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<SEC-DOCUMENT>0000897101-07-001706.txt : 20070814
<SEC-HEADER>0000897101-07-001706.hdr.sgml : 20070814
<ACCEPTANCE-DATETIME>20070814132852
ACCESSION NUMBER:		0000897101-07-001706
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		6
CONFORMED PERIOD OF REPORT:	20070630
FILED AS OF DATE:		20070814
DATE AS OF CHANGE:		20070814

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			INSIGNIA SYSTEMS INC/MN
		CENTRAL INDEX KEY:			0000875355
		STANDARD INDUSTRIAL CLASSIFICATION:	MISCELLANEOUS MANUFACTURING INDUSTRIES [3990]
		IRS NUMBER:				411656308
		STATE OF INCORPORATION:			MN
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-13471
		FILM NUMBER:		071053277

	BUSINESS ADDRESS:	
		STREET 1:		6470 SYCAMORE COURT NORTH
		CITY:			MAPLE GROVE
		STATE:			MN
		ZIP:			55369
		BUSINESS PHONE:		7633926200

	MAIL ADDRESS:	
		STREET 1:		6470 SYCAMORE COURT NORTH
		CITY:			MAPLE GROVE
		STATE:			MN
		ZIP:			55369
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>insignia073330_10q.htm
<DESCRIPTION>FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2007
<TEXT>
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<TITLE>Insignia Systems, Inc. Form 10-Q dated June 30, 2007</TITLE>
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<p style=' margin-bottom:6pt; margin-top:6pt;text-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 SECURITIES AND EXCHANGE COMMISSION</font></B></p>

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

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

<HR WIDTH="20%" COLOR="Black">
<p style=' margin-bottom:6pt; margin-top:6pt;text-align:center;'><B><font SIZE=6>FORM 10-Q</font></B></p>
<HR WIDTH="20%" COLOR="Black">

<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;'><font face=Wingdings>x</font><font size=3> &nbsp;QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font SIZE=3>THE SECURITIES EXCHANGE ACT OF 1934</font><b><font size=3> </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=3>for the quarterly period ended June 30, 2007</font></b></p>

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

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font face=Wingdings>o</font><font size=3> TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font SIZE=3>THE SECURITIES EXCHANGE ACT OF 1934</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:center;'><font size=3>for the transition period from ___________________ to _________________</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:center;'><font size=3>Commission File Number:  1-13471</font></p>

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

<HR WIDTH="20%" COLOR="Black">

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

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>(Exact name of registrant as specified in its charter)</font></p>

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


<div align=center>

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        <td width="351" 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="350" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><b><font size=3>41-1656308</font></b></p> </td> </tr>
    <tr >
        <td width="351" 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="350" 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></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;'><b><font size=3>6470 Sycamore Court North</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><b><font size=3>Maple Grove, MN 55369</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>(Address of principal executive offices)</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:center;'><b><font size=3>(763) 392-6200</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>(Registrant&#146;s telephone number, including area code)</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:center;'><b><font size=3>Not applicable.</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>(Former name, former address and former fiscal year if changed since last report)</font></p>

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

<HR WIDTH="20%" COLOR="Black">

<p style=' margin-bottom:0pt; margin-top:6pt; text-indent:0.2in;text-align:left;'><font size=3>Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such report(s), and (2) has been subject to such filing requirements for the past 90 days. </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="3">Yes </FONT> <FONT FACE="Wingdings" SIZE="3">x</FONT> </p> </td>
        <TD WIDTH="60" NOWRAP VALIGN="TOP">
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><FONT SIZE="3">No </FONT> <FONT FACE="Wingdings" SIZE="3">o </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-indent:0.2in;text-align:left;'><font size=3>Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of &#147;accelerated filer and large accelerated filer&#148; in Rule 12b-2 of the Exchange Act. (Check one):</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="3">&nbsp; </FONT></p> </td>
        <TD WIDTH="30%" NOWRAP VALIGN="TOP">
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><FONT SIZE="3">Large accelerated filer </FONT> <FONT FACE="Wingdings" SIZE="3">o </FONT><FONT SIZE="3">&nbsp;&nbsp; </FONT></p> </td>
        <TD WIDTH="30%" NOWRAP VALIGN="TOP">
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><FONT SIZE="3">Accelerated filer </FONT> <FONT FACE="Wingdings" SIZE="3">o </FONT><FONT SIZE="3">&nbsp;&nbsp; </FONT></p> </td>
        <TD WIDTH="30%" NOWRAP VALIGN="TOP">
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><FONT SIZE="3">Non-accelerated filer </FONT> <FONT FACE="Wingdings" SIZE="3">x </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-indent:0.2in;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).</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="3">Yes </FONT> <FONT FACE="Wingdings" SIZE="3">o</FONT></p> </td>
        <TD WIDTH="60" NOWRAP VALIGN="TOP">
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><FONT SIZE="3">No </FONT> <FONT FACE="Wingdings" SIZE="3">x </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-indent:0.2in;text-align:left;'><font size=3>Number of shares outstanding of Common Stock, $.01 par value, as of July 31, 2007, was 15,425,837.</font></p>

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

<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>

<BR>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><b><font size=2><A NAME="toc">Insignia Systems, Inc.</A></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>TABLE OF CONTENTS</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:left;'><font size=2>&nbsp;</font></p>


<div align=left>

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        <TD WIDTH="77" 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'><B><font SIZE=2><A HREF="#balance">FINANCIAL INFORMATION</A></font></B></p>  </td>
        <TD WIDTH="48" 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="77" 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="48" 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="77" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=2>Item 1.</font></b></p>  </td>
        <TD VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=2><A HREF="#balance">Financial Statements  </A></font></b></p>  </td>
        <td width="48" 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="77" 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="48" 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="77" 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:23.4pt;text-indent:-13.5pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2><A HREF="#balance">Balance Sheets &#150; June 30, 2007 and December 31, 2006 (unaudited)</A></font></p> </td>
        <td width="48" 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="77" 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:23.4pt;text-indent:-13.5pt;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:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr >
        <td width="77" 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:23.4pt;text-indent:-13.5pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2><A HREF="#operations">Statements of Operations &#150; Three and six months ended June 30, 2007 and 2006 (unaudited)</A></font></p> </td>
        <td width="48" 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="77" 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:23.4pt;text-indent:-13.5pt;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:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr >
        <td width="77" 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:23.4pt;text-indent:-13.5pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2><A HREF="#equity">Statements of Shareholder&#146;s Equity &#150; Six months ended June 30, 2007 and 2006 (unaudited)</A></font></p> </td>
        <td width="48" 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="77" 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:23.4pt;text-indent:-13.5pt;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:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr >
        <td width="77" 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:23.4pt;text-indent:-13.5pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2><A HREF="#cash_flows">Statements of Cash Flows &#150; Six months ended June 30, 2007 and 2006 (unaudited)</A></font></p> </td>
        <td width="48" 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="77" 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:23.4pt;text-indent:-13.5pt;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:left;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=1>&nbsp;</font></p> </td>
        <TD VALIGN="TOP">
            <p style='margin-left:23.4pt;text-indent:-13.5pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2><A HREF="#notes">Notes to Financial Statements &#150; June 30, 2007 (unaudited)</A></font></p> </td>
        <td width="48" 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>
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        <td width="77" 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="48" 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="77" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=2>Item 2.</font></b></p> </td>
        <TD VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=2><A HREF="#managements">Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations</A></font></b></p> </td>
        <td width="48" 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>
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        <td width="77" 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="48" 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>
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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>Item 3.</font></b></p> </td>
        <TD VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=2><A HREF="#quantitative">Quantitative and Qualitative Disclosures About Market Risk</A></font></b></p> </td>
        <td width="48" 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>
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        <td width="77" 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="48" 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>
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        <td width="77" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=2>Item 4.</font></b></p> </td>
        <TD VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=2><A HREF="#controls">Controls and Procedures</A></font></b></p> </td>
        <td width="48" 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>
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        <td width="77" 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="48" 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>
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        <td width="77" valign=top >
            <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 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="48" 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>
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        <td width="77" 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'><B><font SIZE=2><A HREF="#part_ii">OTHER INFORMATION</A></font></B></p> </td>
        <td width="48" 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>
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        <td width="77" 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="48" 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>
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        <td width="77" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=2>Item 1.</font></b></p> </td>
        <TD VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=2><A HREF="#legal">Legal Proceedings</A></font></b></p> </td>
        <td width="48" 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="77" 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="48" 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>
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        <td width="77" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=2>Item 1A.</font></b></p> </td>
        <TD VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=2><A HREF="#risk">Risk Factors</A></font></b></p> </td>
        <td width="48" 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>
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        <td width="77" 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="48" 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="77" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=2>Item 2.</font></b></p> </td>
        <TD VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=2><A HREF="#unregistered">Unregistered Sales of Equity Securities and Use of Proceeds</A></font></b></p> </td>
        <td width="48" 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="77" 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="48" 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="77" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=2>Item 3.</font></b></p> </td>
        <TD VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=2><A HREF="#defaults">Defaults Upon Senior Securities</A></font></b></p> </td>
        <td width="48" 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="77" 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="48" 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="77" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=2>Item 4.</font></b></p> </td>
        <TD VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=2><A HREF="#submission">Submission of Matters to a Vote of Security Holders</A></font></b></p> </td>
        <td width="48" 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="77" 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="48" 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="77" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=2>Item 5.</font></b></p> </td>
        <TD VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=2><A HREF="#other_info">Other Information</A></font></b></p> </td>
        <td width="48" 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="77" 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="48" 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="77" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=2>Item 6.</font></b></p> </td>
        <TD VALIGN="TOP">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=2><A HREF="#exhibits">Exhibits</A> </font></b></p> </td>
        <td width="48" 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></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:center;'><font size=2>2</font></p>
<BR>
<HR SIZE=3 COLOR=GRAY NOSHADE>
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<P><FONT FACE="Times New Roman, Times, Serif" 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=3><A NAME="balance"></A>PART I.</font></B><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><B><font SIZE=3>FINANCIAL INFORMATION</font></B></p>


<div align=left>

<table border="0" cellspacing=0 cellpadding=0 width="100%" style='border-collapse:collapse'>
    <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=3>Item 1.</font></b></p> </td>
        <td  valign=top style='padding:6.0pt 0in 0in 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=3>Financial Statements</font></b></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;'><b><font size=2>Insignia Systems, Inc.</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><b>B<small>ALANCE</small> S<small>HEETS</small></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>(Unaudited)</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:.25in;text-indent:-.25in;text-align:center;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
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            <p style='margin-left:0in;text-indent:0pt;text-align:center;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>June 30,</font></b><br> <b><font size=1>2007</font></b></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:center;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>2006</font></b></p> </td>
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            <p style='margin-left:0in;text-indent:0pt;text-align:center;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
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            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><B><font SIZE=2>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="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>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
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            <p 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>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
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            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
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            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><b><font size=2>Current Assets:</font></b></p> </td>
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            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
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            <p style='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>
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            <p 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=1>&nbsp;</font></p> </td>
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            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
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            <p style='margin-left:32.0pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Cash and cash equivalents</font></p> </td>
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            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>4,780,000</font></p> </td>
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            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>3,785,000</font></p> </td>
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            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td> </tr>
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            <p style='margin-left:33.0pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Accounts receivable &#150; net of $10,000 allowance</font></p> </td>
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            <p 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>3,981,000</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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>2,925,000</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background: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:32.0pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Inventories</font></p> </td>
        <TD 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>590,000</font></p> </td>
        <TD 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>452,000</font></p> </td>
        <TD 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:32.0pt;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom: 0in'><font size=2>Prepaid expenses and other</font></p> </td>
        <TD 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>822,000</font></p> </td>
        <TD 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>888,000</font></p> </td>
        <TD 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:47.0pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Total Current Assets</font></p> </td>
        <TD 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>10,173,000</font></p> </td>
        <TD 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>8,050,000</font></p> </td>
        <TD 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: 0in'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background: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: 0in'><b><font size=2>Other Assets:</font></b></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background: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:32.0pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Property and equipment, net</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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>455,000</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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>477,000</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background: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:33.0pt;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom: 0in'><font size=2>Other</font></p> </td>
        <TD 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>39,000</font></p> </td>
        <TD 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>56,000</font></p> </td>
        <TD 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: 0in'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background: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: 0in'><b><font size=2>Total Assets</font></b></p> </td>
        <TD 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="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'><font size=2>10,667,000</font></p> </td>
        <TD 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="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'><font size=2>8,583,000</font></p> </td>
        <TD 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: 0in'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background: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: 0in'><b><font size=2>LIABILITIES AND SHAREHOLDERS&#146; EQUITY</font></b></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background: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: 0in'><b><font size=2>Current Liabilities:</font></b></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background: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:32.0pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Line of credit</font></p> </td>
        <TD 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='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>&#151;</font></p> </td>
        <TD 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='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>186,000</font></p> </td>
        <TD 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:32.0pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Current maturities of long-term liabilities</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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>253,000</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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>241,000</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background: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:33.0pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Accounts payable</font></p> </td>
        <TD 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>1,398,000</font></p> </td>
        <TD 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>1,345,000 </font></p> </td>
        <TD 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:33.0pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Accrued liabilities</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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:51.0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background: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:40.0pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Compensation</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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>618,000</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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>468,000</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background: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:40.0pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Employee stock purchase plan</font></p> </td>
        <TD 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>76,000</font></p> </td>
        <TD 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>98,000</font></p> </td>
        <TD 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:40.0pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Legal</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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>251,000</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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>105,000</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background: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:40.0pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Other</font></p> </td>
        <TD 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>152,000</font></p> </td>
        <TD 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>154,000</font></p> </td>
        <TD 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:33.0pt;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom: 0in'><font size=2>Deferred revenue</font></p> </td>
        <TD 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>542,000</font></p> </td>
        <TD 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>436,000</font></p> </td>
        <TD 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:47.0pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Total Current Liabilities</font></p> </td>
        <TD 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>3,290,000</font></p> </td>
        <TD 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>3,033,000</font></p> </td>
        <TD 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: 0in'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background: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: 0in'><b><font size=2>Long-Term Liabilities, less current maturities</font></b></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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>558,000</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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>688,000</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background: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: 0in'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background: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>
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            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><b><font size=2>Commitments and Contingencies</font></b></p> </td>
        <TD 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>&#151;</font></p> </td>
        <TD 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>&#151;</font></p> </td>
        <TD 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: 0in'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background: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'>
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            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><b><font size=2>Shareholders&#146; Equity:</font></b></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background: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>
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            <p style='margin-left:32.0pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Common stock, par value $.01:</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background: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:40.0pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Authorized shares &#150; 40,000,000</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background: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:40.0pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Issued and outstanding shares &#150; 15,347,000 at June 30, 2007 and 15,152,000 at December 31, 2006</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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>154,000</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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>152,000</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background: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:33.0pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Additional paid-in capital</font></p> </td>
        <TD 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>29,887,000</font></p> </td>
        <TD 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>29,557,000 </font></p> </td>
        <TD 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:33.0pt;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom: 0in'><font size=2>Accumulated deficit</font></p> </td>
        <TD 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>(23,222,000</font></p> </td>
        <TD 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>
        <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:48.75pt;text-indent:-48.75pt;text-align:right;margin-top:0in;margin-bottom: 0in'><font size=2>(24,847,000</font></p> </td>
        <TD 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:47.0pt;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom: 0in'><font size=2>Total Shareholders&#146; Equity</font></p> </td>
        <TD 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>6,819,000</font></p> </td>
        <TD 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>4,862,000</font></p> </td>
        <TD 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: 0in'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background: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: 0in'><b><font size=2>Total Liabilities and Shareholders&#146; Equity</font></b></p> </td>
        <TD 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="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'><font size=2>10,667,000</font></p> </td>
        <TD 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="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'><font size=2>8,583,000</font></p> </td>
        <TD 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;'><i><font size=2>See accompanying notes to financial statements.</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:center;'><font size=2>3</font></p>
<BR>
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<P><FONT FACE="Times New Roman, Times, Serif" 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>Insignia Systems, Inc.</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><b>S<small>TATEMENTS</small> <small>OF</small> O<small>PERATIONS</small></b></p>

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

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


<div align=left>

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        <TD 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 colspan="5" valign=bottom style=' border-bottom:solid black 1.0pt; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>Three Months Ended</font></b><br> <b><font size=1>June 30</font></b></p> </td>
        <TD 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 colspan="5" valign=bottom style=' border-bottom:solid black 1.0pt; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>Six Months Ended</font></b><br> <b><font size=1>June 30</font></b></p> </td>
        <td width="1%" 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:center;margin-top:1.0pt;margin-bottom:0in'><font size=1>&nbsp;</font></p> </td>
        <TD 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 colspan="2" valign=bottom style=' border-bottom:solid black 1.0pt;  '>
            <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 VALIGN="BOTTOM" STYLE="border-top:solid black 1.0pt;">
            <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 colspan="2" valign=bottom style='border-top:solid black 1.0pt; border-left:none;border-bottom:solid black 1.0pt;border-right:none;  '>
            <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 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 colspan="2" valign=bottom style=' border-bottom:solid black 1.0pt;  '>
            <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 VALIGN="BOTTOM" STYLE="border-top:solid black 1.0pt;">
            <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 colspan="2" valign=bottom style='border-top:solid black 1.0pt; border-left:none;border-bottom:solid black 1.0pt;border-right:none;  '>
            <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="1%" 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 WIDTH="51%" VALIGN="TOP" STYLE="background:#D6F3E8">
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Services revenues</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>$</font></p> </td>
        <TD WIDTH="8%" VALIGN="BOTTOM" STYLE="border-top:solid black 1.0pt; background:#D6F3E8">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>6,193,000</font></p> </td>
        <TD WIDTH="3%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="1%" VALIGN="BOTTOM" STYLE="background:#D6F3E8">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <TD WIDTH="8%" VALIGN="BOTTOM" STYLE="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>5,122,000</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="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>$</font></p> </td>
        <TD WIDTH="8%" VALIGN="BOTTOM" STYLE="border-top:solid black 1.0pt; background:#D6F3E8">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>11,563,000</font></p> </td>
        <TD WIDTH="3%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="1%" VALIGN="BOTTOM" STYLE="background:#D6F3E8">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <TD WIDTH="8%" VALIGN="BOTTOM" STYLE="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>9,842,000</font></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:.25in;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom: 0in'><font size=2>Products sold</font></p> </td>
        <TD 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 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>776,000</font></p> </td>
        <TD 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 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>731,000</font></p> </td>
        <TD 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 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>1,471,000</font></p> </td>
        <TD 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 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>1,433,000</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:#D6F3E8">
            <p style='margin-left:42.0pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Total Net Sales</font></p> </td>
        <TD 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 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>6,969,000</font></p> </td>
        <TD 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 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>5,853,000</font></p> </td>
        <TD 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 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>13,034,000</font></p> </td>
        <TD 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 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>11,275,000</font></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:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='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: 0in'><font size=2>Cost of services</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 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>2,349,000</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 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>2,205,000</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 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>4,645,000</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 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>4,247,000</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:1.0pt;margin-bottom: 0in'><font size=2>Cost of goods sold</font></p> </td>
        <TD 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 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>460,000</font></p> </td>
        <TD 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 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>416,000</font></p> </td>
        <TD 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 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>871,000</font></p> </td>
        <TD 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 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>822,000</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:42.0pt;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom: 0in'><font size=2>Total Cost of Sales</font></p> </td>
        <TD 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 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>2,809,000</font></p> </td>
        <TD 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 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>2,621,000</font></p> </td>
        <TD 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 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>5,516,000</font></p> </td>
        <TD 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 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>5,069,000</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:#D6F3E8">
            <p style='margin-left:56.0pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Gross Profit</font></p> </td>
        <TD 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 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>4,160,000</font></p> </td>
        <TD 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 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>3,232,000</font></p> </td>
        <TD 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 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>7,518,000</font></p> </td>
        <TD 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 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>6,206,000</font></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:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='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: 0in'><b><font size=2>Operating Expenses</font></b><font size=2>:</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='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:30.0pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Selling</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 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>1,426,000</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 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>1,224,000</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 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>2,895,000</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 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>2,441,000</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:30.0pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Marketing</font></p> </td>
        <TD 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 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>362,000</font></p> </td>
        <TD 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 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>241,000</font></p> </td>
        <TD 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 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>695,000</font></p> </td>
        <TD 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 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>489,000</font></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:30.0pt;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom: 0in'><font size=2>General and administrative</font></p> </td>
        <TD 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 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>1,195,000</font></p> </td>
        <TD 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 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>902,000</font></p> </td>
        <TD 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 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>2,324,000</font></p> </td>
        <TD 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 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>1,751,000</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:#D6F3E8">
            <p style='margin-left:42.0pt;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom: 0in'><font size=2>Total Operating Expenses</font></p> </td>
        <TD 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 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>2,983,000</font></p> </td>
        <TD 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 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>2,367,000</font></p> </td>
        <TD 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 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>5,914,000</font></p> </td>
        <TD 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 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>4,681,000</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:56.0pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Operating Income </font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 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>1,177,000</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 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>865,000</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 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>1,604,000</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 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>1,525,000</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: 0in'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='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: 0in'><b><font size=2>Other Income (Expense)</font></b><font size=2>:</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='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:30.0pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Interest income</font></p> </td>
        <TD 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 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>51,000</font></p> </td>
        <TD 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 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>23,000</font></p> </td>
        <TD 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 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>95,000</font></p> </td>
        <TD 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 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>44,000</font></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:30.0pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Interest expense</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 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>(24,000</font></p> </td>
        <TD 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="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 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>(39,000</font></p> </td>
        <TD 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="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 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>(58,000</font></p> </td>
        <TD 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="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 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>(81,000</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=2>)</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <TD VALIGN="TOP" STYLE="background:#D6F3E8">
            <p style='margin-left:30.0pt;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom: 0in'><font size=2>Other income</font></p> </td>
        <TD 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 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>&#151;</font></p> </td>
        <TD 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 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>100,000</font></p> </td>
        <TD 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 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>&#151;</font></p> </td>
        <TD 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 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>100,000</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:42.0pt;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom: 0in'><font size=2>Total Other Income</font></p> </td>
        <TD 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 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>27,000</font></p> </td>
        <TD 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 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>84,000</font></p> </td>
        <TD 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 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>37,000</font></p> </td>
        <TD 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 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>63,000</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:#D6F3E8">
            <p style='margin-left:55.0pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Income Before Taxes</font></p> </td>
        <TD 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 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>1,204,000</font></p> </td>
        <TD 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 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>949,000</font></p> </td>
        <TD 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 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>1,641,000</font></p> </td>
        <TD 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 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>1,588,000</font></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:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='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:1.0pt;margin-bottom: 0in'><font size=2>Income tax expense</font></p> </td>
        <TD 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 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 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 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>&#151;</font></p> </td>
        <TD 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>&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 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>16,000</font></p> </td>
        <TD 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 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>&#151;</font></p> </td>
        <td width="1%" 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>&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: 0in'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='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:56.0pt;text-indent:-.25in;text-align:left;margin-top:1.5pt;margin-bottom: 0in'><b><font size=2>Net Income</font></b></p> </td>
        <TD 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>$</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="border-bottom: double black 2.25pt;background:#D6F3E8">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>1,198,000</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: double black 2.25pt;background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <TD 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>949,000</font></p> </td>
        <TD 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>$</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="border-bottom: double black 2.25pt;background:#D6F3E8">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>1,625,000</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: double black 2.25pt;background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <TD 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>1,588,000</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;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: 0in'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='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: 0in'><font size=2>Net income per share:</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='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:42.0pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Basic</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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>$</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>0.08</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <TD 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>0.06</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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>$</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>0.11</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <TD 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>0.10</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:43.0pt;text-indent:-.25in;text-align:left;margin-top:1.5pt;margin-bottom: 0in'><font size=2>Diluted</font></p> </td>
        <TD 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: solid 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>$</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="border-bottom: solid black 2.25pt;background:#D6F3E8">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>0.07</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: solid black 2.25pt;background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="border-bottom: solid 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>0.06</font></p> </td>
        <TD 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: solid 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>$</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="border-bottom: solid black 2.25pt;background:#D6F3E8">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>0.10</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: solid black 2.25pt;background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="border-bottom: solid 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>0.10</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;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: 0in'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='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: 0in'><font size=2>Shares used in calculation of net income per share: </font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='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:42.0pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Basic</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 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>15,344,000</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 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>15,059,000</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 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>15,323,000</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 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>15,059,000</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:43.0pt;text-indent:-.25in;text-align:left;margin-top:1.5pt;margin-bottom: 0in'><font size=2>Diluted</font></p> </td>
        <TD 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: solid 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 VALIGN="BOTTOM" STYLE="border-bottom: solid 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>16,139,000</font></p> </td>
        <TD 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: solid 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 VALIGN="BOTTOM" STYLE="border-bottom: solid 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>15,203,000</font></p> </td>
        <TD 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: solid 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 VALIGN="BOTTOM" STYLE="border-bottom: solid 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>16,080,000</font></p> </td>
        <TD 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: solid 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 VALIGN="BOTTOM" STYLE="border-bottom: solid 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>15,167,000</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;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;'><i><font size=2>See accompanying notes to financial statements.</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:center;'><font size=2>4</font></p>
<BR>
<HR SIZE=3 COLOR=GRAY NOSHADE>
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<P><FONT FACE="Times New Roman, Times, Serif" 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>Insignia Systems, Inc.</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><b>S<small>TATEMENTS</small> <small>OF</small> S<small>HAREHOLDERS</small>&#146; E<small>QUITY</small></b></p>

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

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


<div align=left>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" STYLE="border-collapse:collapse">
    <tr style='page-break-inside:avoid'>
        <td width="35%" valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:center;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:center;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td colspan="4" 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>Common Stock</font></b></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:center;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td colspan="2" valign=bottom style='background:white; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1.0pt;margin-bottom:0pt'><b><font size=1>Additional</font></b><br> <b><font size=1>Paid-In</font></b></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:center;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td colspan="2" valign=bottom style='background:white; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:1.0pt;margin-bottom:0pt'><b><font size=1>Accumulated</font></b></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:center;margin-top:1.0pt;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:center;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" 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 VALIGN="bottom" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:center;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td width="35%" valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:center;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="top" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:center;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="top" 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 VALIGN="top" STYLE="border-top:solid black 1.0pt; background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:center;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td colspan="2" valign=top 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>Amount</font></b></p> </td>
        <TD VALIGN="top" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:center;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td colspan="2" valign=top 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>Capital</font></b></p> </td>
        <TD VALIGN="top" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:center;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td colspan="2" valign=top 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>Deficit</font></b></p> </td>
        <TD VALIGN="top" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:center;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td colspan="2" valign=top 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>Total</font></b></p> </td>
        <TD VALIGN="top" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:center;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <TD WIDTH="35%" VALIGN="TOP" STYLE="background:white">
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><u><b><font size=2>Six Months June 30, 2007</font></b></u><u></u></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="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="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="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=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="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=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="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=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="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=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 width="35%" valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background: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 width="35%" valign=top style='background:#D6F3E8'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><b><font size=2>Balance at December 31, 2006</font></b></p> </td>
        <TD 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 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>15,152,000</font></p> </td>
        <TD 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>$</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>152,000</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:#D6F3E8;">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <TD 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>29,557,000</font></p> </td>
        <TD 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>$</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>(24,847,000</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:#D6F3E8">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=2>)</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <TD 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>4,862,000</font></p> </td>
        <TD 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 width="35%" valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Issuance of common stock, net</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <TD 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>195,000</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p 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 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>2,000</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p 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 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>125,000</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p 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 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>127,000</font></p> </td>
        <TD VALIGN="bottom" STYLE="background: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 width="35%" valign=top style='background:#D6F3E8'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Stock-based compensation</font></p> </td>
        <TD 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 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 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 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 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 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>205,000</font></p> </td>
        <TD 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 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 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 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>205,000</font></p> </td>
        <TD 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 width="35%" valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom: 0in'><font size=2>Net income</font></p> </td>
        <TD 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 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 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 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 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 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 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 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>1,625,000</font></p> </td>
        <TD 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 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>1,625,000</font></p> </td>
        <TD 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 width="35%" valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background: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 width="35%" valign=top style='background:#D6F3E8'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:1.5pt;margin-bottom: 0in'><b><font size=2>Balance at June 30, 2007</font></b></p> </td>
        <TD 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 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>15,347,000</font></p> </td>
        <TD 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>$</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="border-bottom: double black 2.25pt;background:#D6F3E8">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>154,000</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:#D6F3E8;">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: double black 2.25pt;background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <TD 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>29,887,000</font></p> </td>
        <TD 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>$</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="border-bottom: double black 2.25pt;background:#D6F3E8">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>(23,222,000</font></p> </td>
        <TD VALIGN="bottom" STYLE="border-bottom: double #D6F3E8 2.25pt;background:#D6F3E8">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=2>)</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: double black 2.25pt;background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <TD 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>6,819,000</font></p> </td>
        <TD 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 width="35%" valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background: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 width="35%" valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background: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 width="35%" valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><u><b><font size=2>Six Months Ended June 30, 2006</font></b></u><u></u></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background: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 width="35%" valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background: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 width="35%" valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><b><font size=2>Balance at December 31, 2005</font></b></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <TD 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>15,002,000</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p 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>$</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>150,000</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <TD 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>29,165,000</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p 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>$</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>(27,243,000</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=2>)</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <TD 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>2,072,000</font></p> </td>
        <TD VALIGN="bottom" STYLE="background: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 width="35%" valign=top style='background:#D6F3E8'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Issuance of common stock, net</font></p> </td>
        <TD 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 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>57,000</font></p> </td>
        <TD 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 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>1,000</font></p> </td>
        <TD 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 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 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 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 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 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>33,000</font></p> </td>
        <TD 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 width="35%" valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Stock-based compensation</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p 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 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>151,000</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p 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 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>151,000</font></p> </td>
        <TD VALIGN="bottom" STYLE="background: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 width="35%" valign=top style='background:#D6F3E8'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom: 0in'><font size=2>Net income</font></p> </td>
        <TD 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 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 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 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 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 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 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 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>1,588,000</font></p> </td>
        <TD 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 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>1,588,000</font></p> </td>
        <TD 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 width="35%" valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="bottom" STYLE="background: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 width="35%" valign=top style='background:white'>
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:1.5pt;margin-bottom: 0in'><b><font size=2>Balance at June 30, 2006</font></b></p> </td>
        <TD 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 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>15,059,000</font></p> </td>
        <TD 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>$</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="border-bottom: double black 2.25pt;background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>151,000</font></p> </td>
        <TD VALIGN="bottom" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: double black 2.25pt;background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <TD 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>29,348,000</font></p> </td>
        <TD 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>$</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="border-bottom: double black 2.25pt;background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>(25,655,000</font></p> </td>
        <TD VALIGN="bottom" STYLE="border-bottom: double white 2.25pt;background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=2>)</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: double black 2.25pt;background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <TD 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>3,844,000</font></p> </td>
        <TD 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;'><i><font size=2>See accompanying notes to financial statements.</font></i></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<BR><BR><BR><BR>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>5</font></p>



<BR>
<HR SIZE=3 COLOR=GRAY NOSHADE>
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<P><FONT FACE="Times New Roman, Times, Serif" 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>Insignia Systems, Inc.</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><b>S<small>TATEMENTS</small> <small>OF</small> C<small>ASH</small> F<small>LOWS</small></b></p>

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

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


<div align=left>

<TABLE 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:.25in;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom: 0in'><FONT SIZE="2"><U><B>Six Months Ended June 30</B></U> </FONT></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:center;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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:center;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="1%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:center;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <TD WIDTH="71%" VALIGN="TOP" STYLE="background:white">
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><b><font size=2>Operating Activities</font></b><font size=2>:</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="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="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="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="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:30.0pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Net income</font></p> </td>
        <TD 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>$</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:#D6F3E8">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>1,625,000</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <TD 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>1,588,000 </font></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:30.0pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Adjustments to reconcile net income to net cash provided by operating activities:</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='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:43.0pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Depreciation and amortization</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 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>124,000</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 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>100,000</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:43.0pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Stock-based compensation</font></p> </td>
        <TD 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 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>205,000</font></p> </td>
        <TD 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 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>151,000</font></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:30.0pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Changes in operating assets and liabilities:</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='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:43.0pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Accounts receivable</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 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>(1,056,000</font></p> </td>
        <TD 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="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 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>(693,000</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=2>)</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <TD VALIGN="TOP" STYLE="background:#D6F3E8">
            <p style='margin-left:42.0pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Inventories</font></p> </td>
        <TD 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 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>(138,000</font></p> </td>
        <TD 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 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>(33,000</font></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>)</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <TD VALIGN="TOP" STYLE="background:white">
            <p style='margin-left:43.0pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Prepaid expenses and other</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 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>83,000</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 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>(48,000</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=2>)</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <TD VALIGN="TOP" STYLE="background:#D6F3E8">
            <p style='margin-left:43.0pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Accounts payable</font></p> </td>
        <TD 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 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>53,000</font></p> </td>
        <TD 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 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>(430,000</font></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>)</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <TD VALIGN="TOP" STYLE="background:white">
            <p style='margin-left:43.0pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Accrued liabilities</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 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>272,000</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 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>(232,000</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=2>)</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <TD VALIGN="TOP" STYLE="background:#D6F3E8">
            <p style='margin-left:43.0pt;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom: 0in'><font size=2>Deferred revenue</font></p> </td>
        <TD 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 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>106,000</font></p> </td>
        <TD 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 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>127,000</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:68.0pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Net cash provided by operating activities</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 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>1,274,000</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 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>530,000</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: 0in'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='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: 0in'><b><font size=2>Investing Activities</font></b><font size=2>:</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='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:30.0pt;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom: 0in'><font size=2>Purchases of property and equipment</font></p> </td>
        <TD 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 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>(102,000</font></p> </td>
        <TD 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="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 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>(127,000</font></p> </td>
        <td width="1%" 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="TOP" STYLE="background:white">
            <p style='margin-left:68.0pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Net cash used in investing activities</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 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 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="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 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>(127,000</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=2>)</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: 0in'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='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: 0in'><b><font size=2>Financing Activities</font></b><font size=2>:</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='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:30.0pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Net change in line of credit</font></p> </td>
        <TD 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 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>(186,000</font></p> </td>
        <TD 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 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="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:30.0pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Payment of long-term liabilities</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 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>(118,000</font></p> </td>
        <TD 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="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 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>(90,000</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=2>)</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <TD VALIGN="TOP" STYLE="background:#D6F3E8">
            <p style='margin-left:30.0pt;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom: 0in'><font size=2>Proceeds from issuance of common stock, net</font></p> </td>
        <TD 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 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>127,000</font></p> </td>
        <TD 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 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>33,000</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:68.0pt;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom: 0in'><font size=2>Net cash used in financing activities</font></p> </td>
        <TD 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 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>(177,000</font></p> </td>
        <TD 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>
        <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 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>(23,000</font></p> </td>
        <td width="1%" 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:0in;margin-bottom: 0in'><font size=2>Increase in cash and cash equivalents</font></p> </td>
        <TD 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 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>995,000</font></p> </td>
        <TD 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 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>380,000</font></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:.25in;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom: 0in'><font size=2>Cash and cash equivalents at beginning of period</font></p> </td>
        <TD 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 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>3,785,000</font></p> </td>
        <TD 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 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>2,711,000</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:#D6F3E8">
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:1.5pt;margin-bottom: 0in'><font size=2>Cash and cash equivalents at end of period</font></p> </td>
        <TD 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>$</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="border-bottom: double black 2.25pt;background: #D6F3E8">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>4,780,000</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: double black 2.25pt;background: #D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <TD 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>3,091,000</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;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: 0in'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='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: 0in'><b><font size=2>Supplemental disclosures for cash flow information:  </font></b></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='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:25.0pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Cash paid during periods for interest</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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>$</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>35,000</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <TD 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>51,000</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:25.0pt;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Cash paid during periods for income taxes</font></p> </td>
        <TD 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 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>16,000</font></p> </td>
        <TD 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 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>&#151;</font></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></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;'><i><font size=2>See accompanying notes to financial statements.</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:center;'><font size=2>6</font></p>



<BR>
<HR SIZE=3 COLOR=GRAY NOSHADE>
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<P><FONT FACE="Times New Roman, Times, Serif" 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="notes"></A>Insignia Systems, Inc.</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><b>N<small>OTES</small> <small>TO</small> F<small>INANCIAL</small> S<small>TATEMENTS</small></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>(Unaudited)</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="24" 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'><b><font size=2>Summary of Significant Accounting Policies.</font></b></p> </td> </tr></table>
</div>


<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.25in;text-align:left;'><i><b><font size=2>Description of Business</font></b><font size=2>. </font></i><font size=2>Insignia Systems, Inc. (the &#147;Company&#148;) markets in-store advertising programs, services and products to retailers and consumer packaged goods manufacturers. The Company&#146;s services and products include the Insignia Point-of-Purchase Services (POPS) in-store advertising program, thermal sign card supplies for the Company&#146;s SIGNright and Impulse systems, Stylus software and laser printable cardstock and label supplies.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.25in;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.25in;text-align:left;'><i><b><font size=2>Basis of Presentation</font></b><font size=2>. </font></i><font size=2>Financial statements for the interim periods included herein are unaudited; however, they contain all adjustments, including normal recurring accruals, which in the opinion of management, are necessary to present fairly the financial position of the Company at June 30, 2007, and its results of operations for the three and six months ended June 30, 2007 and 2006, and cash flows for the six months ended June 30, 2007 and 2006. Results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year. </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:0.25in;text-align:left;'><font size=2>The financial statements do not include certain footnote disclosures and financial information normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America and, therefore, should be read in conjunction with the financial statements and notes included in the Company&#146;s Annual Report on Form 10-K for the year ended December 31, 2006. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.25in;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.25in;text-align:left;'><font size=2>The Summary of Significant
Accounting Policies in the Company&#146;s 2006 Annual Report on Form 10-K describes the Company&#146;s accounting policies. </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:0.25in;text-align:left;'><i><b><font size=2>Inventories</font></b><font size=2>. </font></i><font size=2>Inventories are primarily comprised of parts and supplies for Impulse and SIGNright machines, sign cards, and rollstock. Inventory is valued at the lower of cost or market using the first-in, first-out (FIFO) method, and consists of the following:</font></p>

<BR>
<div align=center>

<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="70%" STYLE="border-collapse:collapse">
    <tr style='page-break-inside:avoid'>
        <TD 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="5%" 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 colspan="2" valign=bottom style=' border-bottom:solid black 1.0pt; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>June 30,</font></b><br> <b><font size=1>2007</font></b></p> </td>
        <td width="5%" 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 colspan="2" valign=bottom style=' border-bottom:solid black 1.0pt; '>
            <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>2006</font></b></p> </td>
        <td width="1%" 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 WIDTH="63%" VALIGN="TOP" STYLE="background:#D6F3E8">
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Raw materials</font></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>$</font></p> </td>
        <TD WIDTH="12%" VALIGN="BOTTOM" STYLE="border-top: solid black 1.0pt;background: #D6F3E8">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>163,000</font></p> </td>
        <TD WIDTH="5%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="1%" VALIGN="BOTTOM" STYLE="background:#D6F3E8">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <TD WIDTH="12%" 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>162,000</font></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:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Work-in-process</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 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>48,000</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 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>8,000</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:1.0pt;margin-bottom: 0in'><font size=2>Finished goods</font></p> </td>
        <td width="5%" 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 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>379,000</font></p> </td>
        <td width="5%" 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 VALIGN="BOTTOM" STYLE="border-bottom: solid black 1.0pt; background:#D6F3E8">
            <p style='margin-left:0pt;text-indent:2.25pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>282,000</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: 0in'><font size=1>&nbsp;</font></p> </td>
        <td width="5%" 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>$</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="border-bottom: double black 2.25pt;background: white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>590,000</font></p> </td>
        <td width="5%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: double black 2.25pt;background: white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <TD 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>452,000</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr></table>
</div>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.25in;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.25in;text-align:left;'><i><b><font size=2>Property and Equipment</font></b><font size=2>. </font></i><font size=2>Property and equipment consists of 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 CELLSPACING="0" CELLPADDING="0" WIDTH="70%" STYLE="border-collapse:collapse">
    <tr style='page-break-inside:avoid'>
        <TD VALIGN="TOP">
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom: 0in'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0in'><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:0in;margin-bottom:0pt'><b><font size=1>June 30,</font></b><br> <b><font size=1>2007</font></b></p> </td>
        <TD 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 colspan="2" valign=bottom style=' border-bottom:solid black 1.0pt; '>
            <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>2006</font></b></p> </td>
        <td width="1%" valign=bottom >
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0in'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <TD WIDTH="63%" VALIGN="TOP" STYLE="background:#D6F3E8">
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Production tooling, machinery and equipment</font></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>$</font></p> </td>
        <TD WIDTH="12%" VALIGN="BOTTOM" STYLE="border-top: solid black 1.0pt;background: #D6F3E8">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>1,798,000</font></p> </td>
        <TD WIDTH="5%" VALIGN="BOTTOM" STYLE="background:#D6F3E8;">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="1%" VALIGN="BOTTOM" STYLE="background:#D6F3E8">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <TD WIDTH="12%" 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>1,792,000</font></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:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Office furniture and fixtures</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 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>191,000</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p 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 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>191,000</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: 0in'><font size=2>Computer equipment and software</font></p> </td>
        <TD 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 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>720,000</font></p> </td>
        <TD 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 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>661,000</font></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:.25in;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom: 0in'><font size=2>Leasehold improvements</font></p> </td>
        <TD 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 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>360,000</font></p> </td>
        <TD 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 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>341,000</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:#D6F3E8">
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=1>&nbsp;</font></p> </td>
        <TD 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 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>3,069,000</font></p> </td>
        <TD 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 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>2,985,000</font></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:.25in;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom: 0in'><font size=2>Accumulated depreciation and amortization</font></p> </td>
        <TD 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 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>(2,614,000</font></p> </td>
        <TD 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>
        <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 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>(2,508,000</font></p> </td>
        <td width="1%" 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:1.5pt;margin-bottom: 0in'><font size=2>Net Property and Equipment</font></p> </td>
        <TD 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>$</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="border-bottom: double black 2.25pt;background: #D6F3E8">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0in;margin-bottom:0pt'><font size=2>455,000</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:#D6F3E8">
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: double black 2.25pt;background: #D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>$</font></p> </td>
        <TD 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>477,000</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8'>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr></table>
</div>

<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:center;'><font size=2>7</font></p>
<BR>
<HR SIZE=3 COLOR=GRAY NOSHADE>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><A HREF="#toc">Table of Contents</A></FONT></P>




<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.25in;text-align:left;'><i><b><font size=2>Stock-Based Compensation</font></b></i><font size=2>. Effective January 1, 2006, the Company adopted the provisions of Statement of Financial Accounting Standards No. 123(R), &#147;Share-Based Payment&#148; (&#147;SFAS 123(R)&#148;), using the modified prospective transition application method. Under this method, compensation expense is recognized for employee awards granted, modified, or settled subsequent to December 31, 2005, and the unvested portion of awards granted to employees prior to January 1, 2006. We use the straight-line method to recognize compensation expense over the requisite service period of the award.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.25in;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.25in;text-align:left;'><font size=2>There were 506,100 stock option awards in the second quarter of 2007. Total stock-based compensation expense recorded for the six months ended June 30, 2007 and 2006, was $205,000 and $151,000, 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; margin-left:0.25in;text-align:left;'><i><b><font size=2>Net Income Per Share</font></b><font size=2>. </font></i><font size=2>Basic net income per share is computed by dividing net income by the weighted average shares outstanding and excludes any dilutive effects of options, warrants and convertible securities. Diluted net income per share gives effect to all diluted potential common shares outstanding during the period. Options and warrants to purchase approximately 926,000 and 1,962,000 shares of common stock with weighted average exercise prices of $6.81 and $3.98 were outstanding at June 30, 2007 and 2006 and were not included in the computation of common stock equivalents for the three months ended June 30, 2007 and 2006 because their exercise prices were higher than the average fair market value of the common shares during the reporting period. Options and warrants to purchase approximately 865,000 and 1,953,000 shares of common
stock with weighted average exercise prices of  $7.02 and $4.12 were outstanding at June 30, 2007 and 2006 and were not included in the computation of common stock equivalents for the six months ended June 30, 2007 and 2006 because their exercise prices were higher than the average fair market value of the common shares during the reporting period.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.25in;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.25in;text-align:left;'><font size=2>Weighted average common shares outstanding for the three and six months ended June 30, 2007 and 2006 were 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 CELLSPACING="0" CELLPADDING="0" WIDTH="96%" STYLE="margin-left:.25in;border-collapse:collapse">
    <tr style='page-break-inside:avoid'>
        <TD 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 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 colspan="3" valign=bottom style=' border-bottom:solid black 1.0pt; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>Three Months Ended</font></b><br> <b><font size=1>June 30</font></b></p> </td>
        <TD 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 colspan="3" valign=bottom style=' border-bottom:solid black 1.0pt; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>Six Months Ended</font></b><br> <b><font size=1>June 30</font></b></p> </td>
        <td width="1%" 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 WIDTH="47%" 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="3%" 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="10%" VALIGN="BOTTOM" STYLE="border-bottom: solid black 1.0pt">
            <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="border-top:solid black 1.0pt;">
            <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="10%" VALIGN="BOTTOM" STYLE="border-top:solid black 1.0pt; border-left:none;border-bottom:solid black 1.0pt;border-right:none;">
            <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">
            <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="10%" VALIGN="BOTTOM" STYLE="border-bottom: solid black 1.0pt">
            <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="border-top:solid black 1.0pt;">
            <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="10%" VALIGN="BOTTOM" STYLE="border-top:solid black 1.0pt; border-left:none;border-bottom:solid black 1.0pt;border-right:none;">
            <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="1%" 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" STYLE="background:#D6F3E8">
            <p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=2>Denominator for basic net income per share &#150; weighted average shares</font></p> </td>
        <TD 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="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>15,344,000</font></p> </td>
        <TD 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="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>15,059,000</font></p> </td>
        <TD 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="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>15,323,000</font></p> </td>
        <TD 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="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>15,059,000</font></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:.25in;text-indent:-.25in;text-align:left;margin-top:0in;margin-bottom: 0in'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><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="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:1.0pt;margin-bottom: 0in'><font size=2>Effect of dilutive securities: Stock options and warrants</font></p> </td>
        <TD 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="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>795,000</font></p> </td>
        <TD 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="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>144,000</font></p> </td>
        <TD 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="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>757,000</font></p> </td>
        <TD 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="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>108,000</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:0in;margin-bottom: 0in'><font size=1>&nbsp;</font></p> </td>
        <TD VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><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 VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><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="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:1.5pt;margin-bottom: 0in'><font size=2>Denominator for diluted net income per share &#150; adjusted weighted average shares</font></p> </td>
        <TD 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="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>16,139,000</font></p> </td>
        <TD 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="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>15,203,000</font></p> </td>
        <TD 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="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>16,080,000</font></p> </td>
        <TD 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="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>15,167,000</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;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>


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    <tr >
        <td width="24" 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'><b><font size=2>Line of Credit. </font></b><font size=2>On September 16, 2004, the Company entered into a Financing Agreement, Security Agreement and Revolving Note (collectively, &#147;the Credit Agreement&#148;) with Marquette Business Credit, Inc. that initially provided for borrowings up to $1,500,000 for twelve months, subject to collateral availability. The borrowings were secured by all of the Company&#146;s assets. The Credit Agreement provided that borrowings would bear interest at 2.5% over prime, with a minimum monthly interest charge of $2,500, and an annual fee of 1% of the Revolving Note payable. On November 22, 2004, the Company entered into an amendment to the Credit Agreement to extend the term to April 30, 2006, and on May 8, 2006, the Company entered into a second amendment to the Credit Agreement to extend the term to April 30, 2007. The Company did not
renew the Credit Agreement  and all borrowings were repaid as of April 30, 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:center;'><font size=2>8</font></p>
<BR>
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            <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'><b><font size=2>Commitments and Contingencies.</font></b></p> </td> </tr></table>
</div>


<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.25in;text-align:left;'><i><b><font size=2>Legal</font></b></i><font size=2>. In August 2000, News America Marketing In-Store, Inc. (News America), brought suit against the Company in U.S. District Court in New York, New York. The case was settled in November 2002. The terms of the settlement agreement are confidential. The settlement did not impact the Company&#146;s operating results.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.25in;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.25in;text-align:left;'><font size=2>In October 2003, News America brought suit against the Company in U.S. District Court in New York, New York, alleging that the Company has engaged in deceptive acts and practices, has interfered with existing business relationships with retailers and prospective economic advantage, and has engaged in unfair competition. The suit sought unspecified damages and injunctive relief. In February 2007 the U.S. District Court in New York transferred this action to Minnesota where the claims became part of the lawsuit the Company filed against News America and Albertson&#146;s Inc., and the New York action was subsequently dismissed.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.25in;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.25in;text-align:left;'><font size=2>On September 23, 2004, the Company brought suit against News America and Albertson&#146;s Inc. in Federal District Court in Minneapolis, Minnesota, for violations of federal and state antitrust and false advertising laws, alleging that News America has acquired and maintained monopoly power through various wrongful acts designed to harm the Company in the in-store advertising and promotion products and services market. The suit seeks injunctive relief sufficient to prevent further antitrust injury and an award of treble damages to be determined at trial for the harm caused to the Company. On June 30, 2006 the Court denied the motions of News America and Albertson&#146;s to dismiss the suit. On September 20, 2006, the State of Minnesota through its Attorney General intervened as a co-plaintiff in the business disparagement portion of the Minnesota case. In December 2006 News America filed
counterclaims similar to the claims in its New York action against Insignia and one of its officers. Motions to dismiss the counterclaims were argued in June 2007, but a ruling has not yet been issued. The parties are now engaged in pre-trial discovery. Pursuant to Court order, all discovery and pre-trial matters must be completed by July 2008. Management believes that the allegations of the counterclaims are without merit. An evaluation of the likelihood of an unfavorable outcome and estimate of the potential liability cannot be rendered at this time. If the Company is required to pay a significant amount in settlement or damages, it will have a material adverse effect on its operations and financial condition. In addition, a negative outcome of this litigation could affect long-term competitive aspects of the Company&#146;s business.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.25in;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.25in;text-align:left;'><font size=2>Management currently expects the amount of legal fees that will be incurred in connection with the ongoing lawsuit to be significant throughout 2007 and 2008. During the six months ended June 30,&nbsp;2007, the Company incurred legal fees of $810,000 related to the News America litigation. Legal fees 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; margin-left:0.25in;text-align:left;'><font size=2>The Company is subject to various other legal proceedings in the normal course of business. Management believes the outcome of these proceedings will not have a material adverse effect on the Company&#146;s financial position or results 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 >
        <td width="24" 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'><b><font size=2>Concentrations. </font></b><font size=2>During the six months ended June 30,&nbsp;2007, two customers accounted for 13% and 12% of the Company&#146;s total net sales. At June 30, 2007, one of these customers represented 10%, and one other customer represented 16%, of the Company&#146;s total accounts receivable. During the six months ended June&nbsp;30, 2006, one of these customers accounted for 24% of the Company&#146;s total net sales and one other customer accounted for 10% of the Company&#146;s total net sales.</font></p> </td> </tr></table>
</div>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.25in;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.25in;text-align:left;'><font size=2>Although there are a number of customers that the Company sells to, the loss of a major customer could cause a delay in and possible loss of sales, which would adversely affect operating results.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.25in;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>9</font></p>
<BR>
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         <td width="24" 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  valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=2>Income Taxes. </font></b><font size=2>At December 31, 2006, the Company had net operating loss carryforwards of approximately $23,000,000, which are available to offset future taxable income. These carryforwards are subject to the limitations of Internal Revenue Code Section 382. This Section provides limitations on the availability of net operating losses to offset current taxable income if an ownership change has occurred as defined by Internal Revenue Code Section 382. These carryforwards will begin expiring in 2009. The Company has established a valuation allowance against all deferred tax assets due to the uncertainties regarding the realization of the deferred tax assets based upon the Company&#146;s lack of historical earnings. Readers should refer to Note 8 of the Company&#146;s Financial Statements on Form 10-K for the year ended December 31, 2006, for
additional information related to income taxes.</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:0.25in;text-align:left;'><font size=2>The Company believes it has sufficient net operating losses available to offset taxable net income; however, it recorded income tax expense of $6,000 for the quarter ended June 30, 2007, related to alternative minimum tax liability. The Company continues to provide a full valuation allowance against all deferred tax assets as of June 30, 2007. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.25in;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.25in;text-align:left;'><font size=2>The Company adopted the provisions of FASB Interpretation 48, </font><i><font size=2>Accounting for Uncertainty in Income Taxes</font></i><font size=2>, on January 1, 2007. Previously, the Company had accounted for tax contingencies in accordance with Statement of Financial Accounting Standards 5, </font><i><font size=2>Accounting for Contingencies</font></i><font size=2>. As required by Interpretation 48, which clarifies Statement 109, </font><i><font size=2>Accounting for Income Taxes</font></i><font size=2>, the Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not</font><i><font size=2> </font></i><font size=2>threshold, the amount recognized in the financial statements is the largest benefit that has
a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. At the adoption date, the Company applied Interpretation 48 to all tax positions for which the statute of limitations remained open. As a result of the implementation of Interpretation 48, the Company recognized no liability for unrecognized tax benefits, which would have been accounted for as a reduction to the January 1, 2007, balance of retained earnings.</font></p>

<p style=' margin-bottom:2pt; margin-top:6pt; margin-left:0.25in;text-align:left;'><font size=2>The Company is subject to income taxes in the U.S. federal jurisdiction and various states jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. With few exceptions, the Company is no longer subject to U.S. federal, state and local tax examinations by tax authorities for the years before 2003.</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="24" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>6.</font></p> </td>
        <td  valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=2>Subsequent Event. </font></b><font size=2>On July 2, 2007, the Company and Valassis Sales and Marketing Services, Inc. (&#147;Valassis&#148;), entered into Amendment No. 2 (the &#147;Amendment&#148;)&nbsp;to the Exclusive Reseller Agreement between the parties. The Amendment extends the term of the strategic alliance between the parties to December 31, 2017. The Amendment also expands the strategic alliance to increase the role of Valassis in developing and expanding the Company&#146;s participating retailer network. Valassis received a five-year warrant to acquire 800,000 shares of Insignia&#146;s common stock at a price of $4.04 and will be paid a cash commission by the Company on the revenue the Company realizes from POPS programs the consumer packaged goods manufacturers conduct in the new retail chains. </font></p> </td> </tr></table>
</div>

<p style=' margin-bottom:0pt; margin-top:6pt;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'>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=3><A NAME="managements"></A>Item 2. </font></b></p> </td>
        <td  valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=3>Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations</font></b></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>Overview</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>Insignia Systems, Inc. markets in-store advertising programs, services and products to retailers and consumer packaged goods manufacturers. The Company&#146;s services and products include the Insignia Point-of-Purchase Services (POPS) in-store advertising program, thermal sign card supplies for the Company&#146;s SIGNright and Impulse systems, Stylus software and laser printable cardstock and label supplies.</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>10</font></p>
<BR>
<HR SIZE=3 COLOR=GRAY NOSHADE>
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<P><FONT FACE="Times New Roman, Times, Serif" 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>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;'><font size=2>The following table sets forth, for the periods indicated, certain items in the Company&#146;s Statements of Operations as a percentage of total net 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>&nbsp;</font></p>


<div align=left>

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            <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 >
            <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 COLSPAN="3" 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>Three Months Ended</font></b><br> <b><font size=1>June 30</font></b></p> </td>
        <td width="2%" 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 COLSPAN="3" 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>Six Months Ended</font></b><br> <b><font size=1>June 30</font></b></p> </td>
        <td width="1%" 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> </tr>
    <tr style='page-break-inside:avoid'>
        <TD WIDTH="55%" 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="2%" 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="9%" 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>2007</font></b></p> </td>
        <td width="2%" valign=bottom style='border-top:solid black 1.0pt; '>
            <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="9%" VALIGN="BOTTOM" STYLE="border-top:solid black 1.0pt; border-left:none;border-bottom:solid black 1.0pt;border-right:none;">
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><b><font size=1>2006</font></b></p> </td>
        <td width="2%" 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="9%" 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>2007</font></b></p> </td>
        <td width="2%" valign=bottom style='border-top:solid black 1.0pt; '>
            <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="9%" VALIGN="BOTTOM" STYLE="border-top:solid black 1.0pt; border-left:none;border-bottom:solid black 1.0pt;border-right:none;">
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><b><font size=1>2006</font></b></p> </td>
        <td width="1%" 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> </tr>
    <tr style='page-break-inside:avoid'>
        <TD WIDTH="55%" STYLE="background:#D6F3E8">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Net sales</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=1>&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:0pt;margin-bottom:0pt'><font size=2>100.0</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>%</font></p> </td>
        <TD WIDTH="9%" 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>100.0</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>%</font></p> </td>
        <TD WIDTH="9%" 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>100.0</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>%</font></p> </td>
        <TD WIDTH="9%" 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>100.0</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> </tr>
    <tr style='page-break-inside:avoid'>
        <TD WIDTH="55%" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Cost of sales</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <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="9%" VALIGN="BOTTOM" STYLE="background:white;">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>40.3</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <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="9%" VALIGN="BOTTOM" STYLE="background:white;">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>44.8</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <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="9%" VALIGN="BOTTOM" STYLE="background:white;">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>42.3</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <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="9%" VALIGN="BOTTOM" STYLE="background:white;">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>45.0</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <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 style='page-break-inside:avoid'>
        <TD WIDTH="55%" STYLE="background:#D6F3E8">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Gross profit</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=1>&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:0pt;margin-bottom:0pt'><font size=2>59.7</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=1>&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:0pt;margin-bottom:0pt'><font size=2>55.2</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=1>&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:0pt;margin-bottom:0pt'><font size=2>57.7</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=1>&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:0pt;margin-bottom:0pt'><font size=2>55.0</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=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <TD WIDTH="55%" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Operating expenses:</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <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="9%" VALIGN="BOTTOM" STYLE="background:white;">
            <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 style='background:white'>
            <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="9%" VALIGN="BOTTOM" STYLE="background:white;">
            <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 style='background:white'>
            <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="9%" VALIGN="BOTTOM" STYLE="background:white;">
            <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 style='background:white'>
            <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="9%" VALIGN="BOTTOM" STYLE="background:white;">
            <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="1%" valign=bottom style='background:white'>
            <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 style='page-break-inside:avoid'>
        <TD WIDTH="55%" STYLE="background:white">
            <p style='margin-left:.25in;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Selling </font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <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="9%" VALIGN="BOTTOM" STYLE="background:white;">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>20.5</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <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="9%" VALIGN="BOTTOM" STYLE="background:white;">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>20.9</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <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="9%" VALIGN="BOTTOM" STYLE="background:white;">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>22.2</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <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="9%" VALIGN="BOTTOM" STYLE="background:white;">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>21.7</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <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 style='page-break-inside:avoid'>
        <TD WIDTH="55%" STYLE="background:#D6F3E8">
            <p style='margin-left:.25in;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Marketing</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=1>&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:0pt;margin-bottom:0pt'><font size=2>5.2</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=1>&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:0pt;margin-bottom:0pt'><font size=2>4.1</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=1>&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:0pt;margin-bottom:0pt'><font size=2>5.3</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=1>&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:0pt;margin-bottom:0pt'><font size=2>4.3</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=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <TD WIDTH="55%" STYLE="background:white">
            <p style='margin-left:.25in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom: 0in'><font size=2>General and administrative</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: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:0pt;margin-bottom:0pt'><font size=2>17.1</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: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:0pt;margin-bottom:0pt'><font size=2>15.4</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: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:0pt;margin-bottom:0pt'><font size=2>17.9</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: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:0pt;margin-bottom:0pt'><font size=2>15.5</font></p> </td>
        <td width="1%" valign=bottom 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> </tr>
    <tr style='page-break-inside:avoid'>
        <TD WIDTH="55%" STYLE="background:#D6F3E8">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0pt'><font size=2>Total operating expenses</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="9%" VALIGN="BOTTOM" STYLE="border-bottom: solid black 1.0pt;background: #D6F3E8">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>42.8</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="9%" VALIGN="BOTTOM" STYLE="border-bottom: solid black 1.0pt;background: #D6F3E8">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>40.4</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="9%" VALIGN="BOTTOM" STYLE="border-bottom: solid black 1.0pt;background: #D6F3E8">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>45.4</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="9%" VALIGN="BOTTOM" STYLE="border-bottom: solid black 1.0pt;background: #D6F3E8">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>41.5</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <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 style='page-break-inside:avoid'>
        <TD WIDTH="55%" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Operating income </font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <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="9%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>16.9</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <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="9%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>14.8</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <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="9%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>12.3</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <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="9%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>13.5</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <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 style='page-break-inside:avoid'>
        <TD WIDTH="55%" STYLE="background:#D6F3E8">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0pt'><font size=2>Other income</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="9%" VALIGN="BOTTOM" STYLE="border-bottom: solid black 1.0pt; background:#D6F3E8">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>0.4</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="9%" VALIGN="BOTTOM" STYLE="border-bottom: solid black 1.0pt; background:#D6F3E8">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>1.4</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="9%" VALIGN="BOTTOM" STYLE="border-bottom: solid black 1.0pt; background:#D6F3E8">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>0.3</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="9%" VALIGN="BOTTOM" STYLE="border-bottom: solid black 1.0pt; background:#D6F3E8">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>0.6</font></p> </td>
        <td width="1%" valign=bottom style='background:#D6F3E8; '>
            <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 style='page-break-inside:avoid'>
        <TD WIDTH="55%" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Income before taxes</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <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="9%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>17.3</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <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="9%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>16.2</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <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="9%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>12.6</font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <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="9%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>14.1</font></p> </td>
        <td width="1%" valign=bottom style='background:white'>
            <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 style='page-break-inside:avoid'>
        <TD WIDTH="55%" STYLE="background:#D6F3E8">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0pt'><font size=2>Income tax expense</font></p> </td>
        <td width="2%" valign=bottom style='background:#D6F3E8; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="9%" VALIGN="BOTTOM" STYLE="border-bottom: solid black 1.0pt; background:#D6F3E8">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>(0.1</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid #D6F3E8 1.0pt;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="9%" VALIGN="BOTTOM" STYLE="border-bottom: solid black 1.0pt; background:#D6F3E8">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>&#151;</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid #D6F3E8 1.0pt;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="9%" VALIGN="BOTTOM" STYLE="border-bottom: solid black 1.0pt; background:#D6F3E8">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>(0.1</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: solid #D6F3E8 1.0pt;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="9%" VALIGN="BOTTOM" STYLE="border-bottom: solid black 1.0pt; background:#D6F3E8">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>&#151;</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: solid #D6F3E8 1.0pt;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> </tr>
    <tr style='page-break-inside:avoid'>
        <TD WIDTH="55%" STYLE="background:white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0pt'><font size=2>Net income </font></p> </td>
        <td width="2%" valign=bottom style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="9%" VALIGN="BOTTOM" STYLE="border-bottom: double black 2.25pt;background: white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>17.2</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: double white 2.25pt;background:white; '>
            <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="9%" VALIGN="BOTTOM" STYLE="border-bottom: double black 2.25pt;background: white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>16.2</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: double white 2.25pt;background:white; '>
            <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="9%" VALIGN="BOTTOM" STYLE="border-bottom: double black 2.25pt;background: white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>12.5</font></p> </td>
        <td width="2%" valign=bottom style='border-bottom: double white 2.25pt;background:white; '>
            <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="9%" VALIGN="BOTTOM" STYLE="border-bottom: double black 2.25pt;background: white">
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>14.1</font></p> </td>
        <td width="1%" valign=bottom style='border-bottom: double white 2.25pt;background:white; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><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>A 15.6% increase in net sales for the first six months of 2007 compared to the first six months of 2006 resulted in a 21.1% increase in gross profit in 2007. This increase in gross profit was largely offset by increased operating expense in 2007 and the absence in 2007 of $100,000 of one-time nonoperating income present in 2006, resulting in a 2.3% increase in net income in the first six months of 2007 compared to the first six months of 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;'><b><font size=2>Critical 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;'><font size=2>The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities at the date of our financial statements. Actual results may differ from these estimates under different assumptions or conditions. </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 significant accounting policies are described in Note 1 to the annual financial statements as of and for the year ended December 31, 2006, included in our Form 10-K filed with the Securities and Exchange Commission on April 2, 2007. We believe our most critical accounting policies and estimates include the following:</font></p>

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

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    <tr >
        <td width="24" 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="24" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=4><b>&#149;</b></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>revenue recognition; </font></p> </td> </tr></table>
</div>

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        <td width="24" 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="24" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=4><b>&#149;</b></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>allowance for doubtful accounts;</font></p> </td> </tr></table>
</div>

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    <tr >
        <td width="24" 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="24" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=4><b>&#149;</b></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>inventory valuation;</font></p> </td> </tr></table>
</div>

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        <td width="24" 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="24" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=4><b>&#149;</b></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>accounting for deferred income taxes;</font></p> </td> </tr></table>
</div>

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        <td width="24" 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="24" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=4><b>&#149;</b></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>valuation of long-lived and intangible assets; and</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="24" 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="24" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=4><b>&#149;</b></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>stock-based compensation.</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:center;'><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>Three and Six Months ended June 30, 2007 Compared to Three and Six Months Ended June 30, 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 Sales.</font></b></i><font size=2> Net sales for the three months ended June 30, 2007 increased 19.1% to $6,969,000 compared to $5,853,000 for the three months ended June 30, 2006. Net sales for the six months ended June 30, 2007 increased 15.6% to $13,034,000 compared to $11,275,000 for the six months ended June 30, 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>Service revenues from our POPSign programs for the three months ended June 30, 2007 increased 20.9% to $6,193,000 compared to $5,122,000 for the three months ended June 30, 2006. Service revenues from our POPSign programs for the six months ended June 30, 2007 increased 17.5% to $11,563,000 compared to $9,842,000 for the six months ended June 30, 2006. The increases were primarily due to an increase in the number of POPSign programs sold to customers (consumer packaged goods manufacturers) during the quarter. </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>Product sales for the three months ended June 30, 2007 increased 6.2% to $776,000 compared to $731,000 for the three months ended June 30, 2006. Product sales for the six months ended June 30, 2007 increased 2.7% to $1,471,000 compared to $1,433,000 for the six months ended June 30, 2006. The increases were primarily due to increased sales of laser label supplies which were partially offset by decreased sales of thermal sign card supplies.</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 Profit.</font></b></i><b><font size=2> </font></b><font size=2>Gross profit for the three months ended June 30, 2007 increased 28.7% to $4,160,000 compared to $3,232,000 for the three months ended June 30, 2006. Gross profit for the six months ended June 30, 2007 increased 21.1% to $7,518,000 compared to $6,206,000 for the six months ended June 30, 2006. Gross profit as a percentage of total net sales increased to 59.7% for the three months ended June 30, 2007, compared to 55.2% for the three months ended June 30, 2006. Gross profit as a percentage of total net sales increased to 57.7% for the six months ended June 30, 2007, compared to 55.0% for the six months ended June 30, 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>Gross profit from our POPSign program revenues for the three months ended June 30, 2007 increased 31.8% to $3,844,000 compared to $2,917,000 for the three months ended June 30, 2006. Gross profit from our POPSign program revenues for the six months ended June 30, 2007 increased 23.6% to $6,918,000 compared to $5,595,000 for the six months ended June 30, 2006. The increases were primarily due to increased sales and the effect of fixed costs. Gross profit as a percentage of POPSign program revenues for the three months ended June 30, 2007 increased to 62.1% compared to 57.0% for the three months ended June 30, 2006. Gross profit as a percentage of POPSign program revenues for the six months ended June 30, 2007 increased to 59.8% compared to 56.9% for the six months ended June 30, 2006. The increases were due to the factors discussed 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;'><font size=2>Gross profit from our product sales for the three months ended June 30, 2007 increased 0.3% to $316,000 compared to $315,000 for the three months ended June 30, 2006. Gross profit from our product sales for the six months ended June 30, 2007 decreased 1.8% to $600,000 compared to $611,000 for the six months ended June 30, 2006. The increases and decreases were primarily due to fluctuations in the sales mix. Gross profit as a percentage of product sales was 40.7% for the three months ended June 30, 2007 compared to 43.1% for the three months ended June 30, 2006. Gross profit as a percentage of product sales was 40.8% for the six months ended June 30, 2007 compared to 42.6% for the six months ended June 30, 2006.</font><b><font size=2> </font></b><font size=2>The decreases were due to changes in the sales mix toward lower margin 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>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;'><i><b><font size=2>Selling. </font></b></i><font size=2>Selling expenses for the three months ended June 30, 2007 increased 16.5% to $1,426,000 compared to $1,224,000 for the three months ended June 30, 2006, primarily due to increased sales commissions in 2007 as a result of increased sales and increased compliance related costs. Selling expenses for the six months ended June 30, 2007 increased 18.6% to $2,895,000 compared to $2,441,000 for the six months ended June 30, 2006, primarily due to the factors described above as well as increased travel related expense.</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>12</font></p>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Selling expenses as a percentage of total net sales decreased to 20.5% for the three months ended June 30, 2007 compared to 20.9% for the three months ended June 30, 2006, due to the factors discussed above, net of the effect of higher net sales during the three months ended June 30, 2007. Selling expenses as a percentage of total net sales increased to 22.2% for the six months ended June 30, 2007 compared to 21.7% for the six months ended June 30, 2006, due to factors described above, net of the effect of higher net sales during the six months ended June 30, 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;'><i><b><font size=2>Marketing. </font></b></i><font size=2>Marketing expenses for the three months ended June 30, 2007 increased 50.2% to $362,000 compared to $241,000 for the three months ended June 30, 2006. Marketing expenses for the six months ended June 30, 2007 increased 42.1% to $695,000 compared to $489,000 for the six months ended June 30, 2006. Increases in both the quarter and six months were primarily due to increased data acquisition costs and increased staffing levels. </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>Marketing expenses as a percentage of total net sales increased to 5.2% for the three months ended June 30, 2007 compared to 4.1% for the three months ended June 30, 2006. Marketing expenses as a percentage of total net sales increased to 5.3% for the six months ended June 30, 2007 compared to 4.3% for the six months ended June 30, 2006. Increases in both periods were primarily due to the factors discussed above, net of the effect of increased sales 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;'><i><b><font size=2>General and administrative. </font></b></i><font size=2>General and administrative expenses for the three months ended June 30, 2007 increased 32.5% to $1,195,000 compared to $902,000 for the three months ended June 30, 2006. General and administrative expenses for the six months ended June 30, 2007 increased 32.7% to $2,324,000 compared to $1,751,000 for the six months ended June 30, 2006. The increases for both the three months and six months were primarily due to increased legal fees, increased staff levels and increased stock-based compensation expense.</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 expenses as a percentage of total net sales increased to 17.2% for the three months ended June 30, 2007 compared to 15.4% for the three months ended June 30, 2006. General and administrative expenses as percentage of total net sales increased to 17.8% for the six months ended June 30, 2007 compared to 15.5% for the six months ended June 30, 2006. Increases in both periods were primarily due to the factors discussed above, net of the effect of increased sales 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>Legal fees were $470,000 for the three months ended
June 30, 2007 compared to $279,000 for the three months ended June 30, 2006. Legal fees were $892,000 for the six months ended
June 30, 2007 compared to $511,000 for the six months ended June 30, 2006. The legal fees in each period were incurred primarily
in connection with the News America lawsuit described in Note 3 to the financial statements. Increased legal fees in the 2007
periods reflect that the parties are now engaged in pre-trial discovery. We currently expect the amount of additional legal fees
that will be incurred in connection with the ongoing lawsuit to be significant throughout the remainder of 2007 and 2008. Also, if the
Company is required to pay a significant amount in settlement or damages, it will have a material adverse effect on its operations
and financial condition. In addition, a negative outcome of this litigation could affect long-term competitive aspects of the
Company&#146;s 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>Other Income (Expense). </font></b></i><font size=2>Other income  (expense) for the three months ended June 30, 2007 was $27,000 compared to $84,000 for the three months ended June 30, 2006. Other income for the six months ended June&nbsp;30, 2007 was $37,000 compared to $63,000 for the six months ended June 30, 2006. The difference was due primarily to the presence in 2006 of $100,000 of income from the sale of certain VALUStix assets per the terms of a settlement agreement, increased interest income in 2007 as a result of higher cash balances and higher interest rates, and decreased interest expense in 2007 as a result of the expiration of the line of credit on April 30, 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:center;'><font size=2>13</font></p>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><i><b><font size=2>Income Taxes. </font></b></i><font size=2>The Company recorded income tax expense of $6,000 for the quarter ended June 30, 2007 and $16,000 for the six months ended June 30, 2007, related to alternative minimum tax liability.</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>Net Income. </font></b></i><font size=2>Net income for the three months ended June 30, 2007 was $1,198,000 compared to $949,000 for the three months ended June 30, 2006. Net income for the six months ended June 30, 2007 was $1,625,000 compared to $1,588,000 for the six months ended June 30, 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;'><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 Company has financed its operations with proceeds from public and private stock sales and sales of its services and products. At June 30, 2007, working capital was $6,883,000 compared to $5,017,000 at December 31, 2006. During the six months ended June 30, 2007, cash and cash equivalents increased $995,000.</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>Net cash provided by operating activities during the six months ended June 30, 2007 was $1,274,000. Net income of $1,625,000 for the six months ended June 30, 2007 was more than offset by changes in operating assets and liabilities, primarily an increase in accounts receivable. Accounts receivable increased $1,056,000 during the six months ended June 30, 2007 due to POPSign billings in June of 2007 being substantially higher than in December of 2006. Accounts payable and accrued liabilities increased $325,000 during the six month period primarily as a result of increased business activity and related expenses. The Company expects accounts receivable and accounts payable to fluctuate during 2007 depending on the level of quarterly POPSign revenues and related business activity. </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>Net cash of $102,000 was used in investing activities during the six months ended June 30, 2007, due to the purchase of property and equipment, primarily the purchase of computer hardware and software. Capital expenditures for the remainder of 2007 are expected to be comparable to the first half of 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>Net cash of $177,000 was used in financing activities during the six months ended June 30, 2007 as a result of $186,000 of pay down on the line of credit and the payment of $118,000 of principal on long-term liabilities, which were partially offset by $127,000 of proceeds from the issuance of common stock from the employee stock purchase plan and stock option exercises. Through April 30, 2007, the Company maintained a line of credit balance sufficient to generate interest charges to cover the required monthly minimum fee. The Company did not renew the line of credit agreement which expired on April 30, 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>The Company believes that based upon current business conditions, its existing cash balance and future cash from operations will be sufficient for its cash requirements in the foreseeable future. However, there can be no assurances that this will occur or that the Company will be able to secure additional financing from public or private stock sales or from other financing agreements if needed.</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>Cautionary Statement Regarding Forward Looking 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>Statements made in this quarterly report on Form 10-Q, in the Company&#146;s other SEC filings, in press releases and in oral statements to shareholders and securities analysts, which are not statements of historical or current facts, are &#147;forward looking statements.&#148; Such forward looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results or performance of the Company to be materially different from the results or performance expressed or implied by such forward looking statements. The words &#147;believes,&#148; &#147;expects,&#148; &#147;anticipates,&#148; &#147;seeks&#148; and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward looking statements, which speak only as of the date the statement was made. These statements are subject to the risks and uncertainties that
could cause actual results to differ materially and adversely from the forward looking statements. These risks and uncertainties include, but are not limited to, the risks presented in our Annual Report on Form&nbsp;10-K for the year ended December&nbsp;31, 2006, and updated in Part II, Item 1A of this Quarterly Report on Form 10-Q.</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>14</font></p>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=3><A NAME="quantitative"></A>Item 3.</font></b></p> </td>
        <td  valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=3>Quantitative and Qualitative Disclosures About Market Risk</font></b></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>Not applicable.</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>


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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=3><A NAME="controls"></A>Item 4.</font></b></p> </td>
        <td  valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=3>Controls and Procedures</font></b></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>(a)&nbsp;&nbsp;&nbsp;Evaluation of Disclosure Controls and Procedures</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&#146;s management carried out an evaluation, under the supervision and with the participation of the Company&#146;s Chief Executive Officer and the Company&#146;s Chief Financial Officer, of the effectiveness of the design and operation of the Company&#146;s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report, pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, the Company&#146;s Chief Executive Officer and the Company&#146;s Chief Financial Officer concluded that the Company&#146;s disclosure controls and procedures are effective in timely alerting them to material information relating to the Company required to be included in the Company&#146;s periodic filings under the Exchange Act.</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>(b)&nbsp;&nbsp;&nbsp;Changes in Internal Controls 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>There was no change in our internal controls over financial reporting that occurred during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<BR>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><B><font SIZE=3><A NAME="part_ii">PART II.</A></font></B><font size=3>&nbsp;&nbsp;&nbsp;&nbsp;</font><B><font SIZE=3>OTHER INFORMATION</font></B></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'><b><font size=3><A NAME="legal"></A>Item 1.</font></b></p> </td>
        <td  valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=3>Legal Proceedings</font></b></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>In August 2000, News America Marketing In-Store, Inc. (News America), brought suit against the Company in U.S. District Court in New York, New York. The case was settled in November 2002. The terms of the settlement agreement are confidential. The settlement did not impact the Company&#146;s operating results.</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 October 2003, News America brought suit against the Company in U.S. District Court in New York, New York, alleging that the Company has engaged in deceptive acts and practices, has interfered with existing business relationships with retailers and prospective economic advantage, and has engaged in unfair competition. The suit sought unspecified damages and injunctive relief. In February 2007 the U.S. District Court in New York transferred this action to Minnesota where the claims became part of the lawsuit the Company filed against News America and Albertson&#146;s Inc., and the New York action was subsequently dismissed.</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>On September 23, 2004, the Company brought suit against News America and Albertson&#146;s Inc. in Federal District Court in Minneapolis, Minnesota, for violations of federal and state antitrust and false advertising laws, alleging that News America has acquired and maintained monopoly power through various wrongful acts designed to harm the Company in the in-store advertising and promotion products and services market. The suit seeks injunctive relief sufficient to prevent further antitrust injury and an award of treble damages to be determined at trial for the harm caused to the Company. On June 30, 2006 the Court denied the motions of News America and Albertson&#146;s to dismiss the suit. On September 20, 2006, the State of Minnesota through its Attorney General intervened as a co-plaintiff in the business disparagement portion of the Minnesota case.&nbsp;In December 2006 News America filed counterclaims
similar to the claims in its New York action against Insignia and one of its officers. Motions to dismiss the counterclaims were argued in June 2007, but a ruling has not yet been issued. The parties are now engaged in pre-trial discovery. Pursuant to Court order, all discovery and pre-trial matters must be completed by July 2008. Management believes that the allegations of the counterclaims are without merit. An evaluation of the likelihood of an unfavorable outcome and estimate of the potential liability cannot be rendered at this time. If the Company is required to pay a significant amount in settlement or damages, it will have a material adverse effect on its operations and financial condition. In addition, a negative outcome of this litigation could affect long-term competitive aspects of the Company&#146;s 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:center;'><font size=2>15</font></p>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Management currently expects the amount of legal fees that will be incurred in connection with the ongoing lawsuit to be significant throughout 2007 and 2008. During the six months ended June 30, 2007, the Company incurred legal fees of $810,000 related to the News America litigation. Legal fees 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;'><font size=2>The Company is subject to various other legal proceedings in the normal course of business. Management believes the outcome of these proceedings will not have a material adverse effect on the Company&#146;s financial position or results of operations. </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'><b><font size=3><A NAME="risk"></A>Item 1A.</font></b></p> </td>
        <td  valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=3>Risk Factors</font></b></p> </td> </tr></table>
</div>


<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.87in; text-indent:-0.87in;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.87in;text-align:left;'><font size=2>Not applicable.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.87in; text-indent:-0.87in;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'><b><font size=3><A NAME="unregistered"></A>Item 2.</font></b></p> </td>
        <td  valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=3>Unregistered Sales of Equity Securities and Use of Proceeds</font></b></p> </td> </tr></table>
</div>


<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.87in; text-indent:-0.87in;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.87in;text-align:left;'><font size=2>None.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.87in; text-indent:-0.87in;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'><b><font size=3><A NAME="defaults"></A>Item 3.</font></b></p> </td>
        <td  valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=3>Defaults upon Senior Securities</font></b></p> </td> </tr></table>
</div>


<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.87in; text-indent:-0.87in;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.87in;text-align:left;'><font size=2>None.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.87in;text-align:left;'><font size=2>&nbsp;</font></p>


<div align=left>

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        <td width="84" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=3><A NAME="submission"></A>Item 4.</font></b></p> </td>
        <td  valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=3>Submission of Matters to a Vote of Security Holders</font></b></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:0.87in;text-align:left;'><font size=2>The Company held its Annual Meeting of Shareholders on May 23, 2007.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.62in;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.87in;text-align:left;'><font size=2>The shareholders present in person or by proxy voted to elect Donald J. Kramer, Scott F. Drill, Peter V. Derycz, Reid V. MacDonald, W. Robert Ramsdell and Gordon F. Stofer as directors with each director receiving the following votes:</font></p>

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


<div align=left>

<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="85%" STYLE="margin-left:66.0pt;border-collapse:collapse">
    <tr style='page-break-inside:avoid'>
        <TD WIDTH="51%" 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="6%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:center;margin-top:1.0pt;margin-bottom:0.5pt'><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:center;margin-top:0in;margin-bottom:0pt'><B><font SIZE=1>FOR</font></B></p> </td>
        <TD WIDTH="6%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:center;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>
        <TD WIDTH="24%" 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>WITHHOLD AUTHORITY</font></B></p> </td>
        <TD WIDTH="1%" VALIGN="BOTTOM" STYLE="background:white">
            <p style='margin-left:0in;text-indent:0pt;text-align:center;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:0pt'><font size=2>Donald J. Kramer</font></p> </td>
        <td width="6%" 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="12%" style=' background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><font size=2>14,295,414</font></p> </td>
        <td width="6%" 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="24%" style=' background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><font size=2>109,700</font></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:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>Scott F. Drill</font></p> </td>
        <td width="6%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><font size=2>14,295,101</font></p> </td>
        <td width="6%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="24%" style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><font size=2>110,013</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:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>Peter V. Derycz</font></p> </td>
        <td width="6%" 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="12%" style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><font size=2>14,213,965</font></p> </td>
        <td width="6%" 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="24%" style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><font size=2>191,149</font></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:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>Reid V. MacDonald</font></p> </td>
        <td width="6%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><font size=2>14,293,814</font></p> </td>
        <td width="6%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="24%" style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><font size=2>111,300</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:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>W. Robert Ramsdell</font></p> </td>
        <td width="6%" 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="12%" style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><font size=2>14,213,665</font></p> </td>
        <td width="6%" 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="24%" style='background:#D6F3E8'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><font size=2>191,449</font></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:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>Gordon F. Stofer</font></p> </td>
        <td width="6%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="12%" style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><font size=2>14,294,014</font></p> </td>
        <td width="6%" valign=bottom style='background:white'>
            <p style='margin:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:.0001pt'><font size=1>&nbsp;</font></p> </td>
        <td width="24%" style='background:white'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><font size=2>111,100</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></table>
</div>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.62in;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>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>16</font></p>
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<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.87in;text-align:left;'><font size=2>The shareholders present in person or by proxy voted to approve an amendment to the Company&#146;s 2003 Incentive Stock Option Plan to increase the number of shares reserved for issuance under the Plan from 1,625,000 to 1,875,000. The vote consisted of 8,007,091 shares in favor, 280,402 shares against, 28,235 shares abstaining and 6,089,386 broker non-votes.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.62in;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.87in;text-align:left;'><font size=2>The shareholders present in person or by proxy voted to ratify the appointment of Grant Thornton LLP as the independent registered public accounting firm for the current year. The vote consisted of 14,391,449 shares in favor, 10,100 shares against and 3,565 shares abstaining.</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'><b><font size=3><A NAME="other_info"></A>Item 5.</font></b></p> </td>
        <td width="133" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=3>Other Information</font></b></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:0.87in;text-align:left;'><font size=2>None.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.62in; text-indent:-0.62in;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'><b><font size=3><A NAME="exhibits"></A>Item 6.</font></b></p> </td>
        <td  valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=3>Exhibits </font></b></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:0.87in;text-align:left;'><font size=2>The following exhibits are included herewith</font><b><font size=2>: </font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.62in;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=1>&nbsp;</font></p> </td>
        <td width="48" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>10.1</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>Amendment #2 to Exclusive Reseller Agreement </font><b><font size=2>(Confidential treatment has been requested for portions of the Amendment pursuant to Rule 24b-2.)</font></b></p> </td> </tr></table>
</div>



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        <td width="84" 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="48" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>10.2</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>Warrant To Valassis Communications, Inc. to Purchase Shares of Common Stock of Insignia Systems, Inc. </font></p> </td> </tr></table>
</div>



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        <td width="84" 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="48" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>31.1</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>Certification of Principal Executive Officer</font></p> </td> </tr></table>
</div>



<div align=left>

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        <td width="84" 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="48" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>31.2</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>Certification of Principal Financial Officer</font></p> </td> </tr></table>
</div>



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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="48" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>32</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>Section 1350 Certification</font></p> </td> </tr></table>
</div>


<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.62in;text-align:left;'><font size=2>&nbsp;</font></p>
<BR><BR><BR><BR><BR>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>17</font></p>

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


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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0pt'><font size=2>Dated:</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>August 14, 2007</font></p> </td>
        <TD WIDTH="264" 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>Insignia Systems, Inc.</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="264" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><font size=2>(Registrant)</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="264" 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>
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            <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=1>&nbsp;</font></p> </td>
        <td width="264" 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'><font size=2>/s/  Scott F. Drill</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="264" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Scott F. Drill</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="264" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>President and Chief Executive Officer</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="264" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>(principal executive officer)</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="264" 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>
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            <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=1>&nbsp;</font></p> </td>
        <td width="264" 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'><font size=2>/s/ Justin W. Shireman</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="264" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Justin W. Shireman</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="264" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Vice President, Finance and </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>
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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="264" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Chief Financial Officer</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="264" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>(principal financial officer)</font></p> </td> </tr></table>
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<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;'><font size=2>&nbsp;</font></p>
<BR><BR><BR><BR><BR>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>18</font></p>


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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><B><font SIZE=3>EXHIBIT INDEX</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>&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=1>&nbsp;</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>10.1</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>Amendment #2 to Exclusive Reseller Agreement </font><b><font size=2>(Confidential treatment has been requested for portions of the Amendment pursuant to Rule 24b-2.)</font></b></p> </td> </tr></table>
</div>


<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:1.12in; text-indent:-1in;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=1>&nbsp;</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>10.2</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>Warrant To Valassis Communications, Inc. to Purchase Shares of Common Stock of Insignia Systems, Inc. </font></p> </td> </tr></table>
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<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:1.12in; text-indent:-0.5in;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>31.1</font></p> </td>
        <td width="264" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Certification of Principal Executive Officer</font></p> </td> </tr></table>
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<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.62in;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>31.2</font></p> </td>
        <td width="260" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Certification of Principal Financial Officer</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>


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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>32</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>Section 1350 Certification</font></p> </td> </tr></table>
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<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.62in;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; margin-left:0in;text-align:center;'><font size=2>19</font></p>

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<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>insignia073330_ex10-1.htm
<DESCRIPTION>AMENDMENT NO. 2 TO EXCLUSIVE RESELLER AGREEMENT
<TEXT>
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<p style=' margin-bottom:12pt; margin-top:0pt;text-align:right;'><B><font SIZE=3>EXHIBIT 10.1</font></B></p>

<p style=' margin-bottom:12pt; margin-top:0pt;text-align:center;'><B><font SIZE=3>CONFIDENTIAL TREATMENT REQUESTED</font></B></p>

<p style=' margin-bottom:12pt; margin-top:0pt;text-align:center;'><B><font SIZE=3>AMENDMENT NO. 2 TO EXCLUSIVE RESELLER AGREEMENT</font></B></p>

<p style=' margin-bottom:12pt; margin-top:0pt;text-align:center;'><b><font size=3>by and between </font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><b><font size=3>VALASSIS SALES &amp; MARKETING SERVICES, INC.</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><b><font size=3>and</font></b></p>

<p style=' margin-bottom:12pt; margin-top:0pt;text-align:center;'><B><font SIZE=3>INSIGNIA SYSTEMS, INC.</font></B></p>

<p style=' margin-bottom:12pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>AMENDMENT NO. 2 TO EXCLUSIVE RESELLER AGREEMENT (the &#147;Second Amendment&#148;), dated as of July 2, 2007, by and between Valassis Sales &amp; Marketing Services, Inc. (the &#147;Reseller&#148;) and Insignia Systems, Inc. (the &#147;Company&#148;) (collectively, the &#147;Parties&#148;).  All capitalized terms used but not defined herein shall have the same meanings as ascribed to them in the Exclusive Reseller Agreement (as defined below). </font></p>

<p style=' margin-bottom:12pt; margin-top:0pt;text-align:center;'><U><font SIZE=2>W I T N E S S E T H</font></U><font size=2>:</font></p>

<p style=' margin-bottom:12pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>WHEREAS, on June 12, 2006, the Reseller and the Company entered into the Exclusive Reseller Agreement, and amended such agreement by Amendment No. 1 to Exclusive Reseller Agreement dated December 6, 2006 (as amended, the &#147;Exclusive Reseller Agreement&#148;);   </font></p>

<p style=' margin-bottom:12pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>WHEREAS, the Parties wish to, among other things, extend the term of the Agreement and set forth additional terms and conditions; and</font></p>

<p style=' margin-bottom:12pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>WHEREAS, the Parties have determined to amend the Exclusive Reseller Agreement as herein set forth.</font></p>

<p style=' margin-bottom:12pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>NOW, THEREFORE, in consideration of the premises and of the covenants and agreements hereinafter set forth, and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto hereby agree as follows:</font></p>


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        <td width="48" nowrap valign=top style='padding:0in 0in 12.0pt 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>1.</font></p> </td>
        <td width="534" nowrap valign=top style='padding:0in 0in 12.0pt 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>Title of the Agreement shall be changed to &#147;Exclusive Reseller and Retail Services Agreement.&#148;</font></p> </td> </tr></table>
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            <p  style='text-indent:0in'><font size=1>&nbsp;</font></p> </td>
        <td width="48" nowrap valign=top style='padding:0in 0in 12.0pt 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>2.</font></p> </td>
        <td width="491" nowrap valign=top style='padding:0in 0in 12.0pt 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>The Section entitled &#147;Recitals&#148; is hereby amended and restated in its entirety as follows:</font></p> </td> </tr></table>
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<p style=' margin-bottom:12pt; margin-top:0pt; margin-left:1in;text-align:justify;'><font size=2> &#147;The Company develops, manufactures and distributes certain products and services which may be sold through the Reseller channel to grocery and drug retailers.  The Reseller is experienced and intends to be engaged in the business of distributing the kinds of products and services sold by the Company to customers and providing them additional or complementary services or products and integrated solutions.  The parties desire to set forth the terms and conditions under which the Reseller will acquire from the Company and distribute to Customers the Products in the Territory and provide to Customers the Services (as such terms are defined below) as well as assist the Company in expanding the Company&#146;s retail network by developing new contracts between the Company and the Target Retailers (as such term is defined below).&#148;</font></p>

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            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>3.</font></p> </td>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>
The parties hereby agree to add the following definition to
Section 1 as Subsection (h) and re-letter the definition of &#147;Territory&#148; to Subsection (i):</font></p> </td> </tr></table>
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<p style=' margin-bottom:12pt; margin-top:0pt; margin-left:1in;text-align:justify;'><font size=2>(h) &#147;Target Retailers&#148; shall mean those retail chains set forth on </font><u><font size=2>Exhibit C</font></u><font size=2> attached hereto.</font></p>


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            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>4.</font></p> </td>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>The first sentence of Section 3(c)(ii) is hereby amended and restated in its entirety as follows:</font></p> </td> </tr></table>
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<p style=' margin-bottom:12pt; margin-top:0pt; margin-left:1in;text-align:justify;'><font size=2> &#147;All Certificates of Insurance shall be sent to the other party at the appropriate address set forth in Section 14(f).&#148;  </font></p>


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            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>5.</font></p> </td>
        <td width="405" nowrap valign=top style='padding:0in 0in 12.0pt 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>Section 3(c)(x) is hereby amended and restated in its entirety as follows:</font></p> </td> </tr></table>
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<p style=' margin-bottom:12pt; margin-top:0pt; margin-left:1in;text-align:justify;'><font size=2> (x)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Insurance Submittal Address.</font></u><b><font size=2>  </font></b><font size=2>All Certificates of Insurance shall be sent to the address of the Reseller set forth in Section 14(f) hereof.</font></p>


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            <p  style='text-indent:0in'><font size=1>&nbsp;</font></p> </td>
        <td width="48" nowrap valign=top style='padding:0in 0in 12.0pt 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>6.</font></p> </td>
        <td width="389" nowrap valign=top style='padding:0in 0in 12.0pt 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>Section 4(c) is hereby amended and restated in its entirety as follows:</font></p> </td> </tr></table>
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<p style=' margin-bottom:12pt; margin-top:0pt; margin-left:1in;text-align:justify;'><font size=2> (c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Company Payments</font></u><font size=2>.  The Company shall provide the Reseller with a calculation of all revenue for (i) joint sales with respect to Products and Services and (ii) development of Target Retailers on a monthly basis, and remit payment to Reseller, along with an accounting of the amounts due, within 30 days after each calendar year during the term.  All payments shall be made in U.S. Dollars.</font></p>


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            <p  style='text-indent:0in'><font size=1>&nbsp;</font></p> </td>
        <td width="48" nowrap valign=top style='padding:0in 0in 12.0pt 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>7.</font></p> </td>
        <td width="401" nowrap valign=top style='padding:0in 0in 12.0pt 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>Section 4(f)(i) is hereby amended and restated in its entirety as follows:</font></p> </td> </tr></table>
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<p style=' margin-bottom:12pt; margin-top:0pt; margin-left:1in;text-align:justify;'><font size=2> (i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Record Keeping</font></u><font size=2>.  Each of the Company and the Reseller shall keep accurate and complete records relating to (i) the Products and sales of fixed rate and joint sales Services to Customers in the Territory and to such party&#146;s performance of its obligations under this Agreement and (ii) the joint development of new relationships with Target Retailers and to such party&#146;s performance of its obligations under this Agreement.  </font></p>


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            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>8.</font></p> </td>
        <td width="397" nowrap valign=top style='padding:0in 0in 12.0pt 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>Section 10(a) is hereby amended and restated in its entirety as follows:</font></p> </td> </tr></table>
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<p style=' margin-bottom:12pt; margin-top:0pt; margin-left:1in;text-align:justify;'><font size=2> (a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Term</font></u><font size=2>.  The term of this Agreement shall commence on the Effective Date and shall continue until December 31, 2017 (the &#147;</font><u><font size=2>Initial Term</font></u><font size=2>&#148;) unless terminated earlier (i) by mutual consent of the parties hereto or (ii) pursuant to the provisions of this Section 10.  At the end of the Initial Term, this Agreement shall renew automatically for additional 12 month periods unless prior to that time, at the end of each renewal term, either party gives the other party 90 days&#146; written notice of non-renewal.  At the end of each year during the Initial Term, the parties shall mutually agree on any appropriate adjustments to Exhibit B.</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>2</font></p>

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            <p  style='text-indent:0in'><font size=1>&nbsp;</font></p> </td>
        <td width="48" nowrap valign=top style='padding:0in 0in 12.0pt 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>9.</font></p> </td>
        <td width="428" nowrap valign=top style='padding:0in 0in 12.0pt 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>Section 10(d) of the Agreement is hereby deleted in its entirety.</font></p> </td> </tr></table>
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        <td width="48" nowrap valign=top style='padding:0in 0in 12.0pt 0in; '>
            <p  style='text-indent:0in'><font size=1>&nbsp;</font></p> </td>
        <td width="48" nowrap valign=top style='padding:0in 0in 12.0pt 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>10.</font></p> </td>
        <td width="475" nowrap valign=top style='padding:0in 0in 12.0pt 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>Section 10(g) is hereby amended and restated in its entirety as follows:</font></p> </td> </tr></table>
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<p style=' margin-bottom:12pt; margin-top:0pt; margin-left:1in;text-align:justify;'><font size=2> (g)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Survival of Certain Terms</font></u><font size=2>.  The provisions of Sections 1, 3(c), 4, 6(e), 7, 8, 9, 10, 13 and 14 of this Agreement, and all payment or delivery obligations incurred during the term of this Agreement, shall survive the expiration or termination of this Agreement for any reason.  All other rights and obligations of the parties shall cease upon termination of this Agreement.</font></p>


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            <p  style='text-indent:0in'><font size=1>&nbsp;</font></p> </td>
        <td width="48" nowrap valign=top style='padding:0in 0in 12.0pt 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>11.</font></p> </td>
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<p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>The parties hereby agree to re-number old Section 11 &#147;Limitation of
Liability&#148; to Section 13.</font></p> </td> </tr></table>
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        <td width="48" nowrap valign=top style='padding:0in 0in 12.0pt 0in; '>
            <p  style='text-indent:0in'><font size=1>&nbsp;</font></p> </td>
        <td width="48" nowrap valign=top style='padding:0in 0in 12.0pt 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>12.</font></p> </td>
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<p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>
The parties hereby agree to re-number old Section 12 &#147;Miscellaneous&#148;
to Section 14.</font></p> </td> </tr></table>
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        <td width="48" nowrap valign=top style='padding:0in 0in 12.0pt 0in; '>
            <p  style='text-indent:0in'><font size=1>&nbsp;</font></p> </td>
        <td width="48" nowrap valign=top style='padding:0in 0in 12.0pt 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>13.</font></p> </td>
        <td width="509" nowrap valign=top style='padding:0in 0in 12.0pt 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>The parties hereby agree to insert as new Section 11 the following language:</font></p> </td> </tr></table>
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<p style=' margin-bottom:12pt; margin-top:0pt; margin-left:1in;text-align:justify;'><font size=2>11.  </font><u><font size=2>Development of Target Retailers</font></u><font size=2>.</font></p>

<p style=' margin-bottom:12pt; margin-top:0pt; margin-left:1in;text-align:justify;'><font size=2>(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Joint Development</font></u><font size=2>.&nbsp;&nbsp;&nbsp;&nbsp;The Company and the Reseller hereby agree to jointly try to expand the Company&#146;s current retail network by creating new relationships, through marketing and sales efforts, between the Company and the Target Retailers.</font></p>

<p style=' margin-bottom:12pt; margin-top:0pt; margin-left:1in;text-align:justify;'><font size=2>(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Reseller Responsibilities</font></u><font size=2>.&nbsp;&nbsp;&nbsp;&nbsp;The Reseller hereby agrees to use its expertise and marketing skills to help develop new relationships for the Company with Target Retailers, with the Company&#146;s assistance.  In order to assist the Company in developing new relationship with Target Retailers, the Reseller hereby agrees to take a lead role with respect to the following activities: (i) developing sales and marketing materials for retailer expansion, (ii) identifying and qualifying top prospects and (iii) developing, proposing and conceptualizing sell opportunities.   The Reseller hereby agrees to work jointly with the Company to develop and finalize agreement terms and conditions with the Target Retailers; </font><u><font size=2>provided</font></u><font size=2>, </font><u><font
size=2>however</font></u><font size=2>, that the terms and conditions of such agreements shall be solely in the discretion of the Company.  The Reseller also agrees to assist the Company with respect to the training of such retailers and integration of operations.  Upon the request of the Company, the Reseller and the Company will meet prior to the end of the two (2) year period commencing on the date of this Amendment No. 2 and at the end of each two (2) year period thereafter during the Initial Term whereby the parties will review the work done by Reseller in the prior two (2) years and develop a plan of action for the next two (2) years.</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>3</font></p>

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<p style=' margin-bottom:12pt; margin-top:0pt; margin-left:1in;text-align:justify;'><font size=2>(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Company Responsibilities</font></u><font size=2>.&nbsp;&nbsp;&nbsp;&nbsp;In order to develop new relationships with Target Retailers, the Company hereby agrees to assist the Reseller with respect to the following activities:  (i) developing sales and marketing materials for retailer expansion, (ii) identifying and qualifying top prospects and (iii) developing, proposing and conceptualizing sell opportunities.  The Company hereby agrees to work jointly with the Reseller to develop and finalize agreement terms and conditions with the Target Retailers and agrees to take a lead role with respect to the training of such retailers and integration of operations.  The Company also agrees to provide reporting  and other operational support to any Target Retailer (without any assistance from the Reseller).  In order to further incentive the Reseller to
perform its obligations under Section 11(b) hereof, the Company also agrees to grant to the Reseller a warrant, dated as of the date hereof, to purchase up to 800,000 shares of the Company&#146;s common stock.</font></p>

<p style=' margin-bottom:12pt; margin-top:0pt; margin-left:1in;text-align:justify;'><font size=2>(d) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Payment Terms</font></u><font size=2>.&nbsp;&nbsp;&nbsp;&nbsp;In exchange for the Reseller&#146;s obligations under this Agreement with respect to Target Retailers, the Company hereby agrees to pay a cash commission to the Reseller during the term of the Agreement, payable on December 1, March 1, June 1 and September 1 each year based on the most recent calendar quarter, of </font><b><font size=2>[ * ] </font></b><font size=2>based on any revenue that the Company derives from POPS programs run in the new Target Retailers added to the Company&#146;s network through the Reseller&#146;s efforts.  The Company also hereby agrees to pay a cash commission to the Reseller during the term of the Agreement, payable on December 1, March 1, June 1 and September 1 each year, of </font><b><font size=2>[ *
] </font></b><font size=2>and </font><b><font size=2>[ * ]</font></b><font size=2> based on any revenue that the Company derives from POPS programs run at stores operated by </font><b><font size=2>[ * ]</font></b><font size=2> and </font><b><font size=2>[ * ],</font></b><font size=2> respectively.  </font></p>


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            <p  style='text-indent:0in'><font size=1>&nbsp;</font></p> </td>
        <td width="48" nowrap valign=top style='padding:0in 0in 12.0pt 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>14.</font></p> </td>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>The parties hereby agree to insert as new Section 12 the following language:</font></p> </td> </tr></table>
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<p style=' margin-bottom:0pt; margin-top:7.5pt; margin-left:1in;text-align:justify;'><font size=2>12.  </font><u><font size=2>Change of Control</font></u><font size=2>.&nbsp;&nbsp;&nbsp;&nbsp;The Company hereby agrees that if, during the term of this Agreement, a Change of Control of the Company occurs and, following such Change of Control, the Company or the successor entity terminates this Agreement for any reason other than the Reseller&#146;s material breach of this Agreement, the Company and its successor company shall be jointly and severally liable to the Reseller for liquidated damages in a lump-sum amount of </font><b><font size=2>[ * ]</font></b><font size=2> in immediately available funds.   Upon a Change of Control, the Company hereby agrees to use its best efforts to cause any successor company to assume this Agreement and comply with the requirements of this Section 12, if applicable.  The Reseller shall be entitled to receive such payment within 30 days of such termination.  </font></p>

<p style=' margin-bottom:0pt; margin-top:7.5pt; margin-left:1in;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2>* Confidential treatment requested for this portion.</font></b></p>

<p style=' margin-bottom:0pt; margin-top:7.5pt; margin-left:1in;text-align:justify;'><font size=2>&nbsp;</font></p>
<BR><BR>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>4</font></p>

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<p style=' margin-bottom:0pt; margin-top:7.5pt; margin-left:1in;text-align:justify;'>
<font size=2>For purposes of this Section 12, &#147;Change of Control&#148; means the occurrence of one or more of the following events: </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:1in;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:12pt; margin-top:0pt; margin-left:1in; text-indent:0.5in;text-align:left;'><font size=2>(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;the date any one &#147;person&#148; (as that term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended, other than the Company), or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person(s)) ownership of stock of the Company possessing 30 percent or more of the total voting power of the stock of the Company;</font></p>

<p style=' margin-bottom:12pt; margin-top:0pt; margin-left:1in; text-indent:0.5in;text-align:justify;'><font size=2>(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;the date a majority of the members of the Company&#146;s Board of Directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the Company&#146;s Board of Directors before the date of the appointment or election; </font></p>

<p style=' margin-bottom:12pt; margin-top:0pt; margin-left:1in; text-indent:0.5in;text-align:justify;'><font size=2>(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;the date any one person, or more than one person acting as a group, acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50 percent of the fair market value or total voting power of the stock of the Company; or</font></p>

<p style=' margin-bottom:12pt; margin-top:0pt; margin-left:1in; text-indent:0.5in;text-align:justify;'><font size=2>(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;the date one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person(s)) all or a substantial portion of the Company&#146;s assets if such assets have a total gross fair market value equal to or more than 40 percent of the total gross fair market value of all of the assets of the Company immediately before such acquisition(s).</font></p>

<p style=' margin-bottom:12pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>15.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except as set forth herein, all of the terms, conditions and provisions of the Exclusive Reseller Agreement shall remain unchanged and in full force and effect.</font></p>

<p style=' margin-bottom:12pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>16.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each Party hereto shall cooperate and take any further actions, and shall execute and deliver any further documents, that are reasonably requested by a party hereto in order to effectuate or facilitate the purposes and intents of this Second Amendment.</font></p>

<p style=' margin-bottom:12pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>17.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Second Amendment may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same agreement.</font></p>

<p style=' margin-bottom:12pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>18.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Exclusive Reseller Agreement, as amended by this Second Amendment, sets forth the entire understanding and agreement of the Parties hereto with respect to the subject matter thereof, and merges all prior understandings and agreements with respect to the subject matter thereof.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<BR>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>5</font></p>

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<p style=' margin-bottom:12pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'>
<font size=2>IN WITNESS WHEREOF, the Parties hereto have caused this Amendment No. 2 to be executed as of the day and year first above written.</font></p>


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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>RESELLER:</font></B></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 WIDTH="5%" 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="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> </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  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>VALASSIS SALES &amp; MARKETING SERVICES, INC.</font></b></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>
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        <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>
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        <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>By:</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>/s/ Steven Mitzel</font><u></u></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>Name: &nbsp;&nbsp;&nbsp;&nbsp;Steven Mitzel</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>Title: &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Vice President</font></p> </td> </tr>
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        <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>
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        <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  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>COMPANY:</font></B></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>
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        <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  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>INSIGNIA SYSTEMS, INC.</font></B></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=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=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>By:</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>/s/ Scott Drill</font><u></u></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>Name:&nbsp;&nbsp;&nbsp;&nbsp;Scott Drill</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>Title:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CEO</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=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>
<BR><BR><BR>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>6</font></p>

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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><U><B><font SIZE=2>EXHIBIT C</font></B></U></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><u><b><font size=2>Target Retailers</font></b></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;'><u><b><font size=2>Retailer</font></b></u></p>


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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="45" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=2>[ * ]</font></b></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;'><font size=2>&nbsp;</font></p>

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


<div align=left>

<table border="0" cellspacing=0 cellpadding=0 width="217" style='border-collapse:collapse; '>
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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="193" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><u><b><font size=2>Immediate (30 &#150; 60 Days)</font></b></u></p> </td> </tr></table>
</div>



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        <td width="29" nowrap 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="45" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=2>[ * ]</font></b></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;'><font size=2>&nbsp;</font></p>


<div align=left>

<table border="0" cellspacing=0 cellpadding=0 width="131" style='border-collapse:collapse'>
    <tr >
        <td width="24" nowrap 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="107" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><u><b><font size=2>60 &#150; 90 Days</font></b></u></p> </td> </tr></table>
</div>



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        <td width="29" nowrap 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="45" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=2>[ * ]</font></b></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;'><font size=2>&nbsp;</font></p>


<div align=left>

<table border="0" cellspacing=0 cellpadding=0 width="139" style='border-collapse:collapse'>
    <tr >
        <td width="24" nowrap 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="115" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><u><b><font size=2>90 &#150; 120 Days</font></b></u></p> </td> </tr></table>
</div>



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        <td width="29" nowrap 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="45" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=2>[ * ]</font></b></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;'><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=1>&nbsp;</font></p> </td>
        <td width="88" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><u><b><font size=2>On-Going</font></b></u></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="45" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=2>[ * ]</font></b></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: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>* Confidential treatment requested for this portion.</font></b></p>

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

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<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>3
<FILENAME>insignia073330_ex10-2.htm
<DESCRIPTION>WARRANT TO PURCHASE SHARES OF COMMON STOCK
<TEXT>
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<TITLE>Insignia Systems, Inc. Exhibit 10.2 to Form 10-Q</TITLE>
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<BR>
<p style=' margin-bottom:5pt; margin-top:0pt;text-align:right;'><B><font SIZE=3>EXHIBIT 10.2</font></B></p>
<BR>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:5pt; margin-top:0pt;text-align:left;'><B><font SIZE=2>NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED  IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED PURSUANT TO AN AVAILABLE EXEMPTION UNDER THE SECURITIES ACT IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.</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=2>WARRANT TO PURCHASE</font></B></p>

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

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><B><font SIZE=2>INSIGNIA SYSTEMS, INC.</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:right;'><b><font size=2>Issued July 2, 2007</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-indent:0.5in;text-align:justify;'><B><font SIZE=2>THIS CERTIFIES THAT</font></B><font size=2>, for good and valuable consideration, Valassis Communications, Inc. or its registered assigns (the registered holder of the Warrant at any time being referred to as the &#147;</font><b><font size=2>Holder</font></b><font size=2>&#148;) is entitled to purchase from Insignia Systems, Inc., a Minnesota corporation (the &#147;</font><b><font size=2>Company</font></b><font size=2>&#148;), at any time on or prior to 5:00 p.m., New York time, on July 2, 2012 (the &#147;</font><b><font size=2>Termination Date</font></b><font size=2>&#148;), subject to the terms and conditions set forth herein, an aggregate of up to Eight Hundred Thousand (800,000) fully paid, validly issued and nonassessable shares (the &#147;</font><b><font size=2>Shares</font></b><font size=2>&#148;) of the common stock of the Company, par value $0.01 per share (the
&#147;</font><b><font size=2>Common Stock</font></b><font size=2>&#148;), at the price of $4.04 per share (the &#147;</font><b><font size=2>Exercise Price</font></b><font size=2>&#148;), subject to adjustment as provided in Section 5 hereof and the other provisions of this Warrant.  This Warrant is issued in connection with that certain Reseller Agreement, dated as of June 12, 2006, as amended on December 6, 2006 and July 2, 2007,  respectively (the &#147;</font><b><font size=2>Reseller Agreement</font></b><font size=2>&#148;), between the Company and Valassis Sales &amp; Marketing Services, Inc., a wholly-owned subsidiary of the Holder.  The Common Stock which may be acquired upon exercise of this Warrant are referred to herein as the &#147;</font><b><font size=2>Warrant Shares</font></b><font size=2>.&#148;  </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:1in; text-indent:-0.5in;text-align:justify;'><font size=2>This Warrant is subject to the following provisions, terms and conditions:</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><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">1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Exercise; Transferability</B>. </FONT></p> </td> </tr></table>
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<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-indent:0.5in;text-align:justify;'><font size=2>(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Warrant may be exercised for purchase, in whole or in part, of Warrant Shares by written notice of exercise (in the form attached hereto) delivered to the Company at the principal office of the Company prior to the expiration of this Warrant and accompanied or preceded by the surrender of a copy of this manually signed Warrant along with a cashier's or certified check or wire transfer made payable to the order of the Company in an amount equal to the applicable Exercise Price multiplied by the number of Warrant Shares as to which this Warrant is being exercised.  The Holder shall not be required to deliver the original Warrant in order to effect an exercise hereunder.  </font></p>

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<p style=' margin-bottom:12pt; margin-top:0pt; text-indent:0.55in;text-align:justify;'><font size=2>(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the alternative to exercise pursuant to Subsection 1(a), above, if the Fair Market Value (as defined below) of one Warrant Share at the time of exercise is greater than the Exercise Price (at the date of calculation as set forth below), in lieu of exercising this Warrant for cash as provided in Subsection 1(a), the Holder may elect to receive Warrant Shares equal to the value (as determined below) of this Warrant (or the portion thereof being canceled) by surrender of a copy of this Warrant at the principal office of the Company together with a notice of such election, in which event the Company shall issue to the Holder hereof a number of Warrant Shares computed using the following formula:</font></p>


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            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="60" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font SIZE=2>X =</font></p> </td>
        <td width="75" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><U><font SIZE=2>Y (A-B)</font></U></p> </td> </tr></table>
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        <td width="204" nowrap valign=top style='padding:0in 0in 12.0pt 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:12.0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="32" nowrap valign=top style='padding:0in 0in 12.0pt 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font SIZE=2>A</font></p> </td> </tr></table>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:12.0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="72" nowrap valign=top style='padding:0in 0in 12.0pt 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>Where</font></p> </td>
        <td width="60" nowrap valign=top style='padding:0in 0in 12.0pt 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font SIZE=2>X =</font></p> </td>
        <td width="385" nowrap valign=top style='padding:0in 0in 12.0pt 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>the number of Warrant Shares to be issued to the Holder.</font></p> </td> </tr></table>
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        <td width="120" valign=top style='padding:0in 0in 12.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:12.0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="60" valign=top style='padding:0in 0in 12.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font SIZE=2>Y =</font></p> </td>
        <td  valign=top style='padding:0in 0in 12.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>the number of Warrant Shares purchasable under this Warrant, or if only a portion of this Warrant is being exercised, the portion of the Warrant being canceled (at the date of such calculation).</font></p> </td> </tr></table>
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        <td width="120" valign=top style='padding:0in 0in 12.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:12.0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="60" valign=top style='padding:0in 0in 12.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font SIZE=2>A =</font></p> </td>
        <td  valign=top style='padding:0in 0in 12.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>the Fair Market Value of one Warrant Share (at the date of such calculation).</font></p> </td> </tr></table>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:12.0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="60" valign=top style='padding:0in 0in 12.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font SIZE=2>B =</font></p> </td>
        <td  valign=top style='padding:0in 0in 12.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>Exercise Price (as adjusted to the date of such calculation).</font></p> </td> </tr></table>
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<p style=' margin-bottom:12pt; margin-top:0pt;text-align:justify;'><font size=2>For purposes of the above calculation and the calculation set forth in Section 5 of this Warrant, &#147;</font><b><font size=2>Fair Market Value</font></b><font size=2>&#148; of one Warrant Share, as the case may be, shall be determined as follows:</font></p>

<p style=' margin-bottom:12pt; margin-top:0pt; margin-left:0.5in; text-indent:0.5in;text-align:justify;'><font size=2>(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If the Warrant Shares, or the class of shares into which the Warrant Shares have converted, is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market and the Nasdaq SmallCap Market, then the Fair Market Value of one such share shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such system or exchange (or the exchange with the greatest volume of trading in such stock) on the last market trading day prior to the day of calculation, as reported in the Wall Street Journal or such other source as the Board of Directors of the Company deems reliable;</font></p>

<p style=' margin-bottom:12pt; margin-top:0pt; margin-left:0.5in; text-indent:0.5in;text-align:justify;'><font size=2>(ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If the Warrant Shares, or the class of shares into which the Warrant Shares have converted, is regularly quoted by a recognized securities dealer but selling prices are not reported, then the Fair Market Value of one such share shall be the mean between the bid and asked prices for such stock on the last market trading day prior to the day of calculation, as reported in the Wall Street Journal or such other source as the Board of Directors of the Company deems reliable;</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>2</font></p>

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<p style=' margin-bottom:12pt; margin-top:0pt; margin-left:0.5in; text-indent:0.5in;text-align:justify;'><font size=2>(iii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the absence of an established market for the Company&#146;s Warrant Shares or the class of shares into which the Warrants Shares have been converted, the Fair Market Value of one share of such stock shall be mutually determined in good faith by the Board of Directors of the Company and the Holder of the Warrant.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Warrant shall be deemed to be exercised in full on a net exercise basis pursuant to Section 1(b) above, without any notice of exercise or other required action on the part of the Holder, as of immediately prior to the close of business on the Termination Date, in the event and to the extent that as of such time the Warrant shall not have been previously exercised by the Holder.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Warrant may not be sold, transferred, assigned, hypothecated or divided into two or more Warrants of smaller denominations, nor may any Warrant Shares issued pursuant to exercise of this Warrant be transferred, except as provided in Section 8 hereof.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><b><font size=2>Exchange and Replacement</font></b><font size=2>.  Subject to Sections 1 and 7 hereof, this Warrant is exchangeable upon the surrender hereof by the Holder to the Company at its office for new Warrants of like tenor and date representing in the aggregate the right to purchase the number of Warrant Shares purchasable hereunder, each of such new Warrants to represent the right to purchase such number of Warrant Shares (not to exceed the aggregate total number purchasable hereunder) as shall be designated by the Holder at the time of such surrender.  Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction, or mutilation of this Warrant, and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and upon surrender and
cancellation of this Warrant, if mutilated, the Company will make and deliver a new Warrant of like tenor, in lieu of this Warrant.  This Warrant shall be promptly canceled by the Company upon the surrender hereof in connection with any exchange or replacement.  The Company shall pay all expenses, taxes (other than stock transfer taxes), and other charges payable in connection with the preparation, execution, and delivery of Warrants pursuant to this Section 2.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><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">3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Issuance of the Warrant Shares</B>. </FONT></p> </td> </tr></table>
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<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-indent:0.5in;text-align:justify;'><font size=2>(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company agrees that the Warrant Shares purchased hereby shall be and are deemed to be issued to the Holder as of the close of business on the date on which this Warrant shall have been surrendered and the payment made for such Warrant Shares as aforesaid.  Certificates for the Warrant Shares so purchased shall be delivered to the Holder within a reasonable time, not exceeding five (5) business days after this Warrant shall have been so exercised, and, unless this Warrant has expired, a new Warrant representing the right to purchase the number of Warrant Shares, if any, with respect to which this Warrant shall not then have been exercised shall also be delivered to the Holder within such time.</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-indent:0.5in;text-align:justify;'><font size=2>(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding the foregoing, however, the Company shall not be required to deliver any certificate for Warrant Shares upon exercise of this Warrant except in accordance with exemptions from the applicable securities registration requirements or registrations under applicable securities laws.  Except as set forth in Section 7 hereof, nothing herein shall obligate the Company to effect registrations under federal or state securities laws.  The Holder agrees to execute such documents and make such representations, warranties, and agreements as may be required solely to comply with the exemptions relied upon by the Company, or the registrations made, for the issuance of the Warrant Shares.</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>3</font></p>

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            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><FONT SIZE="2">4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Covenants of the Company</B>. </FONT> </p> </td> </tr></table>
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<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company covenants and agrees that all Warrant Shares will, upon issuance, be duly authorized and issued, fully paid, nonassessable, and free from all taxes, liens, and charges with respect to the issue thereof.  The Company further covenants and agrees that during the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized and reserved, free from preemptive rights, for the purpose of issue or transfer upon exercise of the rights evidenced by this Warrant a sufficient number of Warrant Shares to provide for the exercise of the rights represented by this Warrant.   If at any time during the period in which the Warrant may be exercised, the number of authorized but unissued Warrant Shares shall not be sufficient to permit exercise of this Warrant, the Company will take such
corporate action as may be necessary to increase its authorized but unissued shares of the appropriate class of capital stock to such number of shares as shall be sufficient for such purposes. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company shall provide the Holder with any information, notices or such other correspondence that the Company&#146;s stockholders are entitled to receive. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><b><font size=2>Exercise Price Adjustments</font></b><font size=2>.  The provisions of this Warrant are subject to adjustment as provided in this Section 5.</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-indent:0.5in;text-align:justify;'><font size=2>(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Adjustment For Stock Splits And Combinations</font></u><font size=2>. If the Company shall at any time or from time to time after the date of original issuance of this Warrant (the &#147;</font><b><font size=2>Date of Original Issue</font></b><font size=2>&#148;) effect a subdivision or reverse stock split of the outstanding Common Stock, the Exercise Price in effect immediately before that subdivision shall be proportionately decreased, and, conversely, the Exercise Price in effect immediately before the reverse stock split shall be proportionately increased. Any adjustment under this Section&nbsp;5(a) shall become effective at the close of business on the date the reverse stock split or subdivision becomes effective.</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-indent:0.5in;text-align:justify;'><font size=2>(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Adjustment For Common Stock Dividends And Distributions</font></u><font size=2>. If the Company at any time or from time to time after the Date of Original Issue issues, or fixes a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable solely in additional shares of Common Stock, the Exercise Price that is then in effect shall be decreased as of the time of such issuance or, in the event such record date is fixed, as of the close of business on such record date, by multiplying the Exercise Price by a fraction (i)&nbsp;the numerator of which is the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date, and (ii) the denominator of which is the sum of the
total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution; provided, however, that if such record date is fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Exercise Price shall be recomputed accordingly as of the close of business on such record date and thereafter the Exercise Price shall be adjusted pursuant to this Section&nbsp;5(b) to reflect the actual payment of such dividend or distribution.</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>4</font></p>

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<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Adjustments For Other Dividends And Distributions</font></u><font size=2>. If the Company at any time or from time to time after the Date of Original Issue issues, or fixes a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in securities of the Company other than shares of Common Stock or in other property, in each such event provision shall be made so that the Holder shall receive upon conversion hereof, in addition to the number of shares of Common Stock receivable hereupon, the amount of securities of the Company or other property which such Holder would have received had this Warrant been exercised for shares of Common Stock on the date of such event and had it thereafter, during the period from the date of such event to and including the
exercise date, retained such securities or other property receivable by it as aforesaid during such period, subject to all other adjustments called for during such period under this Section 5 with respect to the rights of the Holder or with respect to such other securities or other property by their terms. As used herein, the term &#147;other property&#148; does not include cash.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Adjustment For Reclassification, Exchange And Substitution</font></u><font size=2>. If at any time or from time to time after the Date of Original Issue, the Common Stock issuable upon the conversion of this Warrant is changed into the same or a different number of shares of any class or series of stock, whether by recapitalization, reclassification or otherwise (other than a subdivision or combination of shares or stock dividend or a reorganization, merger, consolidation or sale of assets provided for elsewhere in this Section 5), then in any such event the Holder shall have the right thereafter to exercise this Warrant for the kind and amount of stock and other securities and property receivable upon such recapitalization, reclassification or other change by holders of the number of shares of Common Stock into which
this Warrant could have been converted immediately prior to such recapitalization, reclassification or change, all subject to further adjustment as provided herein or with respect to such other securities or property by the terms thereof.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>(e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Weighted Average Anti-Dilution</font></u><font size=2>. The Exercise Price shall be subject to adjustment from time to time as follows:</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:12pt; margin-top:0pt; text-indent:1.5in;text-align:justify;'><font size=2>(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><i><font size=2>Definitions</font></i><font size=2>. For purposes of this Section 5(e), the following definitions apply:</font></p>

<p style=' margin-bottom:12pt; margin-top:0pt; text-indent:2in;text-align:justify;'><font size=2>(A)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;</font><b><font size=2>Options</font></b><font size=2>&#148; shall mean rights, options or warrants to subscribe for, purchase or otherwise acquire Common Stock or Convertible Securities (as defined below).</font></p>

<p style=' margin-bottom:12pt; margin-top:0pt; text-indent:2in;text-align:justify;'><font size=2>(B)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;</font><b><font size=2>Original Issue Date</font></b><font size=2>&#148; shall mean the date on which this Warrant was first issued.</font></p>

<p style=' margin-bottom:12pt; margin-top:0pt; text-indent:2in;text-align:justify;'><font size=2>(C)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;</font><b><font size=2>Convertible Securities</font></b><font size=2>&#148; shall mean any evidence of indebtedness, shares (other than Common Stock) or other securities convertible into or exchangeable for 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:center;'><font size=2>5</font></p>

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<p style=' margin-bottom:12pt; margin-top:0pt; text-indent:2in;text-align:justify;'><font size=2>(D)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;</font><b><font size=2>Additional Shares of Common Stock</font></b><font size=2>&#148; shall mean all shares of Common Stock issued (or, pursuant to Section 5(e)(iii), deemed to be issued) by the Company after the Original Issue Date, other than:</font></p>

<p style=' margin-bottom:12pt; margin-top:0pt; text-indent:2in;text-align:justify;'><font size=2>(1) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Common Stock issued pursuant to a transaction described in Section 5(a), (b), (c) or (d) hereof,</font></p>

<p style=' margin-bottom:12pt; margin-top:0pt; text-indent:2in;text-align:justify;'><font size=2>(2) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of Common Stock or Options issuable or issued to employees, consultants or directors of the Company pursuant to a stock option plan, restricted stock plan, employment agreement or consulting agreement approved by the Board of Directors of the Company, or</font></p>

<p style=' margin-bottom:12pt; margin-top:0pt; text-indent:2in;text-align:justify;'><font size=2>(3)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of Common Stock or preferred stock issuable upon exercise of Options or Convertible Securities outstanding as of the date of this Warrant.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.5in;text-align:justify;'><font size=2>(ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><i><font size=2>No Adjustment of Exercise Price</font></i><font size=2>. Any provision herein to the contrary notwithstanding, no adjustment of the Exercise Price shall be made in respect of the issuance of Additional Shares of Common Stock unless the consideration per share for an Additional Share of Common Stock issued or deemed to be issued by the Company is less than the Exercise Price in effect on the date of, and immediately prior to, such issue.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.5in;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:12pt; margin-top:0pt; text-indent:1.5in;text-align:justify;'><font size=2>(iii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><i><font size=2>Deemed Issue of Additional Shares of Common Stock</font></i><font size=2>. In the event the Company should at any time or from time to time after the Original Issue Date issue any Options (excluding for all purposes of this subsection (iii) Options excluded from the definition of Additional Shares of Common Stock in Subsection 5(e)(i)(D)) or Convertible Securities (excluding for all purposes of this subsection (iii) Convertible Securities excluded from the definition of Additional Shares of Common Stock in Subsection 5(e)(i)(D)) then the maximum number of shares (as set forth in the instrument relating thereto without regard to any provisions contained therein designed to protect against dilution) of Common Stock issuable upon the exercise of such Options or, in the case of Convertible Securities and Options for Convertible
Securities, the conversion or exchange of such Convertible Securities shall be deemed to be Additional Shares of Common Stock issued as of the time of such issue, provided that in any such case in which Additional Shares of Common Stock are deemed to be issued:</font></p>

<p style=' margin-bottom:12pt; margin-top:0pt; text-indent:2in;text-align:justify;'><font size=2>(A)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;no further adjustments in the Exercise Price shall be made upon the subsequent issue of such Convertible Securities or shares of Common Stock upon the exercise of such Options or conversion or exchange of such Convertible Securities;</font></p>

<p style=' margin-bottom:12pt; margin-top:0pt; text-indent:2in;text-align:justify;'><font size=2>(B)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;if such Options or Convertible Securities by their terms provide, with the passage of time or otherwise, for any increase or decrease in the consideration payable to the Company, or decrease or increase in the number of shares of Common Stock issuable, upon the exercise, conversion or exchange thereof, the Exercise Price computed upon the original issue thereof and any subsequent adjustments based thereon, shall, upon any such increase or decrease becoming effective, be recomputed to reflect such increase or decrease insofar as it affects such Options or the rights of conversion or exchange under such Convertible 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:center;'><font size=2>6</font></p>

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<p style=' margin-bottom:12pt; margin-top:0pt; text-indent:2in;text-align:justify;'><font size=2>(C)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;upon the expiration or termination of any unexercised Options, the Exercise Price, to the extent in any way affected by or computed using such Options, shall be recomputed to reflect the issuance of only the number of shares of Common Stock (and Convertible Securities which remain in effect) actually issued upon the exercise of such Option;</font></p>

<p style=' margin-bottom:12pt; margin-top:0pt; text-indent:2in;text-align:justify;'><font size=2>(D)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;in the event of any change in the number of shares of Common Stock issuable upon the exercise, conversion or exchange of any Option or Convertible Security, including, but not limited to, a change resulting from the anti-dilution provisions thereof, the Exercise Price then in effect shall forthwith be readjusted to such Exercise Price and as would have been obtained had the adjustment which was made upon the issuance of such Option or Convertible Security not exercised or converted prior to such change been made upon the basis of such change; and</font></p>

<p style=' margin-bottom:12pt; margin-top:0pt; text-indent:2in;text-align:justify;'><font size=2>(E)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;no readjustment pursuant to clause (B) or (D) above shall have the effect of increasing the Exercise Price, to an amount which exceeds the lower of (i) the Exercise Price on the original adjustment date, or (ii) the Exercise Price that would have resulted from any issuances of Additional Shares of Common Stock between the original adjustment date and such readjustment date, respectively.</font></p>

<p style=' margin-bottom:12pt; margin-top:0pt; text-indent:1in;text-align:justify;'><font size=2>In the event the Company, after the Original Issue Date amends any Options or Convertible Securities (whether such Options or Convertible Securities were outstanding on the Original Issue Date or were issued after the Original Issue Date) to increase the number of shares issuable thereunder or decrease the consideration to be paid upon exercise or conversion thereof, then such Options or Convertible Securities, as so amended, shall be deemed to have been issued after the Original Issue Date and the provisions of this Subsection 5(e)(iii) shall apply. </font></p>

<p style=' margin-bottom:12pt; margin-top:0pt; text-indent:1.5in;text-align:justify;'><font size=2>(iv)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><i><font size=2>Adjustment of Exercise Price Upon Issuance of Additional Shares of Common Stock.</font></i><font size=2> In the event the Company, at any time after the Original Issue Date shall issue any Additional Shares of Common Stock (including Additional Shares of Common Stock deemed to be issued pursuant to Section 5(e)(iii)) without consideration or for a consideration per share less than the Exercise Price in effect on the date of and immediately prior to such issue, then in such event, the Exercise Price shall be reduced, concurrently with such issue, to a price determined by multiplying the Exercise Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such issue plus the number of shares of Common Stock which the aggregate consideration received by the Company
for the total number of Additional Shares of Common Stock so issued would purchase at the Exercise Price in effect immediately prior to such issuance, and the denominator of which shall be the number of shares of Common Stock outstanding immediately prior to such issue plus the number of such Additional Shares of Common Stock so issued.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1in;text-align:justify;'><font size=2>For the purpose of the above calculation, the number of shares of Common Stock outstanding immediately prior to such issue shall be calculated on a fully diluted basis, as if all Convertible Securities had been fully converted into shares of Common Stock immediately prior to such issuance and any outstanding warrants, options or other rights for the purchase of shares of stock or Convertible Securities had been fully exercised immediately prior to such issuance (and the resulting securities fully converted into shares of Common Stock, if so convertible) as of such 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:center;'><font size=2>7</font></p>

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<p style=' margin-bottom:12pt; margin-top:0pt; text-indent:1.5in;text-align:justify;'><font size=2>(v)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><i><font size=2>Determination of Consideration</font></i><font size=2>. For purposes of this Section 5, the consideration received by the Company for the issue of any Additional Shares of Common Stock shall be computed as follows:</font></p>

<p style=' margin-bottom:12pt; margin-top:0pt; text-indent:2in;text-align:justify;'><font size=2>(A)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the case of the issuance of Additional Stock for cash, the consideration shall be deemed to be the amount of cash paid therefor before deducting any discounts, commissions or other expenses allowed, paid or incurred by the Company for any underwriting or otherwise in connection with the issuance and sale thereof.</font></p>

<p style=' margin-bottom:12pt; margin-top:0pt; text-indent:2in;text-align:justify;'><font size=2>(B)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the case of the issuance of the Additional Stock for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to be the fair value thereof as determined by the Board of Directors of the Company irrespective of any accounting treatment.</font></p>

<p style=' margin-bottom:12pt; margin-top:0pt; text-indent:2in;text-align:justify;'><font size=2>(C)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The consideration per share received by the Company for Additional Shares of Common Stock deemed to have been issued pursuant to paragraph 4(e)(iii) relating to Options and Convertible Securities, shall be the minimum aggregate amount of additional consideration (as set forth in instruments relating thereto) payable to the Company upon the exercise of such Options and the conversion or exchange of such Convertible Securities (as the case may be), including the amounts received by the Company as consideration for the issue of such Options or Convertible Securities.</font></p>

<p style=' margin-bottom:12pt; margin-top:0pt; text-indent:1in;text-align:justify;'><font size=2>(f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Certificate Of Adjustment</font></u><font size=2>. In each case of an adjustment or readjustment of the Exercise Price for the number of shares of Common Stock or other securities issuable upon conversion of this Warrant, the Company, at its own expense, shall cause its Secretary or Treasurer to compute such adjustment or readjustment in accordance with the provisions hereof and prepare a certificate showing such adjustment or readjustment, and shall mail such certificate, by first class mail, postage prepaid, to the Holder at the Holder&#146;s address as shown in the Company&#146;s books. The certificate shall set forth such adjustment or readjustment, showing in detail the facts upon which such adjustment or readjustment is based. No adjustment in the Exercise Price shall be required to be made unless it would
result in an increase or decrease of at least one cent, but any adjustments not made because of this sentence shall be carried forward and taken into account in any subsequent adjustment otherwise required hereunder.</font></p>

<p style=' margin-bottom:12pt; margin-top:0pt; text-indent:1in;text-align:justify;'><font size=2>(g)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Notices Of Record Date</font></u><font size=2>. Upon (i) the establishment by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or (ii) any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company, any merger or consolidation of the Company with or into any other Company, or any transfer of all or substantially all the assets of the Company to any other person or any voluntary or involuntary dissolution, liquidation or winding up of the Company, the Company shall mail to the Holder at least 20 days prior to the record date specified therein a notice specifying (A) the date on which any such record is to be taken for the purpose of
such dividend or distribution and a description of such dividend or distribution, (B) the date on which any such reorganization, reclassification, transfer, consolidation, merger, dissolution, liquidation or winding up is expected to become effective, and (C) the date, if any, that is to be fixed as to when the holders of record of Common Stock (or other securities), shall be entitled to exchange their shares of Common Stock (or other securities), for securities or other property deliverable upon such reorganization, reclassification transfer, consolidation, merger, dissolution, liquidation or winding up.</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>8</font></p>

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<p style=' margin-bottom:12pt; margin-top:0pt; text-indent:1in;text-align:justify;'><font size=2>(h)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>No Impairment</font></u><font size=2>. The Company shall not amend its Certificate of Incorporation or participate in any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action for the purpose of avoiding or seeking to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but shall at all times in good faith assist in carrying out all such action as may be reasonably necessary or appropriate in order to protect the exercise rights of the Holder against dilution or other impairment as provided herein.</font></p>

<p style=' margin-bottom:12pt; margin-top:0pt; text-indent:1in;text-align:justify;'><font size=2>(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Calculations</font></u><font size=2>.&nbsp;&nbsp;&nbsp;All calculations under this Section 5 shall be made to the nearest cent or the nearest 1/100th of a share, as applicable.  </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">6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Purchase Rights</B>. </FONT></p> </td> </tr></table>
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<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.5in;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1in;text-align:justify;'><font size=2>(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Purchase Rights</font></u><font size=2>.   In addition to any adjustments pursuant to Section 5 above, if at any time the Company grants, issues or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the &#147;</font><b><font size=2>Purchase Rights</font></b><font size=2>&#148;), then, upon exercise of this Warrant, the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the proportionate number of shares of Common Stock acquirable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) immediately before the date on which a
record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>&nbsp;</font></p>


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            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><FONT SIZE="2">7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Registration Rights</B>. </FONT></p> </td> </tr></table>
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<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1in;text-align:justify;'><font size=2>(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Effective Date</font></u><font size=2>. The rights of the Holder under this Section 7 are effective as of the date hereof and shall remain in full force and effect for so long as the Holder continues to hold any Warrant Shares; but only until such Warrant Shares are eligible for resale under Rule 144(k) of the Securities Act of 1933, as amended (the &#147;</font><b><font size=2>Securities Act</font></b><font size=2>&#148;).  </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-indent:1in;text-align:justify;'><font size=2>(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Piggyback&nbsp;Registrations</font></u><i><font size=2>.</font></i><font size=2>  Subject to the limitation on registration rights provided for in this Section 7, if at any time prior to the Termination Date, the Company shall file a registration statement (other than on Form S-4, Form S-8, or any successor form) with the United States Securities and Exchange Commission (the &#147;</font><b><font size=2>Commission</font></b><font size=2>&#148;) while this Warrant is outstanding, the Company shall give the Holder at least thirty (30) days prior written notice of the filing of such registration statement. If requested by the Holder in writing within thirty (30) days after receipt of any such notice, the Company shall, at the Company&#146;s sole expense, register or qualify all or, at the Holder&#146;s option, any portion of
the Warrant Shares of the Holder, concurrently with the registration of such other securities, all to the extent requisite to permit the </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>9</font></p>

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<font size=2>public offering and sale of the Warrant Shares through the facilities of all appropriate securities exchanges and the over-the-counter market, and will use its best efforts through its officers, directors, auditors and counsel to cause such registration statement to become effective as promptly as practicable. Notwithstanding the foregoing, if the managing underwriter of any such offering shall advise the Company that, in its opinion, the distribution of all or a portion of the Warrant Shares requested to be included in the registration concurrently with the securities being registered by the Company would materially adversely affect the distribution of such securities by the Company for its own account, then the Company shall not be required to include such Warrant Shares in such registration, provided that any such reduction shall be on a pro-rata basis among all selling shareholders; </font><u><font
size=2>provided</font></u><font size=2>, </font><u><font size=2>however</font></u><font size=2>, (i) that in the event that the Company does not intend to include all the requested Warrant Shares in the registration statement due to such advice received from the managing underwriter, if the Company includes in the registration statement any securities other than securities being offered by the Company for its own account, then the Company shall include any of the Warrant Shares requested to be included in such registration statement by the Holder and any such other securities on a pro-rata basis and (ii) if the Company does not include all of the requested Warrant Shares in the registration statement, then the Company will within six (6) months after the registration statement becomes effective file at is sole expense a new registration statement relating to those Warrant Shares which the Company did not include in the prior registration statement, and the Company will use its best
efforts to cause the registration statement to become effective as promptly as practical (</font><u><font size=2>provided, however</font></u><font size=2>, that the Company and/or the underwriters for the registration called for under this clause (ii) shall have the right to defer such registration for a period of not more than ninety (90) days upon a good faith determination that marketing factors necessitate such a delay).</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1in;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1in;text-align:justify;'><font size=2>(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Demand Registration Rights</font></u><font size=2>.  Subject to the limitation on registration rights provided for in this Section 7, at any time after the date hereof, if the Company shall receive a written request from the Holder to register the sale of all or part of the Warrant Shares, the Company shall, within ninety (90) days thereafter, prepare and file with the Commission an amendment to any then-outstanding registration statement or, as appropriate, a new registration statement sufficient to permit the public offering and sale of the Warrant Shares through the facilities of all appropriate securities exchanges and the over-the-counter market, and will use its best efforts through its officers, directors, auditors and counsel to cause such registration statement to become and remain effective (including taking such
steps as are necessary to obtain removal of any stop order) as promptly as practicable (provided, however, that the Company and/or the underwriters for the registration called for under this Section 7(c) shall have the right to defer such registration for a period of not more than ninety (90) days upon a good faith determination that marketing factors necessitate such a delay). All expenses (including up to $25,000 for fees of a single special counsel for the Holder) incurred in connection with such registration (provided that such expenses are reasonable in the case of expenses incurred by the Holder) shall be borne by the Company. The Holder may, at its option, distribute the Warrant Shares covered by its demand by means of an underwriting. If the Holder intends to distribute the Warrant Shares covered by its demand by means of an underwriting, Holder shall so advise the Company as part of its demand made pursuant to this Section 7(c), including the identity of the managing
underwriter. The Company shall, together with the Holder, enter into an underwriting agreement in customary form with the underwriter or underwriters selected by the Holder and reasonably satisfactory to the Company.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1in;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>10</font></p>

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<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1in;text-align:justify;'><font size=2>(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Registration&nbsp;Procedures</font></u><font size=2>.  If the Holder has requested that any Warrant Shares be registered pursuant to this Agreement, the Company will use its best efforts to effect the registration and the sale of such Warrant Shares in accordance with the intended method of disposition therefor, and pursuant thereto, the Company will, as expeditiously as possible, do all of the following: </font></p>

<p style=' margin-bottom:0pt; margin-top:12pt; text-indent:1.39in;text-align:justify;'><FONT SIZE="2">(1)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Registration
Statement</I>. Prepare and file with the Commission a registration statement with respect to such Warrant
Shares and use its best efforts to cause such registration statement to become effective (provided that before filing a
registration statement or prospectus or any amendments or supplements thereto, the Company will furnish to the counsel selected by
the Holder copies of all such documents proposed to be filed, which documents will be subject to the review and approval of such
counsel) and use its best efforts to avoid the issuance of (or if issued, obtain the withdrawal of) any order suspending the
effectiveness of a registration statement, or the lifting of any suspension of the qualification (or exemption from qualification)
of any of the Warrant Shares for sale in any jurisdiction as soon as possible; </FONT></p>

<p style=' margin-bottom:0pt; margin-top:12pt; text-indent:1.39in;text-align:justify;'><FONT SIZE="2">(2)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Amendments &amp;
Supplements</I>. Prepare and file with the Commission such amendments and supplements to such registration
statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for a
period necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by
such registration statement during such period in accordance with the intended methods of disposition by the sellers thereof,
which period shall not be less than 180 days, and shall not extend beyond the date upon which the Warrant Shares are eligible for
resale under Rule 144(k) of the Securities Act; </FONT></p>

<p style=' margin-bottom:0pt; margin-top:12pt; text-indent:1.39in;text-align:justify;'><FONT SIZE="2">(3)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Furnish
Copies</I>. Furnish to the Holder such reasonable number of copies of the registration statement and of each
amendment and supplement thereto (in each case, including all exhibits), such reasonable number of copies of each prospectus
contained in such registration statement and each supplement or amendment thereto (including each preliminary prospectus), all of
which shall conform to the requirements of the Securities Act and the rules and regulations thereunder, and such other documents,
as the Holder may reasonably request to facilitate the disposition of the Warrant Shares included in such
registration.; </FONT></p>

<p style=' margin-bottom:0pt; margin-top:12pt; text-indent:1.39in;text-align:justify;'><FONT SIZE="2">(4)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Blue-Sky
Compliance</I>. Use its best efforts to register or qualify such Warrant Shares under such other securities or
blue sky laws of such United States jurisdictions as the Holder reasonably requests and do any and all other acts and things which
may be reasonably necessary or advisable to enable the Holder to consummate the disposition in such jurisdictions of the Warrant
Shares owned by such Holder (provided that the Company will not be required to (i)&nbsp;qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify for this subparagraph, (ii)&nbsp;subject itself to taxation in
any such jurisdiction, or (iii)&nbsp;consent to general service of process in any such jurisdiction other than with respect to the
registration, qualification or exemption therefrom of the Warrant Shares); </FONT></p>

<p style=' margin-bottom:0pt; margin-top:12pt; text-indent:1.39in;text-align:justify;'><FONT SIZE="2">(5)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Notifications</I>. Notify the Holder at any time when a registration statement related to the Warrant
Shares is effective under the Securities Act, of the happening of any event as a result of which the prospectus included in such
registration statement contains an untrue statement of a material fact or omits any fact necessary to make the statements therein
not misleading in light of the circumstances then existing, and, at the request of the Holder, the Company will prepare a
supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Warrant Shares, such
prospectus will not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements
therein not misleading; </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>11</font></p>

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<p style=' margin-bottom:0pt; margin-top:12pt; text-indent:1.39in;text-align:justify;'><font size=2>(6)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><i><font size=2>Listing</font></i>.<font size=2>  Cause all such Warrant Shares to be listed on the New York Stock Exchange or on the National Association of Securities Dealers, Inc. National Market System or any other nationally recognized United States trading market, if applicable, on which similar securities of the same class issued by the Company are then listed;</font></p>

<p style=' margin-bottom:0pt; margin-top:12pt; text-indent:1.39in;text-align:justify;'><font size=2>(7)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><i><font size=2>Transfer Agent; Registrar</font></i>.<font size=2>  Provide a transfer agent and registrar for all such Warrant Shares not later than the effective date of such registration statement;</font></p>

<p style=' margin-bottom:0pt; margin-top:12pt; text-indent:1.39in;text-align:justify;'><font size=2>(8)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><i><font size=2>Supply Information</font></i>.<font size=2>  Make available for inspection by the Holder, any underwriter participating in any disposition pursuant to such registration statement and any attorney, accountant or other agent retained by the Holder or underwriter, all financial and other records, pertinent corporate documents and properties of the Company, and cause the Company&#146;s officers, directors, employees and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with such registration statement; and</font></p>

<p style=' margin-bottom:0pt; margin-top:12pt; text-indent:1.39in;text-align:justify;'><font size=2>(9)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><i><font size=2>Obtain Cold Comfort Letter and Opinions of Counsel</font></i>.<font size=2>  Obtain a cold comfort letter from the Company&#146;s independent public accountants and opinions of counsel from the Company&#146;s attorneys, each in customary form and covering such matters as are customarily given or covered by independent public accountants and attorneys, as applicable, in an underwritten public offering of securities, addressed to the sellers.</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-indent:1in;text-align:justify;'><font size=2>(f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Registration&nbsp;Expenses</font></u><font size=2>.</font><i><font size=2> </font></i><font size=2>The Company shall bear and pay all expenses incurred in connection with any registration, filing or qualification of Registrable Securities with respect to the registrations pursuant to this Section 7, including, without limitation, all registration, filing and qualification fees, printing and accounting fees, listing fees and expenses, fees and expenses of compliance with securities or blue sky laws, fees and disbursements of counsel for the Company and the reasonable fees and disbursements of one counsel for the Holder.  Underwriting discounts and commissions relating to the Warrant Shares will be borne and paid ratably by the Holder. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.5in; text-indent:0.5in;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1in;text-align:justify;'><font size=2>(g)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Current Filings</font></u><font size=2>.  The Company agrees that from the date hereof&nbsp; until the earlier of (i) the period when all the Warrant Shares have been sold under a registration statement or pursuant to Rule 144 under the Securities Act or (ii) the date five (5) years after the date on which the Warrant Shares are issued upon exercise of this Warrant in accordance with the terms hereof, it shall keep current in filing all reports, statements and other materials required to be filed with the Commission to permit holders of the Warrant Shares to sell such securities under Rule 144.</font></p>


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            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:12.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  nowrap valign=top style='padding:12.0pt 0in 0in 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>(h)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Indemnification Provisions</font></u><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:center;'><font size=2>12</font></p>

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<p style=' margin-bottom:0pt; margin-top:12pt; text-indent:1.39in;text-align:justify;'><font size=2>(1)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Whenever pursuant to Section 7 a registration statement relating to this Warrant or any Warrant Shares is filed under the Securities Act, amended or supplemented, the Company will indemnify and hold harmless each holder of the securities covered by such registration statement, amendment or supplement (such holder being hereinafter called the &#147;</font><b><font size=2>Distributing Holder</font></b><font size=2>&#148;), and each Person, if any, who controls (within the meaning of the Securities Act) the Distributing Holder, and each underwriter (within the meaning of the Securities Act) of such securities and each Person, if any, who controls (within the meaning of the Securities Act) any such underwriter, against any losses, claims, damages or liabilities, joint or several, to which the
Distributing Holder, any such controlling Person or any such underwriter may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any such registration statement or any preliminary prospectus or final prospectus constituting a part thereof or any amendment or supplement thereto, or arise out of or are based upon the omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; and will reimburse the Distributing Holder and each such controlling Person and underwriter for any legal or other expenses reasonably incurred by the Distributing Holder or such controlling Person or underwriter in connection with investigating or defending any such loss, claim, damage, liability or action; </font><u><font
size=2>provided</font></u><font size=2>, </font><u><font size=2>however</font></u><font size=2>, that the Company will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in said registration statement, said preliminary prospectus, said final prospectus or said amendment or supplement in reliance upon and in conformity with written information furnished by such Distributing Holder for use in the preparation thereof; and </font><u><font size=2>provided</font></u><font size=2>, </font><u><font size=2>further</font></u><font size=2>, that in the event of any claim by the Company against the Holder arising out of or based upon an untrue statement or alleged untrue statement or omission or alleged omission made in said registration statement, said preliminary prospectus, said final prospectus or said amendment or supplement in reliance
upon and in conformity with written information furnished by the Holder for use in the preparation thereof, the Holder&#146;s damages to the Company shall not exceed the sum received by the Holder from the issuance of the Warrant Shares in connection with any such registration statement, preliminary prospectus, final prospectus or amendment or supplement.</font></p>

<p style=' margin-bottom:0pt; margin-top:12pt; text-indent:1.39in;text-align:justify;'><font size=2>(2)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Promptly after receipt by an indemnified party under this Section 7 of notice of the commencement of any action, such indemnified party if a claim in respect thereof is to be made against any indemnifying party, shall give the indemnifying party notice of the commencement thereof; but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party otherwise than under this Section 7.</font></p>

<p style=' margin-bottom:0pt; margin-top:12pt; text-indent:1.39in;text-align:justify;'><font size=2>(3)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In case any such action is brought against any indemnified party, and it notifies an indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate in, and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, assume the defense thereof, with counsel reasonably satisfactory to such indemnified party and under such circumstances, the indemnifying party will not be liable to such indemnified party for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation.</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>13</font></p>

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<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1in;text-align:justify;'><font size=2>(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Rule&nbsp;144&nbsp;Requirements</font></u><font size=2>.  With a view to making available the benefits of certain rules and regulations of the Commission which may at any time permit the sale of the Warrant Shares to the public without registration, the Company agrees to:  (1) make and keep public information available, as defined for purposes of Rule 144 under the Securities Act, (2) use its best efforts to file with the Commission in a timely manner all reports and other documents required of the Company to be filed under the Securities Act and the Securities Exchange Act of 1934, as amended (the &#147;</font><b><font size=2>Exchange Act</font></b><font size=2>&#148;) (at all times after it has become subject to such reporting requirements), and (3) furnish to any holder of Warrant Shares, upon request, a written
statement by the Company as to its compliance with the reporting requirements of Rule 144 under the Securities Act and of the Securities Act (at any time following the close of the first sale of securities by the Company pursuant to a registration statement) and the Exchange Act (at any time after it has become subject to such reporting requirements), a copy of the most recent annual or quarterly report of the Company and such other reports and documents of the Company as such holder may reasonable request to avail itself of any similar rule or regulation of the Commission allowing it to sell any such securities without registration.</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-indent:1in;text-align:justify;'><font size=2>(j)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Mergers, Etc</font></u><font size=2>.  The Company shall not, directly or indirectly, enter into any reorganization, change of control or other merger, consolidation, reorganization or similar transaction in which the Company shall not be the surviving Company unless the proposed surviving Company shall, prior to such transaction, agree in writing to assume the obligations of the Company under Section 7 of this Warrant, and for that purpose references hereunder to &#147;Warrant Shares&#148; shall be deemed to be references to the securities that a Holder would be entitled to receive in exchange for Warrant Shares under and/or in connection with any such transaction; </font><u><font size=2>provided</font></u><font size=2>, </font><u><font size=2>however</font></u><font size=2>, that the provisions of this Warrant shall
not apply in the event of any such transaction in which the Company is not the surviving Company if all Holders holding Warrant Shares are entitled to receive in exchange for all of their Warrant Shares consideration consisting solely of (i) cash, (ii) securities of the acquiring Company that may be immediately sold to the public without registration under the Securities Act, or (iii)&nbsp;securities of the acquiring Company that the acquiring Company has agreed to register, and actually does register, for resale to the public pursuant to the Securities Act contemporaneously with consummation of the transaction.</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-indent:0.5in;text-align:justify;'><font size=2>8.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><b><font size=2>Transfer of Warrant</font></b><font size=2>.  This Warrant may not be transferred by the Holder in whole or in part with respect to any or all of the shares purchased hereunder without the express written consent of the Company, which consent shall not be unreasonably withheld.  Notwithstanding the foregoing, this Warrant may be transferred by the Holder in whole or in part with respect to any or all of the shares purchased hereunder without the consent of the Company to an affiliate (as defined in the Securities Act) of the Holder.</font></p>

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

<p style=' margin-bottom:12pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><b><font size=2>Transfer to Comply with the Securities Act of 1933</font></b><font size=2>. This Warrant may not be exercised and neither this Warrant nor any of the Shares, nor any interest in either, may be offered, sold, assigned, pledged, hypothecated, encumbered or in any other manner transferred or disposed of, in whole or in part, except in compliance with applicable United States federal and state securities laws and the terms and conditions hereof. Each Warrant shall bear a legend in substantially the same form as the legend set forth on the first page of this Warrant. Each certificate for Shares issued upon exercise of this Warrant, unless at the time of exercise such Shares are acquired pursuant to a registration statement that has been declared effective under the Securities Act and applicable blue sky laws, shall
bear a legend substantially in the following form:</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>14</font></p>

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<p style=' margin-bottom:12pt; margin-top:0pt; margin-left:1in;text-align:justify;'><font size=2>&#147;THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE &#147;ACT&#148;). SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF REGISTRATION OR AN EXEMPTION THEREFROM.   INSIGNIA SYSTEMS, INC. MAY REQUIRE AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT THAT A PROPOSED TRANSFER OR SALE IS IN COMPLIANCE WITH THE ACT.&#148;</font></p>

<p style=' margin-bottom:12pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>Any certificate for any Shares issued at any time in exchange or substitution for any certificate for any Shares bearing such legend (except a new certificate for any Shares issued after the acquisition of such Shares pursuant to a registration statement that has been declared effective under the Securities Act) shall also bear such legend unless, in the opinion of counsel for the Company, the Shares represented thereby need no longer be subject to the restriction contained herein. The provisions of this Section 9 shall be binding upon all subsequent holders of certificates for Shares bearing the above legend and all subsequent holders of this Warrant, if any.</font></p>

<p style=' margin-bottom:12pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>10.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><b><font size=2>Rights of Holder</font></b><font size=2>. Except as provided in Section 4(b) above, the Holder shall not, by virtue hereof, be entitled to any rights of a stockholder of the Company, either at law or equity, and the rights of the Holder are limited to those expressed in this Warrant. Nothing contained in this Warrant shall be construed as conferring upon the Holder hereof the right to vote.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>11.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><b><font size=2>Fractional Shares</font></b><font size=2>.  Fractional shares shall not be issued upon the exercise of this Warrant, but in any case where the Holder would, except for the provisions of this Section, be entitled under the terms hereof to receive a fractional share, the Company shall, upon the exercise of this Warrant for the largest number of whole shares then called for, pay a sum in cash equal to the excess, if any, of the Fair Market Value (as defined in Section 1(b) hereof) of such fractional share over the proportional part of the Exercise Price represented by such fractional share.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>12</font><b><font size=2>. </font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><b><font size=2>Notices</font></b><font size=2>.  All notices required in connection with this Warrant shall be in writing and shall be deemed effectively given upon the earlier of actual receipt or:  (a)&nbsp; personal delivery to the party to be notified, (b)&nbsp;one business day after the date of electronically confirmed successful transmission by facsimile, (c)&nbsp;four (4) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d)&nbsp;one (1) business day after the business day of deposit with a nationally recognized overnight courier, specifying next day delivery, freight prepaid, with written notification of receipt, at the address or addresses furnished to the Company in writing.</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>15</font></p>

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<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>13</font><b><font size=2>.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><b><font size=2>Successors and Assigns</font></b><font size=2>.  This Warrant shall be binding upon the Company&#146;s successors and assigns and shall inure to the benefit of the Holder&#146;s successors, legal representatives and permitted assigns.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>14.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><b><font size=2>Governing Law</font></b><font size=2>.</font><b><font size=2>  </font></b><font size=2>This Warrant and all rights, obligations and liabilities hereunder shall be governed by and construed in accordance with the corporate laws of the State of New York, without reference to  principles of conflict of law or choice of laws. </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;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>[signature page follows]</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:center;'><font size=2>16</font></p>

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<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'>
<B><font SIZE=2>IN WITNESS WHEREOF</font></B><font size=2>, the Company has caused this Warrant to be signed by its duly authorized officer as of the date first set forth above.</font></p>

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


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            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font SIZE=2>INSIGNIA SYSTEMS, INC.</font><i></i></p> </td> </tr>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="45" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>By:</font></p> </td>
        <td width="234" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>/s/ Scott Drill</font></p> </td> </tr>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p> </td>
        <td width="45" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="234" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;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:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="45" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>Title:</font></p> </td>
        <td width="234" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font SIZE=2>CEO</font><u></u></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:justify;'><font size=2>Accepted:</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>VALASSIS COMMUNICATIONS, INC.</font></p>

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


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            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>By:</font></p> </td>
        <td width="155" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>/s/ Robert L. Recchia</font></p> </td> </tr></table>
</div>

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


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        <td width="43" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>Title:</font></p> </td>
        <td width="64" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font SIZE=2>C.F.O.</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><BR><BR><BR>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>17</font></p>

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            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>To:</font></p> </td>
        <td width="161" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>Insignia Systems, Inc.</font></p> </td> </tr></table>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="117" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>[&nbsp;&nbsp;</font></p> </td>
        <td width="25" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>]</font></p> </td> </tr></table>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="117" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>[&nbsp;&nbsp;</font></p> </td>
        <td width="25" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>]</font></p> </td> </tr></table>
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<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=2>NOTICE OF EXERCISE OF WARRANT</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:justify;'><font size=2>To Be Executed by the Registered Holder in Order to Exercise the Warrant</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>The undersigned hereby irrevocably elects to exercise the attached Warrant to purchase [check applicable method] ____________ for cash/___________* pursuant to the &#147;cashless&#148; exercise provisions of Section 1(b) of the Warrant, ____________ of the shares issuable upon the exercise of such Warrant, and requests that certificates for such shares (together with a new Warrant to purchase the number of shares, if any, remaining under this Warrant after exercise) shall be issued in the name of:</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>


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            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="182" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="257" valign=top style='border-bottom:solid black 1.0pt; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
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        <td  colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="182" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="257" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>(Print Name)</font></p> </td> </tr>
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        <td  colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>Please insert social security</font></p> </td>
        <td width="182" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="257" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
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        <td  colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>or other identifying number</font></p> </td>
        <td width="182" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="257" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
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        <td  colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:1.0pt;margin-bottom:0pt'><font size=2>of registered holder of</font></p> </td>
        <td width="182" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="257" valign=top style='border-bottom:solid black 1.0pt; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
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        <td  colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>certificate (__________)</font></p> </td>
        <td width="182" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="257" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>(Address)</font></p> </td> </tr>
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        <td  colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="182" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="257" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;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:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="182" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="257" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
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        <td width="42" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:1.0pt;margin-bottom:0pt'><font size=2>Date:</font></p> </td>
        <td width="142" valign=top style='border-bottom: solid black 1.0pt; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="182" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="257" valign=top style='border-bottom:solid black 1.0pt; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
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        <td width="42" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="142" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="182" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="257" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>Signature**</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: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;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;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>


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            <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:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>If exercise is a &#147;cashless&#148; exercise pursuant to Section 1(b), enclose computation of shares purchased, date of determination of Fair Market Value, and computation of Fair Market Value.</font></p> </td> </tr></table>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><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>**</font></p> </td>
        <td  valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>The signature on the Notice of Exercise of Warrant must correspond to the name as written upon the face of the Warrant in every particular without alteration or enlargement or any change whatsoever.  When signing on behalf of a corporations partnership, trust or other entity, PLEASE indicate your positions) and title(s) with such entity.</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>
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<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>4
<FILENAME>insignia073330_ex31-1.htm
<DESCRIPTION>CERTIFICATION OF CEO PURSUANT TO SECTION 302
<TEXT>
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<TITLE>Exhibit 31.1 to Insignia Systems, Inc. Form 10-Q for quarter ended June 30, 2007 </TITLE>
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<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:center;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><B><font SIZE=2>CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER</font></B></p>

<p style=' margin-bottom:0pt; margin-top:5pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=2>I, Scott F. Drill, certify that:</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>1. </font></p> </td>
        <td  valign=top style='padding:5.0pt 0in 5.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>I have reviewed this quarterly report on Form 10-Q of Insignia Systems, Inc.;</font></p> </td> </tr></table>
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        <td width="3%" valign=top style='padding:5.0pt 0in 5.0pt 0in'>
            <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 style='padding:5.0pt 0in 5.0pt 0in'>
            <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>



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        <td width="3%" valign=top style='padding:5.0pt 0in 5.0pt 0in'>
            <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 style='padding:5.0pt 0in 5.0pt 0in'>
            <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 registrant as of, and for, the periods presented in this report; </font></p> </td> </tr></table>
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        <td width="3%" valign=top style='padding:5.0pt 0in 5.0pt 0in'>
            <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 style='padding:5.0pt 0in 5.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:</font></p> </td> </tr></table>
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        <td width="7%" valign=top style='padding:5.0pt 0in 5.0pt 0in'> <p><font size=1>&nbsp;</font></p> </td>

        <td width="3%" valign=top style='padding:5.0pt 0in 5.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>a) </font></p> </td>
        <td  valign=top style='padding:5.0pt 0in 5.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within the Registrant, particularly during the period in which this report is being prepared;</font></p> </td> </tr></table>
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            <p ><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=top style='padding:5.0pt 0in 5.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>b)</font></p> </td>
        <td  valign=top style='padding:5.0pt 0in 5.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; </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>c)</font></p> </td>
        <td  valign=top style='padding:5.0pt 0in 5.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Disclosed in this report any change in the registrant&#146;s internal control over financial reporting that occurred during the registrant&#146;s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant&#146;s internal control over financial reporting;</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>5. </font></p> </td>
        <td  valign=top style='padding:5.0pt 0in 5.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):</font></p> </td> </tr></table>
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        <td width="7%" valign=top style='padding:5.0pt 0in 5.0pt 0in'> <p><font size=1>&nbsp;</font></p> </td>

        <td width="3%" valign=top style='padding:5.0pt 0in 5.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>a) </font></p> </td>
        <td  valign=top style='padding:5.0pt 0in 5.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>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 registrant's ability to record, process, summarize and report financial information; and</font></p> </td> </tr></table>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:.0001pt'><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>b) </font></p> </td>
        <td  valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.</font></p> </td> </tr></table>
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<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>


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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0pt'><font size=2>Date:&nbsp;&nbsp;August 14, 2007</font></p> </td>
        <TD WIDTH="16%" 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="42%" VALIGN="BOTTOM" STYLE="border-bottom: solid black 1.0pt;">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>/s/ Scott F. Drill</font></p> </td> </tr>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="16%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="42%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>Scott F. Drill</font><br> <font size=2>President and Chief Executive Officer</font><br> <font size=2>(principal executive officer)</font></p> </td> </tr></table>
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<TYPE>EX-31.2
<SEQUENCE>5
<FILENAME>insignia073330_ex31-2.htm
<DESCRIPTION>CERTIFICATION OF CFO PURSUANT TO SECTION 302
<TEXT>
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<TITLE>Exhibit 31.2 to Insignia Systems, Inc. Form 10-Q for quarter ended June 30, 2007 </TITLE>
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<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0%;text-align:right;'><b><font size=3>Exhibit 31.2</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>CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER</font></B></p>

<p style=' margin-bottom:0pt; margin-top:5pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=2>I, Justin W. Shireman, certify that:</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>1. </font></p> </td>
        <td  valign=top style='padding:5.0pt 0in 5.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>I have reviewed this quarterly report on Form 10-Q of Insignia Systems, Inc.;</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>2. </font></p> </td>
        <td  valign=top style='padding:5.0pt 0in 5.0pt 0in'>
            <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>
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            <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 style='padding:5.0pt 0in 5.0pt 0in'>
            <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 registrant as of, and for, the periods presented in this report; </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>4. </font></p> </td>
        <td  valign=top style='padding:5.0pt 0in 5.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:</font></p> </td> </tr></table>
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        <td width="7%" valign=top style='padding:5.0pt 0in 5.0pt 0in'> <p><font size=1>&nbsp;</font></p> </td>

        <td width="3%" valign=top style='padding:5.0pt 0in 5.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>a) </font></p> </td>
        <td  valign=top style='padding:5.0pt 0in 5.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within the Registrant, particularly during the period in which this report is being prepared;</font></p> </td> </tr></table>
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            <p ><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=top style='padding:5.0pt 0in 5.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>b)</font></p> </td>
        <td  valign=top style='padding:5.0pt 0in 5.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; </font></p> </td> </tr></table>
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        <td width="7%" valign=top style='padding:5.0pt 0in 5.0pt 0in'>
            <p ><font size=1>&nbsp;</font></p> </td>
        <td width="3%" valign=top style='padding:5.0pt 0in 5.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>c)</font></p> </td>
        <td  valign=top style='padding:5.0pt 0in 5.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Disclosed in this report any change in the registrant&#146;s internal control over financial reporting that occurred during the registrant&#146;s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant&#146;s internal control over financial reporting;</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>5. </font></p> </td>
        <td  valign=top style='padding:5.0pt 0in 5.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):</font></p> </td> </tr></table>
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        <td width="7%" valign=top style='padding:5.0pt 0in 5.0pt 0in'> <p><font size=1>&nbsp;</font></p> </td>

        <td width="3%" valign=top style='padding:5.0pt 0in 5.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>a) </font></p> </td>
        <td  valign=top style='padding:5.0pt 0in 5.0pt 0in'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>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 registrant's ability to record, process, summarize and report financial information; and</font></p> </td> </tr></table>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:.0001pt'><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>b) </font></p> </td>
        <td  valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.</font></p> </td> </tr></table>
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<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>


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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0pt'><font size=2>Date:&nbsp;&nbsp;August 14, 2007</font></p> </td>
        <TD WIDTH="16%" 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="42%" VALIGN="BOTTOM" STYLE="border-bottom: solid black 1.0pt;">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>/s/ Justin W. Shireman</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="16%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>Justin W. Shireman</font><br> <font size=2>Vice President, Finance and</font><br> <font size=2>Chief Financial Officer </font><br> <font size=2>(principal financial officer)</font></p> </td> </tr></table>
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<DOCUMENT>
<TYPE>EX-32
<SEQUENCE>6
<FILENAME>insignia073330_ex32.htm
<DESCRIPTION>CERTIFICATION OF CEO/CFO PURSUANT TO SECTION 906
<TEXT>
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<TITLE>Exhibit 32 to Insignia Systems, Inc. Form 10-Q for quarter ended June 30, 2007 </TITLE>
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<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0%;text-align:RIGHT;'>
<b><font size=3>Exhibit 32</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>SECTION 1350 CERTIFICATION </font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:7.69%;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:7.69%;text-align:justify;'><font size=2>The undersigned certify that:</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;'><font size=2>(1) &nbsp;&nbsp;&nbsp;&nbsp;The accompanying Quarterly Report on Form 10-Q for the period ended June 30, 2007, 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;&nbsp;&nbsp;The information contained in the accompanying Quarterly 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>


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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0pt'><font size=2>Date:&nbsp;&nbsp;August 14, 2007</font></p> </td>
        <td width="16%" 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="42%" valign=bottom style='border-bottom: solid black 1.0pt; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>/s/ Scott F. Drill</font></p> </td> </tr>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="16%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="42%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>Scott F. Drill</font><br> <font size=2>President and Chief Executive Officer</font><br> <font size=2>(principal executive 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:justify;'><font size=2>&nbsp;</font></p>

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


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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0pt'><font size=2>Date:&nbsp;&nbsp;August 14, 2007</font></p> </td>
        <TD WIDTH="16%" 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="42%" VALIGN="BOTTOM" STYLE="border-bottom: solid black 1.0pt;">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>/s/ Justin W. Shireman</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>
        <td width="40%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="16%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="42%" valign=bottom >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0in;margin-bottom:0pt'><font size=2>Justin W. Shireman</font><br> <font size=2>Vice President, Finance and</font><br> <font size=2>Chief Financial Officer </font><br> <font size=2>(principal financial officer)</font></p> </td> </tr></table>
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