspacing=0 cellpadding=0 width="100%" style='border-collapse:collapse'>
    <tr >
        <td width="3%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>3.</font></p> </td>
        <td  valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;</font></p> </td> </tr></table>
</div>


<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:6.67%; text-indent:-3.33%;text-align:left;'><font size=2>&nbsp;</font></p>


<div align=left>

<table border="0" cellspacing=0 cellpadding=0 width="100%" style='border-collapse:collapse'>
    <tr >
        <td width="3%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>4.</font></p> </td>
        <td  valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))   for the small business issuer and have:</font></p> </td> </tr></table>
</div>


<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:10%;text-align:left;'><font size=2>(a)&nbsp;&nbsp;Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:10%;text-align:left;'><font size=2>(b)&nbsp;&nbsp;Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:10%;text-align:left;'><font size=2>(c)&nbsp;&nbsp;Evaluated the effectiveness of the small business issuer&#146;s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:10%;text-align:left;'><font size=2>(d)&nbsp;&nbsp;Disclosed in this report any change in the small business issuer&#146;s internal control over financial reporting that occurred during the small business issuer&#146;s most recent fiscal quarter (the small business issuer&#146;s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer&#146;s internal control over financial reporting; and</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<div align=left>

<table border="0" cellspacing=0 cellpadding=0 width="100%" style='border-collapse:collapse'>
    <tr >
        <td width="3%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>5.</font></p> </td>
        <td width="93%" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the small business issuer&#146;s auditors and the audit committee of the small business issuer&#146;s board of directors (or persons performing the equivalent functions):</font></p> </td> </tr></table>
</div>


<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:10%;text-align:left;'><font size=2>(a)&nbsp;&nbsp;All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer&#146;s ability to record, process, summarize and report financial information; and</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:10.13%;text-align:left;'><font size=2>(b)&nbsp;Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer&#146;s internal control over financial reporting.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<div align=left>
<table border="0" cellspacing=0 cellpadding=0 width="90%" style='border-collapse:collapse'>
    <tr >
        <td width="65%" valign=top>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0pt'><font size=2>March 25, 2008</font></p> </td>
        <td width="35%" valign=top style='border-bottom: solid black 1.0pt;'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>/s/ Bradley D. Slye</font></p> </td> </tr>
    <tr >
        <td valign=top>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td valign=top>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>Bradley D. Slye</font></p> </td> </tr>
    <tr >
        <td valign=top>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td nowrap valign=top>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>Chief Executive Officer and Chief Financial Officer</font></p> </td> </tr></table>
</div>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<BR>
<HR SIZE=3 COLOR=GRAY NOSHADE>

</BODY>
</HTML>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.1
<SEQUENCE>4
<FILENAME>electro081390s1_ex32-1.htm
<DESCRIPTION>CERTIFICATION OF CEO/CFO PURSUANT TO SECTION 906
<TEXT>
<HTML>
<HEAD>
<TITLE>Exhibit 32.1 to Electro-Sensors, Inc. Form 10-KSB for fiscal year ended December 31, 2007 </TITLE>
</HEAD>
<BODY bgcolor="#ffffff" style='font-family:"Times New Roman"'>
<BR><BR>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><B><font SIZE=3>EXHIBIT 32.1</font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font SIZE=3>CERTIFICATION PURSUANT TO</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font SIZE=3>SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>In connection with the Annual Report of Electro-Sensors, Inc. (the &#147;Company&#148;) on Form 10-KSB for the year ended December 31, 2007 as filed with the Securities and Exchange Commission (the &#147;Report&#148;), I, Bradley D. Slye, Chief Executive Officer and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. &sect;1350, as adopted pursuant to &sect;906 of the Sarbanes-Oxley Act of 2002, that:</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>(1)&nbsp;&nbsp;The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>(2)&nbsp;&nbsp;The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>



<div align=left>
<table border="0" cellspacing=0 cellpadding=0 width="90%" style='border-collapse:collapse'>
    <tr >
        <td width="65%" valign=top>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0pt'><font size=2>March 25, 2008</font></p> </td>
        <td width="35%" valign=top style='border-bottom: solid black 1.0pt;'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>/s/ Bradley D. Slye</font></p> </td> </tr>
    <tr >
        <td valign=top>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td valign=top>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>Bradley D. Slye</font></p> </td> </tr>
    <tr >
        <td valign=top>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td nowrap valign=top>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>Chief Executive Officer and Chief Financial Officer</font></p> </td> </tr></table>
</div>


<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<BR>
<HR SIZE=3 COLOR=GRAY NOSHADE>

</BODY>
</HTML>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>5
<FILENAME>electro081390s1_ex99-1.htm
<DESCRIPTION>LETTER TO SHAREHOLDERS DATED MARCH 12, 2008
<TEXT>
<HTML>
<HEAD>
<TITLE>Exhibit 99.1 to Electro-Sensors, Inc. Form 10-KSB for fiscal year ended December 31, 2007 </TITLE>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><b><font size=3>Exhibit 99.1</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>March 12, 2008</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>To the shareholders:</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:5%;text-align:left;'><font size=2>Our job as a company is to listen to our customers and provide solutions that fulfill their needs. Sometimes these solutions are products we already have designed and sometimes they are new products. In many instances, the solution is technical support for our products that enables the customer to design a system or start up a new process smoothly. Based on customer feedback in both of our divisions, I believe that we listen to our customers and provide solutions to them very well. This gives us a great reputation in our industries and many satisfied customers who recommend us to other potential users of our products. We will continue to build on these strengths and strive to operate in this manner everyday.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:5%;text-align:left;'><font size=2>Sales in the Controls division increased 24% over 2006 with a total sales amount of $6,494,000. Grain handling, biofuels, and power generation continued being three strong areas of use for our products in this past year. New plants, expansion of existing facilities, and retrofitting old process lines were active areas of sales for our products due to the material handling systems required at these sites. Our sales channel continued to grow during the year. We added manufacturer&#146;s representative coverage in Georgia and Alabama, and four new international exclusive distributors in Malaysia, Singapore, South Africa, and Great Britain. To support and train our sales partners, our sales team traveled with our representatives and distributors doing training and joint sales calls. This helps us to listen to our partners and customers and thus be able to supply their product needs. New products
introduced during the year include the FB420 shaft speed monitor with analog output, the SG1000E position monitor for clamshell gates, the DiscGuard for our SCP speed switch, the TT420 Shaft Tach speed sensor, and new software for the TR400 tachometer that enables customers to test their underspeed shutdown operation by only pressing one button. Our product line now includes products to monitor the shaft speed, gate and valve position, bearing temperature, belt misalignment, material levels, and vibration of machines and processes.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:5%;text-align:left;'><font size=2>The AutoData Systems division experienced an increase in sales of 13%. In August, we introduced the NetE-nable software product that gives customers the ability to conduct surveys via email with our ExpertScan product. This product addition can be sold to all of our existing ExpertScan customers that wish to also perform surveys electronically as well as a complete solution to new customers that desire both paper and electronic survey capabilities. User feedback from our initial customers has been positive. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:5%;text-align:left;'><font size=2>Every employee is committed to producing high quality products that serve the customer for a long time. We again passed our ISO9001:2000 Quality Management System audit with flying colors and for this we are very proud.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:5%;text-align:left;'><font size=2>A dividend of $0.04 per share was paid each quarter to our shareholders reflecting a strong balance sheet. As a company, each of our employees, our manufacturer&#146;s representatives, and distributors will continue to work together as a team to listen to and meet the needs of our customers. We are committed to the growth and success of this company.   Thank-you also to you, our shareholders, for your support and confidence in our efforts to make this a great company!  Please join us for our annual meeting on April 23, 2008 at the Sheraton Minneapolis West Hotel in Minnetonka at 2:00 p.m.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Sincerely,</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><img src="img3.gif"><br> </p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>/s/ Brad Slye</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Bradley D. Slye</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

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<TYPE>EX-99.2
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<FILENAME>electro081390s1_ex99-2.htm
<DESCRIPTION>INVESTOR INFORMATION
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<TITLE>Exhibit 99.2 to Electro-Sensors, Inc. Form 10-KSB for fiscal year ended December 31, 2007 </TITLE>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><b><font size=3>Exhibit 99.2</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><B><font SIZE=3>INVESTOR INFORMATION</font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2>Annual Meeting</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The Annual Meeting of Shareholders will be held at the Sheraton Minneapolis West, 12201 Ridgedale Drive, Minnetonka, Minnesota on April 23, 2008 at 2:00 p.m. local time. All shareholders are welcome to attend and take part in the discussion of Company affairs.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2>Board of Directors</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Bradley D. Slye</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><i><font size=2>Chairman of the Board</font></i></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><i><font size=2>President, Electro-Sensors, Inc.</font></i></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>P. R. Petersen</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><i><font size=2>President, P. R. Petersen Company</font></i></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><i><font size=2>Secretary, Electro-Sensors, Inc.</font></i></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Joseph A. Marino</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><i><font size=2>President/CEO, Cardia, Inc.</font></i></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Geoffrey W. Miller</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><i><font size=2>CFO, Wilcox Paper</font></i></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Robert W. Heller</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><i><font size=2>President, Heller Capital, Inc.</font></i></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2>Officers</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Bradley D. Slye</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><i><font size=2>President; CEO and CFO</font></i></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Peter R. Petersen</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><i><font size=2>Secretary</font></i></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2>Transfer Agent &amp; Registrar</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>American Stock Transfer &amp; Trust Company</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Corporate Trust Services</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>59 Maiden Lane</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>New York, NY 10038</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2>Auditors</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Boulay, Heutmaker, Zibell &amp; Co. P.L.L.P. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>7500 Flying Cloud Drive, Ste. 800 </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Minneapolis, MN 55344</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2>Counsel</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Fredrikson &amp; Byron, PA</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>200 South Sixth Street, Suite 4000</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Minneapolis, MN 55402-1425</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2>Exchange Listing</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The Nasdaq Stock Market (Capital Market)</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Common Stock</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Stock Trading Symbol: </font><B><font SIZE=2>ELSE</font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2>Form 10-KSB</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The Form 10-KSB report included in this annual report to shareholders has been filed with the Securities and Exchange Commission (&#147;SEC&#148;). However, the SEC takes no action to approve or disapprove the report or to pass upon its accuracy or adequacy. This report is not intended to be used, nor may it be used, as a representation, prospectus or circular in respect to any security; it is published and furnished solely as information for the benefit of the Company&#146;s shareholders.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

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