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<SEC-DOCUMENT>0000897101-08-002291.txt : 20081114
<SEC-HEADER>0000897101-08-002291.hdr.sgml : 20081114
<ACCEPTANCE-DATETIME>20081114110023
ACCESSION NUMBER:		0000897101-08-002291
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20080930
FILED AS OF DATE:		20081114
DATE AS OF CHANGE:		20081114

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:		081187942

	BUSINESS ADDRESS:	
		STREET 1:		8799 BROOKLYN BLVD.
		CITY:			MINNEAPOLIS
		STATE:			MN
		ZIP:			55445
		BUSINESS PHONE:		7633926200

	MAIL ADDRESS:	
		STREET 1:		8799 BROOKLYN BLVD.
		CITY:			MINNEAPOLIS
		STATE:			MN
		ZIP:			55445
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>insignia084642_10q.htm
<DESCRIPTION>FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2008
<TEXT>
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<TITLE>Insignia Systems, Inc. Form 10-Q for quarterly period ended September 30, 2008 </TITLE>
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<p style=' margin-bottom:3pt; margin-top:3pt;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>


<p style=' margin-bottom:0pt; margin-top:6pt;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=3>Washington, D. C. 20549</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=1>&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 face=Wingdings>x</font><font size=3>&nbsp;&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=1>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><b><font size=3>for the quarterly period ended September 30, 2008</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>&nbsp;&nbsp;TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font SIZE=3>SECURITIES EXCHANGE ACT OF 1934 </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=1>&nbsp;</font></p>

<p style=' margin-bottom:6pt; margin-top:0pt;text-align:center;'><font size=3>Commission File Number:&nbsp;&nbsp;1-13471</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:left;'><font size=1>&nbsp;</font></p>


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<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="360" valign=bottom >
<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>
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        <td width="360" 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 </font><br> <font size=2>incorporation or organization)</font></p> </td>

        <td width="360" 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:center;'><font size=1>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><b><font size=3>8799 Brooklyn Blvd.</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><b><font size=3>Minneapolis, MN 55445</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=1>&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=1>&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:6pt; margin-top:0pt;text-align:center;'><font size=2> (Former name, former address and former fiscal year if changed since last report)</font></p>


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

<p style=' margin-bottom:0pt; margin-top:6pt; text-indent:0.5in;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&nbsp;&nbsp;</font><font face=Wingdings>x</font>&nbsp;&nbsp;</p> </td>

        <td width="57" nowrap valign=top >
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=3>No&nbsp;&nbsp;</font><font face=Wingdings>o</font></p> </td> </tr></table>
</div>


<p style=' margin-bottom:0pt; margin-top:6pt; text-indent:0.5in;text-align:justify;'><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>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=3>Large accelerated filer&nbsp;&nbsp;</font><font face=Wingdings>o</font><font size=3>&nbsp;&nbsp;&nbsp;&nbsp;Accelerated filer&nbsp;&nbsp;</font><font face=Wingdings>o</font><font size=3>&nbsp;&nbsp;&nbsp;&nbsp;Non-accelerated filer&nbsp;&nbsp;</font><font face=Wingdings>x</font><font size=3>&nbsp;&nbsp;&nbsp;&nbsp;Smaller Reporting Company&nbsp;&nbsp;</font><font face=Wingdings>o</font></p>


<p style=' margin-bottom:0pt; margin-top:6pt; text-indent:0.5in;text-align:justify;'><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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<table border="0" cellspacing=0 cellpadding=0 width="119" style='margin-left:0pt;border-collapse:collapse; '>
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        <td width="61" nowrap valign=top >
<p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=3>Yes&nbsp;&nbsp;</font><font face=Wingdings>o</font>&nbsp;&nbsp;</p> </td>

        <td width="57" nowrap valign=top >
<p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=3>No&nbsp;&nbsp;</font><font face=Wingdings>x</font></p> </td> </tr></table>
</div>


<p style=' margin-bottom:0pt; margin-top:6pt; text-indent:0.5in;text-align:justify;'><font size=3>Number of shares outstanding of Common Stock, $.01 par value, as of October 31, 2008, was 15,369,464.</font></p>



<p style=' margin-bottom:0pt; margin-top:6pt;text-align:center;'><A NAME="PAGENUM"><font size=2>1</font>
</A></p>

<DIV STYLE="width: 100%; border-bottom: 1pt solid black; margin-top: 8pt; font-size: 1pt">&nbsp;</DIV>
<DIV STYLE="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>


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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><b><font size=2><A NAME="toc">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>


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        <td width="89" 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="#A001">PART I.</A></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="#A001">FINANCIAL INFORMATION</A></font></B></p>  </td>

        <td width="41" valign=bottom >
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>3</font></p>  </td> </tr>
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        <td width="89" 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="41" valign=bottom >
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr >

        <td width="89" 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="#A002">Item 1.</A></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="#A002">Financial Statements</A>  </font></b></p>  </td>

        <td width="41" valign=bottom >
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>3</font></p>  </td> </tr>
    <tr >

        <td width="89" 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="41" valign=bottom >
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr >

        <td width="89" 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:.5in;text-indent:-.25in;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2><A HREF="#A003">Balance Sheets &#150; September 30, 2008 and December 31, 2007 (unaudited)</A></font></p> </td>

        <td width="41" valign=bottom >
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>3</font></p> </td> </tr>
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        <td width="89" 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="41" valign=bottom >
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
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        <td width="89" 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:.5in;text-indent:-.25in;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2><A HREF="#A004">Statements of Operations &#150; Three and nine months ended September 30, 2008 and 2007 (unaudited)</A></font></p> </td>

        <td width="41" valign=bottom >
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>4</font></p> </td> </tr>
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        <td width="89" 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="41" valign=bottom >
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
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        <td width="89" 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:.5in;text-indent:-.25in;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2><A HREF="#A005">Statements of Shareholders&#146; Equity &#150; Nine months ended September 30, 2008 and 2007 (unaudited)</A></font></p> </td>

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<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>5</font></p> </td> </tr>
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        <td width="89" 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="41" valign=bottom >
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
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        <td width="89" 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:.5in;text-indent:-.25in;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2><A HREF="#A006">Statements of Cash Flows &#150; Nine months ended September 30, 2008 and 2007 (unaudited)</A></font></p> </td>

        <td width="41" valign=bottom >
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>6</font></p> </td> </tr>
    <tr >

        <td width="89" 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="41" valign=bottom >
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr >

        <td width="89" 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:.5in;text-indent:-.25in;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2><A HREF="#A007">Notes to Financial Statements &#150; September 30, 2008 (unaudited)</A></font></p> </td>

        <td width="41" valign=bottom >
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>7</font></p> </td> </tr>
    <tr >

        <td width="89" 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="41" valign=bottom >
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr >

        <td width="89" 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="#A008">Item 2</A>.</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="#A008">Management's Discussion and Analysis of Financial Condition and Results of Operations</A></font></b></p> </td>

        <td width="41" valign=bottom >
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>10</font></p> </td> </tr>
    <tr >

        <td width="89" 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="41" valign=bottom >
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr >

        <td width="89" 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="#A009">Item 3.</A></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="#A009">Quantitative and Qualitative Disclosures About Market Risk</A></font></b></p> </td>

        <td width="41" valign=bottom >
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>15</font></p> </td> </tr>
    <tr >

        <td width="89" 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="41" valign=bottom >
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr >

        <td width="89" 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="#A010">Item 4.</A></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="#A010">Controls and Procedures</A></font></b></p> </td>

        <td width="41" valign=bottom >
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>15</font></p> </td> </tr>
    <tr >

        <td width="89" 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="41" valign=bottom >
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr >

        <td width="89" 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="41" valign=bottom >
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr >

        <td width="89" 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="#A011">PART II.</A></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="#A011">OTHER INFORMATION</A></font></B></p> </td>

        <td width="41" valign=bottom >
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>16</font></p> </td> </tr>
    <tr >

        <td width="89" 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="41" valign=bottom >
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr >

        <td width="89" 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="#A012">Item 1.</A></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="#A012">Legal Proceedings</A></font></b></p> </td>

        <td width="41" valign=bottom >
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>16</font></p> </td> </tr>
    <tr >

        <td width="89" 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="41" valign=bottom >
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr >

        <td width="89" 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="#A013">Item 1A.</A></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="#A013">Risk Factors</A></font></b></p> </td>

        <td width="41" valign=bottom >
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>17</font></p> </td> </tr>
    <tr >

        <td width="89" 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="41" valign=bottom >
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr >

        <td width="89" 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="#A014">Item 2.</A></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="#A014">Unregistered Sales of Equity Securities and Use of Proceeds</A></font></b></p> </td>

        <td width="41" valign=bottom >
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>17</font></p> </td> </tr>
    <tr >

        <td width="89" 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="41" valign=bottom >
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr >

        <td width="89" 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="#A015">Item 3.</A></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="#A015">Defaults Upon Senior Securities</A></font></b></p> </td>

        <td width="41" valign=bottom >
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>18</font></p> </td> </tr>
    <tr >

        <td width="89" 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="41" valign=bottom >
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr >

        <td width="89" 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="#A016">Item 4.</A></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="#A016">Submission of Matters to a Vote of Security Holders</A></font></b></p> </td>

        <td width="41" valign=bottom >
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>18</font></p> </td> </tr>
    <tr >

        <td width="89" 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="41" valign=bottom >
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr >

        <td width="89" 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="#A017">Item 5.</A></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="#A017">Other Information</A></font></b></p> </td>

        <td width="41" valign=bottom >
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>18</font></p> </td> </tr>
    <tr >

        <td width="89" 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="41" valign=bottom >
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr >

        <td width="89" 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="#A018">Item 6.</A></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="#A018">Exhibits</A> </font></b></p> </td>

        <td width="41" valign=bottom >
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>18</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;'><A NAME="PAGENUM"><font size=2>2</font>
</A></p>

<BR>
<HR SIZE=3 COLOR=GRAY NOSHADE>
<PAGE>
<p><font size=2><A HREF="#toc">Table of Contents</A></FONT></P>


<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'>
<B><font SIZE=3><A NAME="A001">PART I.</A></font></B><font size=3>&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='margin-left:0pt;border-collapse:collapse; '>
    <tr >

        <td width="11%" nowrap 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><A NAME="A002">Item 1.</A></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><A NAME="A003">Insignia Systems, Inc.</A></font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><b><font SIZE=3>B</font><font size=2>ALANCE </font><font SIZE=3>S</font><font size=2>HEETS</font></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:center;'><font size=2>&nbsp;</font></p>


<div align=left>

<table border="0" cellspacing=0 cellpadding=0 width="100%" style='border-collapse:collapse'>
    <tr style='page-break-inside:avoid'>

        <td width="68%" nowrap 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 width="2%" nowrap 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 nowrap 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:2pt;margin-bottom:0pt'><b><font size=1>September 30,</font></b><br> <b><font size=1>2008</font></b></p> </td>

        <td width="2%" nowrap 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 nowrap 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:2pt;margin-bottom:0pt'><b><font size=1>December 31,</font></b><br> <b><font size=1>2007</font></b></p> </td>

        <td width="1%" nowrap 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="68%" valign=top style='background:white'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><B><font SIZE=2>ASSETS</font></B></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style=' border-top:solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style=' border-top:solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="68%" valign=top style='background:white'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><b><font size=2>Current Assets:</font></b></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="68%" valign=top style='background:#D6F3E8'>
<p style='margin-left:35.3pt;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Cash and cash equivalents</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>8,336,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>7,393,000</font></p> </td>

        <td width="1%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="68%" valign=top style='background:white'>
<p style='margin-left:35.3pt;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Accounts receivable &#150; net of $10,000 allowance</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>4,007,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>2,155,000</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="68%" valign=top style='background:#D6F3E8'>
<p style='margin-left:35.3pt;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Inventories</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>515,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>397,000</font></p> </td>

        <td width="1%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="68%" valign=top style='background:white'>
<p style='margin-left:35.3pt;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Deferred tax assets, net</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>164,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>164,000</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="68%" valign=top style='background:#D6F3E8'>
<p style='margin-left:35.3pt;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom: 0in'><font size=2>Prepaid expenses and other</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>798,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>883,000</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 width="68%" valign=top style='background:white'>
<p style='margin-left:52.55pt;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Total Current Assets</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>13,820,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>10,992,000</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="68%" valign=top style='background:white'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="68%" valign=top style='background:white'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><b><font size=2>Other Assets:</font></b></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="68%" valign=top style='background:#D6F3E8'>
<p style='margin-left:35.3pt;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Property and equipment, net</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>1,095,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>375,000</font></p> </td>

        <td width="1%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="68%" valign=top style='background:white'>
<p style='margin-left:35.3pt;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Non-current deferred tax assets, net</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>1,967,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>1,967,000</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="68%" valign=top style='background:#D6F3E8'>
<p style='margin-left:35.3pt;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom: 0in'><font size=2>Other</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>40,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>6,000</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 width="68%" valign=top style='background:white'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="68%" 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 width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style=' border-bottom:double black 2.25pt;background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="10%" nowrap valign=bottom style=' border-bottom:double black 2.25pt;background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>16,922,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style=' border-bottom:double black 2.25pt;background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="10%" nowrap valign=bottom style=' border-bottom:double black 2.25pt;background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>13,340,000</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>
    <tr style='page-break-inside:avoid'>

        <td width="68%" valign=top style='background:white'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="68%" valign=top style='background:white'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><b><font size=2>LIABILITIES AND SHAREHOLDERS&#146; EQUITY</font></b></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="68%" valign=top style='background:white'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><b><font size=2>Current Liabilities:</font></b></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="68%" valign=top style='background:#D6F3E8'>
<p style='margin-left:35.3pt;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Current maturities of long-term liabilities</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>93,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>266,000</font></p> </td>

        <td width="1%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="68%" valign=top style='background:white'>
<p style='margin-left:35.3pt;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Accounts payable</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>2,100,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>1,369,000</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="68%" valign=top style='background:white'>
<p style='margin-left:35.3pt;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Accrued liabilities</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="68%" valign=top style='background:#D6F3E8'>
<p style='margin-left:43.9pt;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Compensation</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>875,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>622,000</font></p> </td>

        <td width="1%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="68%" valign=top style='background:white'>
<p style='margin-left:43.9pt;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Employee stock purchase plan</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>99,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>98,000</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="68%" valign=top style='background:#D6F3E8'>
<p style='margin-left:43.9pt;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Legal</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>1,273,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>208,000</font></p> </td>

        <td width="1%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="68%" valign=top style='background:white'>
<p style='margin-left:43.9pt;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Other commissions</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>860,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>152,000</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="68%" valign=top style='background:#D6F3E8; '>
<p style='margin-left:43.9pt;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Other</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>589,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>221,000</font></p> </td>

        <td width="1%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="68%" valign=top style='background:white'>
<p style='margin-left:35.3pt;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom: 0in'><font size=2>Deferred revenue</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>1,015,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>305,000</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 width="68%" valign=top style='background:#D6F3E8;'>
<p style='margin-left:52.55pt;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Total Current Liabilities</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8;'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style=' background:#D6F3E8;'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style=' background:#D6F3E8;'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>6,904,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style=' background:#D6F3E8;'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style=' background:#D6F3E8;'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>3,241,000</font></p> </td>

        <td width="1%" valign=bottom style='background:#D6F3E8;'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="68%" valign=top style='background:white'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="68%" valign=top style='background:white'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><b><font size=2>Long-Term Liabilities, less current maturities</font></b></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>398,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:white '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>422,000</font></p> </td>

        <td width="1%" valign=bottom style='background:white '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="68%" valign=top style='background:white'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="68%" valign=top style='background:#D6F3E8;'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><b><font size=2>Commitments and Contingencies</font></b></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8;'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>&#151;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>&#151;</font></p> </td>

        <td width="1%" valign=bottom style='background:#D6F3E8;'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="68%" valign=top style='background:white'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="68%" valign=top style='background:white'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><b><font size=2>Shareholders&#146; Equity:</font></b></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="68%" valign=top style='background:white'>
<p style='margin-left:35.3pt;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Common stock, par value $.01:</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="68%" valign=top style='background:white'>
<p style='margin-left:43.55pt;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Authorized shares &#150; 40,000,000 </font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="68%" valign=top style='background:white'>
<p style='margin-left:43.55pt;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Issued and outstanding shares &#150; 15,369,000 at September 30, 2008 and 15,550,000 at December 31, 2007</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>154,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>156,000</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="68%" valign=top style='background:#D6F3E8'>
<p style='margin-left:35.3pt;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Additional paid-in capital</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>32,054,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>32,025,000</font></p> </td>

        <td width="1%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="68%" valign=top style='background:white'>
<p style='margin-left:35.3pt;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom: 0in'><font size=2>Accumulated deficit</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(22,588,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='border-bottom: solid white 1.0pt;background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>)</font></p> </td>

        <td width="2%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(22,504,000</font></p> </td>

        <td width="1%" valign=bottom style='border-bottom: solid white 1.0pt;background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>)</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="68%" valign=top style='background:#D6F3E8'>
<p style='margin-left:52.55pt;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom: 0in'><font size=2>Total Shareholders&#146; Equity</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt;  background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt;  background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>9,620,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt;  background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt;  background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>9,677,000</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 width="68%" valign=top style='background:white'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="68%" 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 width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style=' border-bottom:double black 2.25pt;background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="10%" nowrap valign=bottom style=' border-bottom:double black 2.25pt;background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>16,922,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style=' border-bottom:double black 2.25pt;background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="10%" nowrap valign=bottom style=' border-bottom:double black 2.25pt;background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>13,340,000</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;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;'><A NAME="PAGENUM"><font size=2>3</font>
</A></p>

<BR>
<HR SIZE=3 COLOR=GRAY NOSHADE>
<PAGE>
<p><font size=2><A HREF="#toc">Table of Contents</A></FONT></P>



<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'>
<b><font size=2><A NAME="A004">Insignia Systems, Inc.</A></font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><b><font SIZE=3>S</font><font size=2>TATEMENTS OF </font><font SIZE=3>O</font><font size=2>PERATIONS</font></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; margin-left:2.75in;text-align:left;'><font size=2>&nbsp;</font></p>


<div align=left>

<table border="0" cellspacing=0 cellpadding=0 width="100%" style='border-collapse:collapse'>
    <tr style='page-break-inside:avoid'>

        <td width="46%" valign=top >
<p style='margin-left:.25in;text-indent:-.25in;text-align:center;margin-top:1.0pt;margin-bottom:0in'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom >
<p style='margin-left:0in;text-indent:0pt;text-align:center;margin-top:1.0pt;margin-bottom:0in'><font size=1>&nbsp;</font></p> </td>

        <td nowrap colspan="5" valign=bottom style=' border-bottom:solid black 1.0pt; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:2pt;margin-bottom:0pt'><font size=1>Three Months Ended</font><br> <b><font size=1>September 30</font></b></p> </td>

        <td width="2%" nowrap valign=bottom >
<p style='margin-left:0in;text-indent:0pt;text-align:center;margin-top:1.0pt;margin-bottom:0in'><font size=1>&nbsp;</font></p> </td>

        <td nowrap colspan="5" valign=bottom style=' border-bottom:solid black 1.0pt; '>
<p
style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:2pt;margin-bottom:0pt'><font size=1>Nine Months Ended</font><br> <b><font size=1>September 30</font></b></p> </td>

        <td width="1%" nowrap valign=bottom >
<p style='margin-left:0in;text-indent:0pt;text-align:center;margin-top:1.0pt;margin-bottom:0in'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="46%" valign=top >
<p style='margin-left:.25in;text-indent:-.25in;text-align:center;margin-top:1.0pt;margin-bottom:0in'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom >
<p style='margin-left:0in;text-indent:0pt;text-align:center;margin-top:1.0pt;margin-bottom:0in'><font size=1>&nbsp;</font></p> </td>

        <td nowrap colspan="2" valign=bottom style='border-bottom:solid black 1.0pt;  '>
<p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:2pt;margin-bottom:0pt'><b><font size=1>2008</font></b></p> </td>

        <td width="2%" nowrap 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 nowrap 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:2pt;margin-bottom:0pt'><b><font size=1>2007</font></b></p> </td>

        <td width="2%" nowrap valign=bottom >
<p style='margin-left:0in;text-indent:0pt;text-align:center;margin-top:1.0pt;margin-bottom:0in'><font size=1>&nbsp;</font></p> </td>

        <td nowrap colspan="2" valign=bottom style=' border-bottom:solid black 1.0pt;  '>
<p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:2pt;margin-bottom:0pt'><b><font size=1>2008</font></b></p> </td>

        <td width="2%" nowrap 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 nowrap 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:2pt;margin-bottom:0pt'><b><font size=1>2007</font></b></p> </td>

        <td width="1%" nowrap valign=bottom >
<p style='margin-left:0in;text-indent:0pt;text-align:center;margin-top:1.0pt;margin-bottom:0in'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="46%" valign=top style='background:#D6F3E8'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Services revenues</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' border-top:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>7,999,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' border-top:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>5,718,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' border-top:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>20,830,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' border-top:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>17,281,000</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="46%" 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 width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>598,000</font></p> </td>

        <td width="2%" nowrap 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%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>743,000</font></p> </td>

        <td width="2%" nowrap 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%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>1,908,000</font></p> </td>

        <td width="2%" nowrap 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%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>2,214,000</font></p> </td>

        <td width="1%" nowrap 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="46%" valign=top style='background:#D6F3E8'>
<p style='margin-left:52.55pt;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Total Net Sales</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>8,597,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>6,461,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>22,738,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>19,495,000</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="46%" valign=top style='background:white'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="46%" valign=top style='background:white'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Cost of services</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>3,699,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>2,372,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>9,190,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>7,017,000</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="46%" 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 products sold</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>399,000</font></p> </td>

        <td width="2%" nowrap 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%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>481,000</font></p> </td>

        <td width="2%" nowrap 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%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>1,221,000</font></p> </td>

        <td width="2%" nowrap 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%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>1,352,000</font></p> </td>

        <td width="1%" nowrap 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="46%" valign=top style='background:white'>
<p style='margin-left:52.55pt;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom: 0in'><font size=2>Total Cost of Sales</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt;  background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt;  background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>4,098,000</font></p> </td>

        <td width="2%" nowrap 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%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt;  background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt;  background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>2,853,000</font></p> </td>

        <td width="2%" nowrap 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%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt;  background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt;  background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>10,411,000</font></p> </td>

        <td width="2%" nowrap 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%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt;  background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt;  background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>8,369,000</font></p> </td>

        <td width="1%" nowrap 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="46%" valign=top style='background:#D6F3E8'>
<p style='margin-left:69.85pt;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Gross Profit</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>4,499,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>3,608,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>12,327,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>11,126,000</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="46%" valign=top style='background:white'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="46%" valign=top style='background:white'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><b><font size=2>Operating Expenses</font></b><font size=2>:</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="46%" valign=top style='background:white'>
<p style='margin-left:35.3pt;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Selling</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>2,561,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>1,400,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>5,878,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>4,295,000</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="46%" valign=top style='background:#D6F3E8'>
<p style='margin-left:35.3pt;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Marketing</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>451,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>357,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>1,211,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>1,052,000</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="46%" valign=top style='background:white'>
<p style='margin-left:35.3pt;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Warrant expense (selling &amp; marketing)</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>&#151;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>1,521,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>&#151;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>1,521,000</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="46%" valign=top style='background:#D6F3E8'>
<p style='margin-left:35.3pt;text-indent:-.25in;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:#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%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>1,992,000</font></p> </td>

        <td width="2%" nowrap 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%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>1,245,000</font></p> </td>

        <td width="2%" nowrap 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%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>5,457,000</font></p> </td>

        <td width="2%" nowrap 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%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>3,569,000</font></p> </td>

        <td width="1%" nowrap 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="46%" valign=top style='background:white'>
<p style='margin-left:52.55pt;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom: 0in'><font size=2>Total Operating Expenses</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt;  background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt;  background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>5,004,000</font></p> </td>

        <td width="2%" nowrap 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%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt;  background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt;  background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>4,523,000</font></p> </td>

        <td width="2%" nowrap 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%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt;  background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt;  background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>12,546,000</font></p> </td>

        <td width="2%" nowrap 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%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt;  background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt;  background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>10,437,000</font></p> </td>

        <td width="1%" nowrap 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="46%" valign=top style='background:#D6F3E8'>
<p style='margin-left:69.85pt;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Operating Income (Loss)</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(505,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>)</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(915,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>)</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(219,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>)</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>689,000</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="46%" valign=top style='background:white'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="46%" valign=top style='background:white'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><b><font size=2>Other Income (Expense)</font></b><font size=2>:</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="46%" valign=top style='background:white'>
<p style='margin-left:35.3pt;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Interest income</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>55,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>71,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>178,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>166,000</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="46%" valign=top style='background:#D6F3E8'>
<p style='margin-left:35.3pt;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Interest expense</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(13,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>)</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(19,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>)</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(43,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>)</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(77,000</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>)</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="46%" valign=top style='background:white'>
<p style='margin-left:35.3pt;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom: 0in'><font size=2>Other income</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>2,000</font></p> </td>

        <td width="2%" nowrap 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%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>&#151;</font></p> </td>

        <td width="2%" nowrap 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%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>&#151;</font></p> </td>

        <td width="2%" nowrap 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%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>&#151;</font></p> </td>

        <td width="1%" nowrap 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="46%" valign=top style='background:#D6F3E8'>
<p style='margin-left:52.55pt;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom: 0in'><font size=2>Total Other Income</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt;  background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt;  background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>44,000</font></p> </td>

        <td width="2%" nowrap 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%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt;  background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt;  background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>52,000</font></p> </td>

        <td width="2%" nowrap 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%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt;  background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt;  background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>135,000</font></p> </td>

        <td width="2%" nowrap 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%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt;  background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt;  background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>89,000</font></p> </td>

        <td width="1%" nowrap 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="46%" valign=top style='background:white'>
<p style='margin-left:69.85pt;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Income (Loss) Before Taxes</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(461,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>)</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(863,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>)</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(84,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>)</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>778,000</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="46%" valign=top style='background:white'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="46%" 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>Income tax expense (benefit)</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(207,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style=' border-bottom:solid #D6F3E8 1.0pt; background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>)</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>44,000</font></p> </td>

        <td width="2%" nowrap 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%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>&#151;</font></p> </td>

        <td width="2%" nowrap 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%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>60,000</font></p> </td>

        <td width="1%" nowrap 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="46%" valign=top style='background:white'>
<p style='margin-left:69.85pt;text-indent:-.25in;text-align:left;margin-top:1.5pt;margin-bottom: 0in'><b><font size=2>Net Income (Loss)</font></b></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' border-bottom:double black 2.25pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' border-bottom:double black 2.25pt; background:white'>
<p style='margin-left:0pt;text-indent:2.25pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(254,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style=' border-bottom:double white 2.25pt; background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>)</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' border-bottom:double black 2.25pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' border-bottom:double black 2.25pt; background:white'>
<p style='margin-left:0pt;text-indent:2.25pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(907,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style=' border-bottom:double white 2.25pt;background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>)</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' border-bottom:double black 2.25pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' border-bottom:double black 2.25pt; background:white'>
<p style='margin-left:0pt;text-indent:2.25pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(84,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style=' border-bottom:double white 2.25pt;background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>)</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' border-bottom:double black 2.25pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' border-bottom:double black 2.25pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>718,000</font></p> </td>

        <td width="1%" nowrap 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 width="46%" valign=top style='background:white'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="46%" valign=top style='background:white'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Net income (loss) per share:</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="46%" valign=top style='background:#D6F3E8'>
<p style='margin-left:52.55pt;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Basic</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:2.25pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(0.02</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>)</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:2.25pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(0.06</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>)</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:2.25pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(0.01</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>)</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>0.05</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="46%" valign=top style='background:white'>
<p style='margin-left:52.55pt;text-indent:-.25in;text-align:left;margin-top:1.5pt;margin-bottom: 0in'><font size=2>Diluted</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' border-bottom:double black 2.25pt;background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' border-bottom:double black 2.25pt;background:white'>
<p style='margin-left:0pt;text-indent:2.25pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(0.02</font></p> </td>

        <td width="2%" nowrap valign=bottom style=' border-bottom:double white 2.25pt;background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>)</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' border-bottom:double black 2.25pt;background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' border-bottom:double black 2.25pt;background:white'>
<p style='margin-left:0pt;text-indent:2.25pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(0.06</font></p> </td>

        <td width="2%" nowrap valign=bottom style=' border-bottom:double white 2.25pt;background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>)</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' border-bottom:double black 2.25pt;background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' border-bottom:double black 2.25pt;background:white'>
<p style='margin-left:0pt;text-indent:2.25pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(0.01</font></p> </td>

        <td width="2%" nowrap valign=bottom style=' border-bottom:double white 2.25pt;background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>)</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' border-bottom:double black 2.25pt;background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' border-bottom:double black 2.25pt;background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>0.04</font></p> </td>

        <td width="1%" nowrap 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 width="46%" valign=top style='background:white'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="46%" valign=top style='background:white'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Shares used in calculation of net income (loss) per share:</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="46%" valign=top style='background:#D6F3E8'>
<p style='margin-left:52.55pt;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Basic</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>15,527,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>15,454,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>15,569,000</font></p> </td>

        <td width="2%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>15,367,000</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="46%" valign=top style='background:white'>
<p style='margin-left:52.55pt;text-indent:-.25in;text-align:left;margin-top:1.5pt;margin-bottom: 0in'><font size=2>Diluted</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' border-bottom:double black 2.25pt;background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' border-bottom:double black 2.25pt;background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>15,527,000</font></p> </td>

        <td width="2%" nowrap 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%" nowrap valign=bottom style=' border-bottom:double black 2.25pt;background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' border-bottom:double black 2.25pt;background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>15,454,000</font></p> </td>

        <td width="2%" nowrap 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%" nowrap valign=bottom style=' border-bottom:double black 2.25pt;background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' border-bottom:double black 2.25pt;background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>15,569,000</font></p> </td>

        <td width="2%" nowrap 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%" nowrap valign=bottom style=' border-bottom:double black 2.25pt;background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style=' border-bottom:double black 2.25pt;background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>16,178,000</font></p> </td>

        <td width="1%" nowrap 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;'><A NAME="PAGENUM"><font size=2>4</font>
</A></p>

<BR>
<HR SIZE=3 COLOR=GRAY NOSHADE>
<PAGE>
<p><font size=2><A HREF="#toc">Table of Contents</A></FONT></P>


<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'>
<b><font size=2><A NAME="A005">Insignia Systems, Inc.</A></font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><b><font SIZE=3>S</font><font size=2>TATEMENTS OF </font><font SIZE=3>S</font><font size=2>HAREHOLDERS' </font><font SIZE=3>E</font><font size=2>QUITY</font></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=1>&nbsp;</font></p>


<div align=left>

<table border="0" cellspacing=0 cellpadding=0 width="100%" style='border-collapse:collapse'>
    <tr style='page-break-inside:avoid; height:15.4pt'>

        <td width="36%" nowrap rowspan=2 valign=top style='background: white;height:15.4pt'>
<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 width="1%" nowrap rowspan=2 valign=bottom style='background: white;height:15.4pt'>
<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  nowrap colspan="4" valign=bottom style=' border-bottom:solid black 1.0pt; background:white;height:15.4pt'>
<p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0pt;margin-bottom:0pt'><b><font size=1>Common Stock</font></b></p> </td>

        <td width="1%" nowrap rowspan=2 valign=bottom style='background: white;height:15.4pt'>
<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 nowrap colspan="2" rowspan=2 valign=bottom style=' border-bottom:solid black 1.0pt; background:white;height:15.4pt'>
<p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>Additional</font></b><br> <b><font size=1>Paid-In</font></b><br> <b><font size=1>Capital</font></b></p> </td>

        <td width="1%" nowrap rowspan=2 valign=bottom style='background: white;height:15.4pt'>
<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 nowrap colspan="2" rowspan=2 valign=bottom style=' border-bottom:solid black 1.0pt; background:white;height:15.4pt'>
<p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>Accumulated</font></b><br> <b><font size=1>Deficit</font></b></p> </td>

        <td width="1%" nowrap rowspan=2 valign=bottom style='background: white;height:15.4pt'>
<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 nowrap colspan="2" rowspan=2 valign=bottom style=' border-bottom:solid black 1.0pt; background:white;height:15.4pt'>
<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 width="1%" nowrap rowspan=2 valign=bottom style='background: white;height:15.4pt'>
<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;height:15.35pt'>

        <td width="9%" nowrap valign=bottom style='border-bottom: solid black 1.0pt;background: white;height:15.35pt'>
<p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>Shares</font></b></p> </td>

        <td width="1%" nowrap valign=bottom style=' border-top:solid black 1.0pt; background:white;height:15.35pt'>
<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 nowrap colspan="2" valign=bottom style='border-top: solid black 1.0pt;border-left:none;border-bottom:solid black 1.0pt; border-right:none;background:white;height:15.35pt'>
<p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:0in;margin-bottom:0pt'><b><font size=1>Amount</font></b></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="36%" nowrap valign=top style='background:white; '>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="7%" nowrap valign=bottom style='border-top: solid black 1.0pt;background: white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='border-top: solid black 1.0pt;background: white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style=' border-top:solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" nowrap valign=bottom style=' border-top:solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="36%" nowrap valign=top style='background:white; '>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><u><b><font size=2>Nine Months Ended September 30, 2008</font></b></u><u></u></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="7%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="36%" nowrap valign=top style='background:#D6F3E8; '>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><b><font size=2>Balance at December 31, 2007</font></b></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>15,550,000</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="7%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>156,000</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>32,025,000</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(22,504,000</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>)</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="8%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>9,677,000</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="36%" nowrap valign=top style='background:white; '>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Issuance of common stock, net</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>44,000</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="7%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>&#151;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>98,000</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>&#151;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>98,000</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="36%" nowrap valign=top style='background:#D6F3E8; '>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Stock-based compensation</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>&#151;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="7%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>&#151;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>393,000</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>&#151;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>393,000</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="36%" nowrap valign=top style='background:white; '>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Repurchase of common stock, net</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(225,000</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>)</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="7%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(2,000</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>)</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(462,000</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>)</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(464,000</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>)</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="36%" nowrap 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 loss</font></p> </td>

        <td width="1%" nowrap 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="9%" nowrap valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>&#151;</font></p> </td>

        <td width="1%" nowrap 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%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="7%" nowrap valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>&#151;</font></p> </td>

        <td width="1%" nowrap 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%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>&#151;</font></p> </td>

        <td width="1%" nowrap 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%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(84,000</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' border-bottom:solid #D6F3E8 1.0pt; background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>)</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(84,000</font></p> </td>

        <td width="1%" nowrap valign=bottom style='border-bottom: solid #D6F3E8 1.0pt;background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>)</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="36%" nowrap valign=top style='background:white; '>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="7%" nowrap valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="36%" nowrap 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 September 30, 2008</font></b></p> </td>

        <td width="1%" nowrap 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="9%" nowrap valign=bottom style='border-bottom: double black 2.25pt;background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>15,369,000</font></p> </td>

        <td width="1%" nowrap 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%" nowrap valign=bottom style=' border-bottom:double black 2.25pt;background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="7%" nowrap valign=bottom style='border-bottom: double black 2.25pt;background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>154,000</font></p> </td>

        <td width="1%" nowrap 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%" nowrap valign=bottom style=' border-bottom:double black 2.25pt;background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="9%" nowrap valign=bottom style='border-bottom: double black 2.25pt;background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>32,054,000</font></p> </td>

        <td width="1%" nowrap 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%" nowrap valign=bottom style=' border-bottom:double black 2.25pt;background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="10%" nowrap valign=bottom style=' border-bottom:double black 2.25pt;background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(22,588,000</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' border-bottom:double white 2.25pt;background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>)</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' border-bottom:double black 2.25pt;background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="8%" nowrap valign=bottom style=' border-bottom:double black 2.25pt;background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>9,620,000</font></p> </td>

        <td width="1%" nowrap 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 width="36%" nowrap valign=top style='background:white; '>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="7%" nowrap valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="36%" nowrap valign=top style='background:white; '>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="7%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="36%" nowrap valign=top style='background:white; '>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><u><b><font size=2>Nine Months Ended September 30, 2007</font></b></u><u></u></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="7%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="36%" nowrap valign=top style='background:#D6F3E8; '>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><b><font size=2>Balance at December 31, 2006</font></b></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>15,152,000</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="7%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>152,000</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>29,557,000</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(24,847,000</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>)</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="8%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>4,862,000</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="36%" nowrap valign=top style='background:white; '>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Issuance of common stock, net</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>384,000</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="7%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>3,000</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>442,000</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>&#151;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>445,000</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="36%" nowrap valign=top style='background:#D6F3E8; '>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Stock-based compensation</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>&#151;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="7%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>&#151;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>348,000</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>&#151;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>348,000</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="36%" nowrap valign=top style='background:white; '>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Warrant expense</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>&#151;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="7%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>&#151;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>1,521,000</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>&#151;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>1,521,000</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="36%" nowrap 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 width="1%" nowrap 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="9%" nowrap valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>&#151;</font></p> </td>

        <td width="1%" nowrap 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%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="7%" nowrap valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>&#151;</font></p> </td>

        <td width="1%" nowrap 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%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>&#151;</font></p> </td>

        <td width="1%" nowrap 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%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>718,000</font></p> </td>

        <td width="1%" nowrap 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%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>718,000</font></p> </td>

        <td width="1%" nowrap 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="36%" nowrap valign=top style='background:white; '>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="7%" nowrap valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="9%" nowrap valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="10%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" nowrap valign=bottom style=' background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="36%" nowrap 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 September 30, 2007</font></b></p> </td>

        <td width="1%" nowrap 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="9%" nowrap valign=bottom style='border-bottom: double black 2.25pt;background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>15,536,000</font></p> </td>

        <td width="1%" nowrap 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%" nowrap valign=bottom style=' border-bottom:double black 2.25pt;background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="7%" nowrap valign=bottom style='border-bottom: double black 2.25pt;background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>155,000</font></p> </td>

        <td width="1%" nowrap 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%" nowrap valign=bottom style=' border-bottom:double black 2.25pt;background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="9%" nowrap valign=bottom style='border-bottom: double black 2.25pt;background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>31,868,000</font></p> </td>

        <td width="1%" nowrap 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%" nowrap valign=bottom style=' border-bottom:double black 2.25pt;background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="10%" nowrap valign=bottom style=' border-bottom:double black 2.25pt;background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(24,129,000</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' border-bottom:double white 2.25pt;background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>)</font></p> </td>

        <td width="1%" nowrap valign=bottom style=' border-bottom:double black 2.25pt;background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="8%" nowrap valign=bottom style=' border-bottom:double black 2.25pt;background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>7,894,000</font></p> </td>

        <td width="1%" nowrap 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;'><A NAME="PAGENUM"><font size=2>5</font>
</A></p>

<BR>
<HR SIZE=3 COLOR=GRAY NOSHADE>
<PAGE>
<p><font size=2><A HREF="#toc">Table of Contents</A></FONT></P>


<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'>
<b><font size=2><A NAME="A006">Insignia Systems, Inc.</A></font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><b><font SIZE=3>S</font><font size=2>TATEMENTS OF </font><font SIZE=3>C</font><font size=2>ASH </font><font SIZE=3>F</font><font size=2>LOWS</font></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 style='page-break-inside:avoid'>

        <td width="72%" valign=top style='background:white'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom: 0in'><b><font size=2>Nine Months Ended September 30</font></b></p> </td>

        <td width="2%" 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:2pt;margin-bottom:0pt'><b><font size=1>2008</font></b></p> </td>

        <td width="2%" 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:2pt;margin-bottom:0pt'><b><font size=1>2007</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>

        <td width="72%" valign=top style='background:white'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><b><font size=2>Operating Activities</font></b><font size=2>:</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='border-top:solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='border-top:solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="72%" valign=top style='background:#D6F3E8'>
<p style='margin-left:34.55pt;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Net income (loss)</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="8%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:2.25pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(84,000</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=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:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="8%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>718,000</font></p> </td>

        <td width="1%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="72%" valign=top style='background:white'>
<p style='margin-left:34.55pt;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Adjustments to reconcile net income (loss) to net cash provided by operating activities:</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;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:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;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:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="72%" valign=top style='background:white'>
<p style='margin-left:.85in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Depreciation and amortization</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>267,000</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;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:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>188,000</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="72%" valign=top style='background:#D6F3E8'>
<p style='margin-left:.85in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Stock-based compensation</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>393,000</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>348,000</font></p> </td>

        <td width="1%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="72%" valign=top style='background:white'>
<p style='margin-left:.85in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Warrant expense</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>&#151;</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>1,521,000</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="72%" valign=top style='background:white'>
<p style='margin-left:34.55pt;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Changes in operating assets and liabilities:</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;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:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="72%" valign=top style='background:#D6F3E8'>
<p style='margin-left:.85in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Accounts receivable</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(1,852,000</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>)</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>83,000</font></p> </td>

        <td width="1%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="72%" valign=top style='background:white'>
<p style='margin-left:.85in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Inventories</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(118,000</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>)</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(44,000</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>)</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="72%" valign=top style='background:#D6F3E8'>
<p style='margin-left:.85in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Prepaid expenses and other</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>51,000</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>16,000</font></p> </td>

        <td width="1%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="72%" valign=top style='background:white'>
<p style='margin-left:.85in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Accounts payable</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>731,000</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;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:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>135,000</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="72%" valign=top style='background:#D6F3E8'>
<p style='margin-left:.85in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Accrued liabilities</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>2,395,000</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>277,000</font></p> </td>

        <td width="1%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="72%" valign=top style='background:white'>
<p style='margin-left:.85in;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom: 0in'><font size=2>Deferred revenue</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>710,000</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(109,000</font></p> </td>

        <td width="1%" valign=bottom style='border-bottom: solid white 1.0pt;background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>)</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="72%" valign=top style='background:#D6F3E8'>
<p style='margin-left:69.85pt;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Net cash provided by operating activities</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>2,493,000</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>3,133,000</font></p> </td>

        <td width="1%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="72%" valign=top style='background:white'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;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:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;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:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="72%" valign=top style='background:white'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><b><font size=2>Investing Activities</font></b><font size=2>:</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;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:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="72%" valign=top style='background:white'>
<p style='margin-left:34.55pt;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 width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(987,000</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=2>)</font></p> </td>

        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(124,000</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=2>)</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="72%" valign=top style='background:#D6F3E8'>
<p style='margin-left:69.85pt;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Net cash used in investing activities</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(987,000</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>)</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(124,000</font></p> </td>

        <td width="1%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>)</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="72%" valign=top style='background:white'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;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:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;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:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="72%" valign=top style='background:white'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><b><font size=2>Financing Activities</font></b><font size=2>:</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;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:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="72%" valign=top style='background:white'>
<p style='margin-left:34.55pt;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Net change in line of credit</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>&#151;</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(186,000</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>)</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="72%" valign=top style='background:#D6F3E8'>
<p style='margin-left:34.55pt;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Payment of long-term liabilities</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(197,000</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>)</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(178,000</font></p> </td>

        <td width="1%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>)</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="72%" valign=top style='background:white'>
<p style='margin-left:34.55pt;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Proceeds from issuance of common stock, net</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>98,000</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;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:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>445,000</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="72%" valign=top style='background:#D6F3E8'>
<p style='margin-left:34.55pt;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom: 0in'><font size=2>Repurchase of common stock, net</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(464,000</font></p> </td>

        <td width="2%" valign=bottom style='border-bottom: solid #D6F3E8 1.0pt;background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>)</font></p> </td>

        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>&#151;</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 width="72%" valign=top style='background:white'>
<p style='margin-left:69.85pt;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom: 0in'><font size=2>Net cash provided by (used in) financing activities</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt;background: white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='border-bottom: solid black 1.0pt;background: white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(563,000</font></p> </td>

        <td width="2%" valign=bottom style='border-bottom: solid white 1.0pt;background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>)</font></p> </td>

        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt;background: white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='border-bottom: solid black 1.0pt;background: white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>81,000</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 width="72%" valign=top style='background:#D6F3E8'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Increase in cash and cash equivalents</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>943,000</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>3,090,000</font></p> </td>

        <td width="1%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="72%" 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 width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>7,393,000</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>3,785,000</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 width="72%" 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 width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='border-bottom: double black 2.25pt;background: #D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="8%" valign=bottom style='border-bottom: double black 2.25pt;background: #D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>8,336,000</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='border-bottom: double black 2.25pt;background: #D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="8%" valign=bottom style='border-bottom: double black 2.25pt;background: #D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>6,875,000</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 width="72%" valign=top style='background:white'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;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:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;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:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="72%" valign=top style='background:white'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;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:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;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:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="72%" valign=top style='background:white'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Supplemental disclosures for cash flow information:</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;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:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="72%" valign=top style='background:white'>
<p style='margin-left:34.55pt;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Cash paid during periods for interest</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="8%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>14,000</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="8%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>45,000</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="72%" valign=top style='background:#D6F3E8'>
<p style='margin-left:34.55pt;text-indent:-.25in;text-align:left;margin-top:1.5pt;margin-bottom: 0in'><font size=2>Cash paid during periods for income taxes</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='border-bottom: double black 2.25pt;background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='border-bottom: double black 2.25pt;background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>8,000</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='border-bottom: double black 2.25pt;background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" valign=bottom style='border-bottom: double black 2.25pt;background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>60,000</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;'><A NAME="PAGENUM"><font size=2>6</font>
</A></p>

<BR>
<HR SIZE=3 COLOR=GRAY NOSHADE>
<PAGE>
<p><font size=2><A HREF="#toc">Table of Contents</A></FONT></P>


<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'>
<b><font size=2><A NAME="A007">Insignia Systems, Inc.</A></font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><b><font SIZE=3>N</font><font size=2>OTES TO </font><font SIZE=3>F</font><font size=2>INANCIAL </font><font SIZE=3>S</font><font size=2>TATEMENTS</font></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='margin-left:0pt;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 September 30, 2008, and its results of operations and cash flows for the three and nine months ended September 30, 2008 and 2007. 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's Annual Report on Form 10-K for the year ended December 31, 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 Summary of Significant Accounting Policies in the Company&#146;s 2007 Annual Report on Form </font></p>

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

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


<div align=left>

<table border="0" cellspacing=0 cellpadding=0 width="65%" style='margin-left:.25in;border-collapse:collapse; '>
    <tr style='page-break-inside:avoid'>

        <td width="44%" 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="6%" 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:2pt;margin-bottom:0pt'><b><font size=1>September 30,</font></b><br> <b><font size=1>2008</font></b></p> </td>

        <td width="6%" 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:2pt;margin-bottom:0pt'><b><font size=1>December 31,</font></b><br> <b><font size=1>2007</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="44%" valign=top style='background:#D6F3E8'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Raw materials</font></p> </td>

        <td width="6%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="18%" valign=bottom style='border-top:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>114,000</font></p> </td>

        <td width="6%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="18%" valign=bottom style='border-top:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>82,000</font></p> </td>

        <td width="1%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="44%" valign=top style='background:white'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Work-in-process</font></p> </td>

        <td width="6%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="18%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>90,000</font></p> </td>

        <td width="6%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="18%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>36,000</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="44%" 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="6%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="18%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>311,000</font></p> </td>

        <td width="6%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="18%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>279,000</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 width="44%" 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="6%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='border-bottom: double black 2.25pt;background: white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="18%" valign=bottom style='border-bottom: double black 2.25pt;background: white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>515,000</font></p> </td>

        <td width="6%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='border-bottom: double black 2.25pt;background: white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="18%" valign=bottom style='border-bottom: double black 2.25pt;background: white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>397,000</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; margin-left:0.25in;text-align:left;'><font size=1>&nbsp;</font></p>


<div align=left>

<table border="0" cellspacing=0 cellpadding=0 width="95%" style='margin-left:.25in;border-collapse:collapse; '>
    <tr style='page-break-inside:avoid'>

        <td width="60%" 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 colspan="2" valign=bottom style=' border-bottom:solid black 1.0pt; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:2pt;margin-bottom:0pt'><b><font size=1>September 30,</font></b><br> <b><font size=1>2008</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 colspan="2" valign=bottom style=' border-bottom:solid black 1.0pt; '>
<p
style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:2pt;margin-bottom:0pt'><b><font size=1>December 31,</font></b><br> <b><font size=1>2007</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> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="60%" valign=top style='background:#D6F3E8'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Production tooling, machinery and equipment</font></p> </td>

        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="13%" valign=bottom style='border-top: solid black 1.0pt;background: #D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>2,263,000</font></p> </td>

        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="13%" valign=bottom style='border-top: solid black 1.0pt;background: #D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>1,725,000</font></p> </td>

        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="60%" valign=top style='background:white'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Office furniture and fixtures</font></p> </td>

        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="13%" valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>249,000</font></p> </td>

        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;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:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="13%" valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>191,000</font></p> </td>

        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="60%" valign=top style='background:#D6F3E8'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Computer equipment and software</font></p> </td>

        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="13%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>706,000</font></p> </td>

        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="13%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>698,000</font></p> </td>

        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="60%" 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 width="3%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="13%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>261,000</font></p> </td>

        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <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:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="13%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>368,000</font></p> </td>

        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="60%" valign=top style='background:#D6F3E8'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="13%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>3,479,000</font></p> </td>

        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="13%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>2,982,000</font></p> </td>

        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="60%" 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 width="3%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="13%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(2,384,000</font></p> </td>

        <td width="3%" valign=bottom style='border-bottom: solid white 1.0pt;background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><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:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="13%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(2,607,000</font></p> </td>

        <td width="3%" valign=bottom style='border-bottom: solid white 1.0pt;background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>)</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="60%" 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 width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='border-bottom: double black 2.25pt;background: #D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="13%" valign=bottom style='border-bottom: double black 2.25pt;background: #D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>1,095,000</font></p> </td>

        <td width="3%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="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:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="13%" valign=bottom style='border-bottom: double black 2.25pt;background: #D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>375,000</font></p> </td>

        <td width="3%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </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;'><A NAME="PAGENUM"><font size=2>7</font>
</A></p>

<BR>
<HR SIZE=3 COLOR=GRAY NOSHADE>
<PAGE>
<p><font 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>. The Company accounts for its stock-based compensation in accordance with the provisions of Statement of Financial Accounting Standards No. 123(R). The Company recognizes stock compensation expense on a straight-line method 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 321,000 stock option awards during the nine months ended September 30, 2008. Total stock-based compensation expense recorded for the nine months ended September 30, 2008 and 2007, was $393,000 and $348,000, respectively.  The Company uses the Black-Scholes option-pricing model to estimate the fair value of stock-based awards with the following weighted average assumptions for the stock option awards granted during the nine months ended September 30, 2008: expected life of 3.4 years, expected volatility of 75%, dividend yield of 0% and a risk-free interest rate of 2.67%.</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 (Loss) Per Share</font></b><font size=2>. </font></i><font size=2>Basic net income (loss) 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 (loss) per share gives effect to all diluted potential common shares outstanding during the period. Options and warrants to purchase approximately 2,292,000 and 1,061,000 shares of common stock with weighted average exercise prices of $4.74 and $6.24 were outstanding at September 30, 2008 and 2007 and were not included in the computation of common stock equivalents for the three months ended September 30, 2008 and 2007 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 2,154,000
and 1,207,000 shares of common stock with weighted average exercise prices of $4.95 and $6.12 were outstanding at September 30, 2008 and 2007 and were not included in the computation of common stock equivalents for the nine months ended September 30, 2008 and 2007 because their exercise prices were higher than the average fair market value of the common shares during the reporting period. During the three months ended September 30, 2008 and 2007 and the nine months ended September 30, 2008, the effect of options and warrants outstanding was anti-dilutive due to the net losses incurred during the periods. Had net income been achieved, approximately 392,000, 1,003,000 and 440,000, respectively, of common stock equivalents would have been included in the computation of diluted net income per share.</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 nine months ended September 30, 2008 and 2007 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 border="0" cellspacing=0 cellpadding=0 width="95%" style='margin-left:.25in;border-collapse:collapse; '>
    <tr style='page-break-inside:avoid'>

        <td width="55%" nowrap valign=top >
<p style='margin-left:.25in;text-indent:-.25in;text-align:center;margin-top:1.0pt;margin-bottom:0in'><font size=1>&nbsp;</font></p> </td>

        <td width="0%" nowrap valign=bottom >
<p style='margin-left:0in;text-indent:0pt;text-align:center;margin-top:1.0pt;margin-bottom:0in'><font size=1>&nbsp;</font></p> </td>

        <td nowrap colspan="5" valign=bottom style='border-bottom:solid black 1.0pt; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:2pt;margin-bottom:0pt'><b><font size=1>Three Months Ended</font></b><br> <b><font size=1>September 30</font></b></p> </td>

        <td width="1%" nowrap valign=bottom >
<p style='margin-left:0in;text-indent:0pt;text-align:center;margin-top:1.0pt;margin-bottom:0in'><font size=1>&nbsp;</font></p> </td>

        <td nowrap colspan="5" valign=bottom style='
border-bottom:solid black 1.0pt; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:2pt;margin-bottom:0pt'><b><font size=1>Nine Months Ended</font></b><br> <b><font size=1>September 30</font></b></p> </td>

        <td width="0%" nowrap valign=bottom >
<p style='margin-left:0in;text-indent:0pt;text-align:center;margin-top:1.0pt;margin-bottom:0in'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="55%" nowrap valign=top >
<p style='margin-left:.25in;text-indent:-.25in;text-align:center;margin-top:1.0pt;margin-bottom:0in'><font size=1>&nbsp;</font></p> </td>

        <td width="0%" nowrap valign=bottom >
<p style='margin-left:0in;text-indent:0pt;text-align:center;margin-top:1.0pt;margin-bottom:0in'><font size=1>&nbsp;</font></p> </td>

        <td nowrap colspan="2" valign=bottom style=' border-bottom:solid black 1.0pt;  '>
<p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:2pt;margin-bottom:0pt'><b><font size=1>2008</font></b></p> </td>

        <td width="0%" nowrap 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 nowrap 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:2pt;margin-bottom:0pt'><b><font size=1>2007</font></b></p> </td>

        <td width="1%" nowrap valign=bottom >
<p style='margin-left:0in;text-indent:0pt;text-align:center;margin-top:1.0pt;margin-bottom:0in'><font size=1>&nbsp;</font></p> </td>

        <td nowrap colspan="2" valign=bottom style=' border-bottom:solid black 1.0pt;  '>
<p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:2pt;margin-bottom:0pt'><b><font size=1>2008</font></b></p> </td>

        <td width="0%" nowrap 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 nowrap 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:2pt;margin-bottom:0pt'><b><font size=1>2007</font></b></p> </td>

        <td width="0%" nowrap valign=bottom >
<p style='margin-left:0in;text-indent:0pt;text-align:center;margin-top:1.0pt;margin-bottom:0in'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="55%" nowrap valign=top style='background:#D6F3E8; '>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Denominator for basic net income (loss)</font><br> <font size=2>per share &#150; weighted average shares</font></p> </td>

        <td width="0%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>&nbsp;&nbsp;</font></p> </td>

        <td width="0%" nowrap valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>&nbsp;&nbsp;</font></p> </td>

        <td width="8%" nowrap valign=bottom style=' border-top:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>15,527,000</font></p> </td>

        <td width="0%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;</font></p> </td>

        <td width="0%" nowrap valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>&nbsp;&nbsp;</font></p> </td>

        <td width="8%" nowrap valign=bottom style=' border-top:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>15,454,000</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p> </td>

        <td width="0%" nowrap valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>&nbsp;&nbsp;</font></p> </td>

        <td width="8%" nowrap valign=bottom style=' border-top:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>15,569,000</font></p> </td>

        <td width="0%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;</font></p> </td>

        <td width="0%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>&nbsp;&nbsp;</font></p> </td>

        <td width="8%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>15,367,000</font></p> </td>

        <td width="0%" nowrap valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="55%" nowrap valign=top style='background:white; '>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="0%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="0%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="0%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="0%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="0%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="0%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="0%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="0%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="55%" nowrap valign=top style='background:white; '>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Effect of dilutive securities:</font></p> </td>

        <td width="0%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="0%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="0%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="0%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="0%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="0%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="0%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="0%" nowrap valign=bottom style='background:white; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="55%" nowrap valign=top style='background:white; '>
<p style='margin-left:28.0pt;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom: 0in'><font size=2>Stock options and warrants</font></p> </td>

        <td width="0%" nowrap 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="0%" nowrap valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>&#151;</font></p> </td>

        <td width="0%" nowrap 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="0%" nowrap valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>&#151;</font></p> </td>

        <td width="1%" nowrap 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="0%" nowrap valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>&#151;</font></p> </td>

        <td width="0%" nowrap 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="0%" nowrap valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" nowrap valign=bottom style=' border-bottom:solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>811,000</font></p> </td>

        <td width="0%" nowrap 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="55%" nowrap 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 (loss) </font><br> <font size=2>per share &#150; adjusted weighted average shares</font></p> </td>

        <td width="0%" nowrap 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="0%" nowrap valign=bottom style='border-bottom: double black 2.25pt;background: #D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" nowrap valign=bottom style=' border-bottom:double black 2.25pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>15,527,000</font></p> </td>

        <td width="0%" nowrap 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="0%" nowrap valign=bottom style='border-bottom: double black 2.25pt;background: #D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" nowrap valign=bottom style=' border-bottom:double black 2.25pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>15,454,000</font></p> </td>

        <td width="1%" nowrap 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="0%" nowrap valign=bottom style='border-bottom: double black 2.25pt;background: #D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" nowrap valign=bottom style=' border-bottom:double black 2.25pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>15,569,000</font></p> </td>

        <td width="0%" nowrap 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="0%" nowrap valign=bottom style='border-bottom: double black 2.25pt;background: #D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="8%" nowrap valign=bottom style=' border-bottom:double black 2.25pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>16,178,000</font></p> </td>

        <td width="0%" nowrap 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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<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>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;text-align:center;'><A NAME="PAGENUM"><font size=2>8</font>
</A></p>

<BR>
<HR SIZE=3 COLOR=GRAY NOSHADE>
<PAGE>
<p><font 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;'>
<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. in 2004 (described below), 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. (Albertson&#146;s) 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.&nbsp; 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.&nbsp; 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 in the Minnesota case that included claims similar to those in its New York action against Insignia and one of its officers, plus claims for damages for two alleged incidents of libel and slander. Motions to dismiss the counterclaims were argued in June 2007, and on September 28, 2007 the Court denied the motions to dismiss the counterclaims. The parties are now engaged in pre-trial discovery. Pursuant to Court order, all discovery and pre-trial matters must be completed by May 1, 2009.  On February 4, 2008, the Court approved a Consent Decree entered into by News America and the State of Minnesota under which News America agreed to not violate Minnesota&#146;s statutes prohibiting commercial disparagement. On July 29, 2008, the Company and Albertson&#146;s entered into a Settlement Agreement and Mutual Release, in which they each agreed to release all claims against the other, and the Company agreed to dismiss its lawsuit against
Albertson&#146;s.</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 filed claims in December 2006 and January 2007 with its director&#146;s and officer&#146;s liability and general liability insurers related to the defense costs and insurance coverage for claims asserted against the Company and one of its officers in News America&#146;s counterclaims. On August 9, 2007, the Company filed a complaint against the insurers in Hennepin County District Court, State of Minnesota requesting a declaratory judgment that the insurers owe the Company and its officer such defense costs and insurance coverage. In December 2007, the Company settled its claim against one of the insurers, and the litigation is continuing against the other insurer.</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>Although management believes that News America&#146;s counterclaims are without merit, an evaluation of the likelihood of an unfavorable outcome and an 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 and expenses that will be incurred in connection with the ongoing lawsuits to be significant throughout 2008 and 2009.  During the nine months ended September 30,&nbsp;2008, the Company incurred legal fees and expenses of $3,270,000 related to the ongoing lawsuits.  Legal fees and expenses are expensed as incurred and are included in general and administrative expenses in the statement of operations.</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 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>


<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><A NAME="PAGENUM"><font size=2>9</font>
</A></p>

<BR>
<HR SIZE=3 COLOR=GRAY NOSHADE>
<PAGE>
<p><font size=2><A HREF="#toc">Table of Contents</A></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.</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>  The Company did not record a cumulative income tax benefit for the nine months ended September 30, 2008, as a result of the net loss for the nine months and its continued analysis of future taxable income levels and the amount of net deferred tax assets recorded at September 30, 2008. For the three months ended September 30, 2008, the Company recorded an income tax benefit of $207,000 in order to
adjust the cumulative income expense/benefit to $0 for the nine month period. The Company recorded income tax expense of $44,000 and $60,000 for the three and nine months ended September 30, 2007, respectively, which was related to alternative minimum taxes. With the exception of alternative minimum taxes and certain state taxes, the Company will not use cash for income taxes until its net operating losses are fully utilized on its tax returns.</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>In accordance with SFAS No. 109, &#147;Accounting for Income Taxes,&#148; the Company has assessed the likelihood of realization of its deferred tax assets. The Company has determined that it is not more likely than not that its entire deferred tax asset will be utilized. Therefore, the Company continues to record a valuation allowance against the amount of its deferred tax asset that does not meet the more likely than not threshold. The Company will continue to evaluate this conclusion in future periods. See Footnote 7 of the Company&#146;s 2007 Annual Report on Form 10-K for further discussion of the valuation allowance. The Company has also concluded that it does not need to record any reserve for income tax uncertainties under FASB Interpretation No. 48 (&#147;FIN 48&#148;).</font></p>

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


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<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>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 nine months ended September 30 2008, two customers accounted for 15.8% and 12.8% of the Company&#146;s total net sales. At September 30, 2008 these customers represented 14.5% and 16.6% of the Company&#146;s total accounts receivable and one other customer represented 11.2% of the Company&#146;s total accounts receivable. During the nine months ended September 30, 2007, two customers accounted for 13.1% and 11% 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>


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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 >
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=2>New Accounting Pronouncements.</font></b><font size=2>  In May 2008, the Financial Accounting Standards Board released Statement No. 162, &#147;The Hierarchy of Generally Accepted Accounting Principles&#148; (SFAS No.162). SFAS No. 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that presented in conformity with generally accepted accounting principles in the United States of America. SFAS No. 162 will be effective 60 days following the SEC&#146;s approval of the
Public Company Accounting Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles. The Company does not believe SFAS No. 162 will have a significant impact on the Company&#146;s financial statements.</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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<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=3><A NAME="A008">Item 2.</A></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;'><A NAME="PAGENUM"><font size=2>10</font>
</A></p>

<BR>
<HR SIZE=3 COLOR=GRAY NOSHADE>
<PAGE>
<p><font size=2><A HREF="#toc">Table of Contents</A></FONT></P>


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


<div align=left>

<table border="0" cellspacing=0 cellpadding=0 width="100%" style='border-collapse:collapse'>
    <tr style='page-break-inside:avoid'>

        <td width="50%" 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 colspan="5" valign=bottom style=' border-bottom:solid black 1.0pt; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:2pt;margin-bottom:0pt'><b><font size=1>Three Months Ended</font></b><br> <b><font size=1>September 30</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 colspan="5" valign=bottom style=' border-bottom:solid black 1.0pt; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:2pt;margin-bottom:0pt'><b><font size=1>Nine Months Ended</font></b><br> <b><font size=1>September 30</font></b></p> </td>

        <td width="2%" 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="50%" 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 colspan="2" valign=bottom style=' border-bottom:solid black 1.0pt;  '>
<p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:2pt;margin-bottom:0pt'><b><font size=1>2008</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 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:2pt;margin-bottom:0pt'><b><font size=1>2007</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 colspan="2" valign=bottom style=' border-bottom:solid black 1.0pt;  '>
<p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:2pt;margin-bottom:0pt'><b><font size=1>2008</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 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:2pt;margin-bottom:0pt'><b><font size=1>2007</font></b></p> </td>

        <td width="2%" 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="50%" valign=top style='background:#D6F3E8'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Net sales</font></p> </td>

        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='border-top:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>100.0</font></p> </td>

        <td width="3%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><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:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='border-top:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>100.0</font></p> </td>

        <td width="3%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><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:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='border-top:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>100.0</font></p> </td>

        <td width="3%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><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:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='border-top:solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>100.0</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>%</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="50%" 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>Cost of sales</font></p> </td>

        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>47.7</font></p> </td>

        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>44.2</font></p> </td>

        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>45.8</font></p> </td>

        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>42.9</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="50%" valign=top style='background:#D6F3E8'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Gross profit</font></p> </td>

        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>52.3</font></p> </td>

        <td width="3%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>55.8</font></p> </td>

        <td width="3%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>54.2</font></p> </td>

        <td width="3%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>57.1</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="50%" valign=top style='background:white'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Operating expenses:</font></p> </td>

        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="50%" valign=top style='background:white'>
<p style='margin-left:38.0pt;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Selling </font></p> </td>

        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>29.8</font></p> </td>

        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>21.7</font></p> </td>

        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>25.9</font></p> </td>

        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>22.0</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="50%" valign=top style='background:#D6F3E8'>
<p style='margin-left:38.0pt;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Marketing</font></p> </td>

        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>5.2</font></p> </td>

        <td width="3%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>5.5</font></p> </td>

        <td width="3%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>5.3</font></p> </td>

        <td width="3%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>5.4</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="50%" valign=top style='background:white'>
<p style='margin-left:38.0pt;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Warrant expense (selling &amp; marketing)</font></p> </td>

        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>&#151;</font></p> </td>

        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>23.5</font></p> </td>

        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>&#151;</font></p> </td>

        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>7.8</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="50%" valign=top style='background:#D6F3E8'>
<p style='margin-left:38.0pt;text-indent:-.25in;text-align:left;margin-top:1.0pt;margin-bottom: 0in'><font size=2>General and administrative</font></p> </td>

        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>23.2</font></p> </td>

        <td width="3%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>19.3</font></p> </td>

        <td width="3%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>24.0</font></p> </td>

        <td width="3%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="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:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>18.3</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="50%" 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>Total operating expenses</font></p> </td>

        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='border-bottom: solid black 1.0pt;background: white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='border-bottom: solid black 1.0pt;background: white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>58.2</font></p> </td>

        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='border-bottom: solid black 1.0pt;background: white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='border-bottom: solid black 1.0pt;background: white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>70.0</font></p> </td>

        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='border-bottom: solid black 1.0pt;background: white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='border-bottom: solid black 1.0pt;background: white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>55.2</font></p> </td>

        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='border-bottom: solid black 1.0pt;background: white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='border-bottom: solid black 1.0pt;background: white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>53.5</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="50%" valign=top style='background:#D6F3E8'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Operating income (loss)</font></p> </td>

        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(5.9</font></p> </td>

        <td width="3%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>)</font></p> </td>

        <td width="1%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(14.2</font></p> </td>

        <td width="3%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>)</font></p> </td>

        <td width="1%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(1.0</font></p> </td>

        <td width="3%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><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:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>3.6</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="50%" 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>Other income (expense)</font></p> </td>

        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>0.5</font></p> </td>

        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>0.8</font></p> </td>

        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>0.6</font></p> </td>

        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>0.5</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="50%" valign=top style='background:#D6F3E8'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>Income (loss) before taxes</font></p> </td>

        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(5.4</font></p> </td>

        <td width="3%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>)</font></p> </td>

        <td width="1%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(13.4</font></p> </td>

        <td width="3%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>)</font></p> </td>

        <td width="1%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(0.4</font></p> </td>

        <td width="3%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>)</font></p> </td>

        <td width="1%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>4.1</font></p> </td>

        <td width="2%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="50%" 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 (benefit)</font></p> </td>

        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(2.4</font></p> </td>

        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=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:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>0.7</font></p> </td>

        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>0.0</font></p> </td>

        <td width="3%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='border-bottom: solid black 1.0pt; background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>0.4</font></p> </td>

        <td width="2%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="50%" 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 income (loss)</font></p> </td>

        <td width="3%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='border-bottom: double black 2.25pt;background: #D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='border-bottom: double black 2.25pt;background: #D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(3.0</font></p> </td>

        <td width="3%" valign=bottom style='border-bottom: double #D6F3E8 2.25pt;background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><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:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='border-bottom: double black 2.25pt;background: #D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(14.1</font></p> </td>

        <td width="3%" valign=bottom style='border-bottom: double #D6F3E8 2.25pt;background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><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:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='border-bottom: double black 2.25pt;background: #D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>(0.4</font></p> </td>

        <td width="3%" valign=bottom style='border-bottom: double #D6F3E8 2.25pt;background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><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:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='border-bottom: double black 2.25pt;background: #D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>3.7</font></p> </td>

        <td width="2%" valign=bottom style='border-bottom: double #D6F3E8 2.25pt;background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;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>Increased net sales in the first nine months of 2008 compared to the first nine months of 2007 resulted in increased gross profit in 2008. This increase in gross profit was more than offset by increased operating expense in 2008 resulting in a net loss in the first nine months of 2008 as compared to net income in the first nine months of 2007. The increased operating expense in the 2008 period was primarily legal fees and expenses related to the News America litigation and increased sales commissions related to increased sales and higher incentives.</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>
<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, 2007, included in our Form 10-K filed with the Securities and Exchange Commission on March 31, 2008. We believe our most critical accounting policies and estimates include the following:
&nbsp;
</font>


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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>
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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>
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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; and</font></p> </td> </tr></table>
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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>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:center;'><A NAME="PAGENUM"><font size=2>11</font>
</A></p>

<BR>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'>
<b><font size=2>Three and Nine Months ended September 30, 2008 Compared to Three and Nine Months Ended September 30, 2007</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 September 30, 2008, increased 33.1% to $8,597,000 compared to $6,461,000 for the three months ended September 30, 2007.  Net sales for the nine months ended September 30, 2008, increased 16.6% to $22,738,000 compared to $19,495,000 for the nine months ended September 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>Service revenues from our POPSign programs for the three months ended September 30, 2008, increased 39.9% to $7,999,000 compared to $5,718,000 for the three months ended September 30, 2007. Service revenues from our POPSign programs for the nine months ended September 30, 2008, increased 20.5% to $20,830,000 compared to $17,281,000 for the nine months ended September 30, 2007. The increases were primarily due to an increase in the number of POPSign programs executed for customers (consumer packaged goods manufacturers) during the 2008 periods which more than offset reductions in the average sign price during the 2008 periods. </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 September 30, 2008, decreased 19.5% to $598,000 compared to $743,000 for the three months ended September 30, 2007. Product sales for the nine months ended September 30, 2008, decreased 13.8% to $1,908,000 compared to $2,214,000 for the nine months ended September 30, 2007. The decreases were primarily due to lower sales of thermal and laser sign card supplies based on decreased demand for those products from our customers.</font></p>

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

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><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 September 30, 2008, increased 24.7% to $4,499,000 compared to $3,608,000 for the three months ended September 30, 2007. Gross profit for the nine months ended September 30, 2008, increased 10.8% to $12,327,000 compared to $11,126,000 for the nine months ended September 30, 2007. Gross profit as a percentage of total net sales decreased to 52.3% for the three months ended September 30, 2008, compared to 55.8% for the three months ended September 30, 2007. Gross profit as a percentage of total net sales decreased to 54.2% for the nine months ended September 30, 2008, compared to 57.1% for the nine months ended September 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>Gross profit from our POPSign program revenues for the three months ended September
30, 2008, increased 28.5% to $4,300,000 compared to $3,346,000 for the three months ended September 30, 2007. Gross profit from our POPSign program revenues for
the nine months ended September 30, 2008, increased 13.4% to $11,640,000 compared to $10,264,000 for the nine months ended September 30, 2007. The increases in
gross profit in the 2008 periods were primarily due to increased sales partially offset by increased costs (primarily retailer expenses). Gross profit as a
percentage of POPSign program revenues for the three months ended September 30, 2008, decreased to 53.8% compared to 58.5% for the three months ended September
30, 2007. Gross profit as a percentage of POPSign program revenues for the nine months ended September 30, 2008 decreased to 55.9%, compared to 59.4% for the
nine months ended September 30, 2007. The decreases in gross profit as a percentage of POPSign program revenues in the 2008 periods were primarily due to lower
average sign prices combined with higher average sign costs (primarily retailer expenses) in the 2008 periods. </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 September 30, 2008, decreased 24.0% to $199,000 compared to $262,000 for the three months ended September 30, 2007.  Gross profit from our product sales for the nine months ended September 30, 2008, decreased 20.3% to $687,000 compared to $862,000 for the nine months ended September 30, 2007. The decreases in gross profit in the 2008 periods were primarily due to decreased sales combined with fixed costs. Gross profit as a percentage of product sales was 33.3% for the three months ended September 30, 2008, compared to 35.3% for the three months ended September 30, 2007. Gross profit as a percentage of product sales was 36.0% for the nine months ended September 30, 2008, compared to 38.9% for the nine months ended September 30, 2007.  The decreases in gross profit as a percentage of products sales in the 2008 periods were primarily due to decreased
sales and the effect of fixed costs.</font></p>

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


<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><A NAME="PAGENUM"><font size=2>12</font>
</A></p>

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<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 (exclusive of selling related warrant expense) for the three months ended September 30, 2008, increased 82.9% to $2,561,000 compared to $1,400,000 for the three months ended September 30, 2007. Selling expenses (exclusive of selling related warrant expense) for the nine months ended September 30, 2008, increased 36.9% to $5,878,000 compared to $4,295,000 for the nine months ended September 30, 2007. Increases in the 2008 periods were primarily due to increased sales commissions, staffing levels and meals and entertainment.  The increased sales commissions were due to increased POPSign program sales and the effect of increased incentives for our strategic partner (Valassis Sales &amp; Marketing Services, Inc. (&#147;Valassis&#148;)) and our employed sales force. </font></p>

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

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Selling expenses (exclusive of selling related warrant expense) as a percentage of total net sales increased to 29.8% for the three months ended September 30, 2008, compared to 21.7% for the three months ended September 30, 2007. Selling expenses (exclusive of selling related warrant expense) as a percentage of total net sales increased to 25.9% for the nine months ended September 30, 2008, compared to 22.0% for the nine months ended September 30, 2007.  The increases in selling expenses as a percentage of total net sales in the 2008 periods was due to the factors described above, partially offset by the effect of increased sales in the 2008 periods.</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 (exclusive of marketing related warrant expense) for the three months ended September 30, 2008, increased 26.3% to $451,000 compared to $357,000 for the three months ended September 30, 2007, primarily due to increased staffing levels and increased data acquisition expense. Marketing expenses (exclusive of marketing related warrant expense) for the nine months ended September 30, 2008, increased 15.1% to $1,211,000 compared to $1,052,000 for the nine months ended September 30, 2007, primarily due to increased staffing levels partially offset by decreased data acquisition 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>Marketing expenses (exclusive of marketing related warrant expense) as a percentage of total net sales decreased to 5.2% for the three months ended September 30, 2008, compared to 5.5% for the three months ended September 30, 2007. Marketing expenses (exclusive of marketing related warrant expense) as a percentage of total net sales decreased to 5.3% for the nine months ended September 30, 2008, compared to 5.4% for the nine months ended September 30, 2007. Decreases in the 2008 periods were primarily due to the increased expenses discussed above which were more than offset by the effect of higher net sales during the 2008 periods. </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>Warrant expense (selling and marketing).</font></b></i><font size=2> On July
2, 2007, the Company and Valassis, 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 the Company&#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. The Company recorded $1,521,000 of expense for the quarter ended September
30, 2007, related to the fair value of the warrant.
</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 September 30, 2008, increased 60% to $1,992,000 compared to $1,245,000 for the three months ended September
30, 2007. General and administrative expenses for the nine months ended September 30, 2008 increased 52.9% to $5,457,000 compared to $3,569,000 for the nine
months ended September 30, 2007. The increases in the 2008 periods were primarily due to increased legal expense related to the News America litigation (see
below) and increased staffing which were partially offset by receipt of a lease termination payment. The Company received a payment of $400,000 for early
termination of its previous facility lease on July 31, 2008. The payment, net of $115,000 of moving expense, is recorded as part of general and administrative
expenses.</font></p>

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


<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><A NAME="PAGENUM"><font size=2>13</font>
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<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 23.2% for the three months ended September 30, 2008, compared to 19.3% for the three months ended September 30, 2007. General and administrative expenses as a percentage of total net sales increased to 24.0% for the nine months ended September 30, 2008, compared to 18.3% for the nine months ended September 30, 2007.  The increases in the 2008 periods were primarily due to factors discussed above partially mitigated by the effect of higher net sales during the 2008 periods. </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 for the three months ended September 30, 2008, were $1,526,000 compared to $496,000 for the three months ended September 30, 2007. Legal fees for the nine months ended September 30, 2008, were $3,406,000 compared to $1,388,000 for the nine months ended September 30, 2007. The legal fees in each period were incurred primarily in connection with the News America lawsuit described in Note 2 to the financial statements. Legal fees increased in the 2008 periods primarily due to the increase in activity in the News America litigation as the parties prepare for trial scheduled to commence in 2009. We currently expect the amount of additional legal fees that will be incurred in connection with the ongoing lawsuits to be significant throughout the remainder of 2008 and 2009. 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 for the three months ended September 30, 2008, was $44,000 compared to $52,000 for the three months ended September 30, 2007, primarily due to lower interest income.  Lower interest income rates in the 2008 period more than offset the effect of higher cash balances in the 2008 period. Other income for the nine months ended September 30, 2008, was $135,000 compared to $89,000 for the nine months ended September 30, 2007, due to higher interest income and lower interest expense during the 2008 period. During the first nine months of 2008 the effect on interest income of higher cash balances was partially offset by lower interest rates, especially in the second and third quarter of 2008. Interest expense was lower in the nine months ended September 30, 2008, 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:left;'><i><b><font size=2>Income Taxes.</font></b></i><font size=2> The Company did not record a cumulative income tax benefit for the nine months ended September 30, 2008, as a result of the net loss for the nine months and its continued analysis of future taxable income levels and the amount of net deferred tax assets recorded at September 30, 2008. For the three months ended September 30, 2008, the Company recorded an income tax benefit of $207,000 in order to adjust the cumulative income expense/benefit to $0 for the nine month period. The Company recorded income tax expense of $44,000 and $60,000 for the three and nine months ended September 30, 2007, respectively, which was related to alternative minimum taxes.</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 (Loss).</font></b></i><font size=2>  The net loss for the three months ended September 30, 2008, was $(254,000) compared to a net loss of $(907,000) for the three months ended September 30, 2007.  The net loss for the nine months ended September 30, 2008, was $(84,000) compared to net income of $718,000 for the nine months ended September 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;'><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 September 30, 2008, working capital was $6,916,000 compared to $7,751,000 at December 31, 2007.  During the first nine months of 2008, cash and cash equivalents increased by $943,000 to $8,336,000 at September 30, 2008, compared to $7,393,000 at December 31, 2007.</font></p>

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


<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><A NAME="PAGENUM"><font size=2>14</font>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'>
<font size=2>Net cash provided by operating activities during the nine months ended September 30, 2008, was $2,493,000.  The increase in cash and cash equivalents resulted from the net loss of $(84,000), non-cash expense of $660,000 for depreciation, amortization and stock-based compensation expense, and $1,917,000 of changes to operating assets and liabilities during the nine months ended September 30, 2008.</font></p>

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

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Net cash of $987,000 was used in investing activities during the nine months ended September 30, 2008, due to the purchase of property and equipment, primarily the purchase of digital printing equipment, computer hardware and software and leasehold improvements in the new facility. Capital expenditures for the remainder of 2008 are expected to be minimal.</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 $563,000 was used in financing activities during the nine months ended September 30, 2008. The Company received $98,000 of proceeds (net of expenses) from the issuance of common stock related to the employee stock purchase plan and exercises of stock options. The Company used $464,000 (including fees) of cash to repurchase 225,000 shares of common stock as part of the stock repurchase plan adopted in August 2008. The Company also used $197,000 of cash for the payment of long-term liabilities.  </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, 2007, 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>


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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="A009">Item 3.</A></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>
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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>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="A010">Item 4.</A></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) 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:center;'><A NAME="PAGENUM"><font size=2>15</font>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'>
<font size=2>(b) 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>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><B><font SIZE=3><A NAME="A011">PART II.</A></font></B><font size=3>&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="A012">Item 1.</A></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. in 2004 (described below), 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. (Albertson&#146;s) 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.&nbsp; 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.&nbsp;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 in the Minnesota case that included claims similar to those in its New York action against Insignia and one of its officers, plus claims for damages for two alleged incidents of libel and slander.  Motions to dismiss the counterclaims were argued in June 2007, and on September 28, 2007 the Court denied the motions to dismiss the counterclaims. The parties are now engaged in pre-trial discovery. Pursuant to Court order, all discovery and pre-trial matters must be completed by May 1, 2009.  On February 4, 2008, the Court approved a Consent Decree entered into by News America and the State of Minnesota under which News America agreed to not violate Minnesota&#146;s statutes prohibiting commercial disparagement. On July 29, 2008, the Company and Albertson&#146;s entered into a Settlement Agreement and Mutual Release, in which they each agreed to release all claims against the other, and the Company agreed to dismiss its lawsuit against
Albertson&#146;s.</font></p>

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

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The Company filed claims in December 2006 and January 2007 with its director&#146;s and officer&#146;s liability and general liability insurers related to the defense costs and insurance coverage for claims asserted against the Company and one of its officers in News America&#146;s counterclaims. On August 9, 2007, the Company filed a complaint against the insurers in Hennepin County District Court, State of Minnesota requesting a declaratory judgment that the insurers owe the Company and its officer such defense costs and insurance coverage.  In December 2007, the Company settled its claim against one of the insurers, and the litigation is continuing against the other insurer.</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;'><A NAME="PAGENUM"><font size=2>16</font>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'>
<font size=2>Although management believes that News America&#146;s counterclaims are without merit, an evaluation of the likelihood of an unfavorable outcome and an 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:left;'><font size=2>Management currently expects the amount of legal fees and expenses that will be incurred in connection with the ongoing lawsuits to be significant throughout 2008 and 2009.  During the nine months ended </font><font size=2>September 30</font><font size=2>,&nbsp;2008, the Company incurred legal fees and expenses of $3,270,000 related to the ongoing lawsuits.  Legal fees and expenses are expensed as incurred and are included in general and administrative expenses in the statements of operations.</font></p>

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

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The Company 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="A013">Item 1A.</A></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;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Set forth below is an update to one of the Risk Factors contained in our report on Form 10-K for the year ended December 31, 2007:</font></p>

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

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><b><font size=2>We are Dependent On Our Contracts With Retailers And Our Ability To Renew Those Contracts When Their Terms Expire</font></b></p>

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

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>On an ongoing basis, we negotiate renewals of various retailer contracts. Some of our retailer contracts require us to guarantee minimum payments to our retailers. If we are unable to offer guarantees at the required levels in the new contracts, and the contracts are not renewed because of that or because of other reasons, it will have a material adverse effect on our operations and financial condition.</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 POPS business and results of operations could be adversely affected if the number of retailer partners decreases significantly or if the retailer partners fail to continue to provide good service including performing their duties in placing and maintaining POPSigns at the shelf in their stores and providing product movement data to us.</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 current contract with Safeway Stores was scheduled to expire on June 30, 2008. In May of this year, we entered into an agreement with Safeway to extend the contract to December 31, 2008. Failure to extend the Safeway contract beyond December 31, 2008, could have a material adverse effect on our business.</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="A014">Item 2.</A></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;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>On August 19, 2008, the Board of Directors authorized the repurchase of up to $2,000,000 of the Company&#146;s common stock on or before July 31, 2009. The plan does not obligate the Company to repurchase any particular number of shares, and may be suspended at any time at the Company&#146;s discretion.</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:center;'><A NAME="PAGENUM"><font size=2>17</font>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'>
<font size=2>Our share repurchase program activity for the three months ended September 30, 2008 was:</font></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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<table border="0" cellspacing=0 cellpadding=0 width="100%" style='border-collapse:collapse'>
    <tr style='page-break-inside:avoid'>

        <td width="37%" nowrap valign=top >
<p style='margin-left:.25in;text-indent:-.25in;text-align:center;margin-top:1.0pt;margin-bottom:0in'><font size=1>&nbsp;</font></p> </td>

        <td width="4%" nowrap valign=bottom >
<p style='margin-left:0in;text-indent:0pt;text-align:center;margin-top:1.0pt;margin-bottom:0in'><font size=1>&nbsp;</font></p> </td>

        <td nowrap colspan="2" valign=bottom style=' border-bottom:solid black 1.0pt; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:2pt;margin-bottom:0pt'><b><font size=1>Total Number</font></b><br> <b><font size=1>Of Shares</font></b><br> <b><font size=1>Repurchased</font></b></p> </td>

        <td width="1%" nowrap valign=bottom >
<p style='margin-left:0in;text-indent:0pt;text-align:center;margin-top:1.0pt;margin-bottom:0in'><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p> </td>

        <td nowrap colspan="2" valign=bottom style=' border-bottom:solid black 1.0pt; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:2pt;margin-bottom:0pt'><b><font size=1>Average</font></b><br> <b><font size=1>Price Paid</font></b><br> <b><font size=1>Per Share</font></b></p> </td>

        <td width="1%" nowrap valign=bottom >
<p style='margin-left:0in;text-indent:0pt;text-align:center;margin-top:1.0pt;margin-bottom:0in'><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p> </td>

        <td nowrap colspan="2" valign=bottom style=' border-bottom:solid black 1.0pt; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:2pt;margin-bottom:0pt'><b><font size=1>Total Number Of</font></b><br> <b><font size=1>Shares Purchased As</font></b><br> <b><font size=1>Part Of Publicly</font></b><br> <b><font size=1>Announced Plans</font></b><br> <b><font size=1>Or Programs</font></b></p> </td>

        <td width="1%" nowrap valign=bottom >
<p style='margin-left:0in;text-indent:0pt;text-align:center;margin-top:1.0pt;margin-bottom:0in'><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p> </td>

        <td nowrap colspan="2" valign=bottom style=' border-bottom:solid black 1.0pt; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:center;margin-top:2pt;margin-bottom:0pt'><b><font size=1>Approximate Dollar</font></b><br> <b><font size=1>Value of Shares That</font></b><br> <b><font size=1>May Yet Be Purchased</font></b><br> <b><font size=1>Under The Plans</font></b><br> <b><font size=1>Or Programs</font></b></p> </td>

        <td width="1%" nowrap valign=bottom >
<p style='margin-left:0in;text-indent:0pt;text-align:center;margin-top:1.0pt;margin-bottom:0in'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

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<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="4%" valign=bottom >
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

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

        <td width="12%" valign=bottom style='border-top:solid black 1.0pt; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

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

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

        <td width="6%" valign=bottom style='border-top:solid black 1.0pt; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

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

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

        <td width="12%" valign=bottom style='border-top:solid black 1.0pt; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

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

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

        <td width="14%" valign=bottom style='border-top: solid black 1.0pt'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom >
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="37%" valign=top style='background:#D6F3E8'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>July 1-31, 2008</font></p> </td>

        <td width="4%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="12%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>&#151;</font></p> </td>

        <td width="1%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>&nbsp;&nbsp;&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:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="6%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>&#151;</font></p> </td>

        <td width="1%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=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:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="12%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>&#151;</font></p> </td>

        <td width="1%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=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:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="14%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>&#151;</font></p> </td>

        <td width="1%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="37%" valign=top style='background:white'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=2>August 1-31, 2008</font></p> </td>

        <td width="4%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="12%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>&#151;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;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:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="6%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>&#151;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;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:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="12%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>&#151;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;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:2pt;margin-bottom:0pt'><font size=2>$</font></p> </td>

        <td width="14%" valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>2,000,000</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="37%" 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>September 1-30, 2008</font></p> </td>

        <td width="4%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.0pt;margin-bottom:0.5pt'><font size=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:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="12%" valign=bottom style='border-bottom: solid black 1.0pt; background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>225,000</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>

        <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=2>$</font></p> </td>

        <td width="6%" valign=bottom style='background:#D6F3E8'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.0pt;margin-bottom:0pt'><font size=2>2.04</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>

        <td width="1%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="12%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.0pt;margin-bottom:0pt'><font size=2>225,000</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>

        <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=2>$</font></p> </td>

        <td width="14%" valign=bottom style='background:#D6F3E8; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.0pt;margin-bottom:0pt'><font size=2>1,541,000</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 width="37%" valign=top style='background:white'>
<p style='margin-left:.25in;text-indent:-.25in;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="4%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="12%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="12%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="14%" valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
    <tr style='page-break-inside:avoid'>

        <td width="37%" 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=2>Totals</font></p> </td>

        <td width="4%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;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:right;margin-top:2pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="12%" valign=bottom style='border-bottom: double black 2.25pt;background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:2pt;margin-bottom:0pt'><font size=2>225,000</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>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.5pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="6%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.5pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="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>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.5pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="12%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.5pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="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>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.5pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="14%" valign=bottom style='background:white; '>
<p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:1.5pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>

        <td width="1%" valign=bottom style='background:white'>
<p style='margin-left:0in;text-indent:0pt;text-align:left;margin-top:1.5pt;margin-bottom:0.5pt'><font size=1>&nbsp;</font></p> </td> </tr></table>
</div>

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


<div align=left>

<table border="0" cellspacing=0 cellpadding=0 width="100%" style='margin-left:0pt;border-collapse:collapse; '>
    <tr >

        <td width="11%" 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="A015">Item 3.</A></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;text-align:left;'><font size=2>&nbsp;</font></p>

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

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



<div align=left>

<table border="0" cellspacing=0 cellpadding=0 width="100%" style='margin-left:0pt;border-collapse:collapse; '>
    <tr >

        <td width="11%" 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="A016">Item 4.</A></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;text-align:left;'><font size=2>None. </font></p>

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


<div align=left>

<table border="0" cellspacing=0 cellpadding=0 width="100%" style='margin-left:0pt;border-collapse:collapse; '>
    <tr >

        <td width="11%" 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="A017">Item 5.</A></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>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;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>


<div align=left>

<table border="0" cellspacing=0 cellpadding=0 width="100%" style='margin-left:0pt;border-collapse:collapse; '>
    <tr >

        <td width="11%" 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="A018">Item 6.</A></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;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>


<div align=left>

<table border="0" cellspacing=0 cellpadding=0 width="373" style='margin-left:0pt;border-collapse:collapse; '>
    <tr >

        <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=1>&nbsp;</font></p> </td>

        <td width="48" nowrap 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 width="265" 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>
</div>



<div align=left>

<table border="0" cellspacing=0 cellpadding=0 width="368" style='margin-left:0pt;border-collapse:collapse; '>
    <tr >

        <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=1>&nbsp;</font></p> </td>

        <td width="48" nowrap 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 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>
</div>



<div align=left>

<table border="0" cellspacing=0 cellpadding=0 width="277" style='margin-left:0pt;border-collapse:collapse; '>
    <tr >

        <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=1>&nbsp;</font></p> </td>

        <td width="48" nowrap 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 width="169" nowrap 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;text-align:left;'><font size=2>&nbsp;</font></p>


<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><A NAME="PAGENUM"><font size=2>18</font>
</A></p>

<BR>
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<PAGE>
<p><font size=2><A HREF="#toc">Table of Contents</A></FONT></P>


<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><B><font SIZE=3>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:&nbsp;&nbsp;November 13, 2008</font></p> </td>

        <td width="276" 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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        <td width="444" 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="276" 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>

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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> </tr>
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        <td width="444" 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="276" 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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        <td width="444" 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="276" 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>
<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>
<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 width="276" 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 >

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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 width="276" 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 width="276" 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>
<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>
<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>
<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>
</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;'><A NAME="PAGENUM"><font size=2>19</font>
</A></p>

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<PAGE>
<p><font size=2><A HREF="#toc">Table of Contents</A></FONT></P>



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

        <td width="265" 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>
</div>

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

        <td width="48" nowrap 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 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>
</div>

<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>32</font></p> </td>

        <td width="169" nowrap 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;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;'><A NAME="PAGENUM"><font size=2>20</font>
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<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>2
<FILENAME>insignia084642_ex31-1.htm
<DESCRIPTION>CERTIFICATION OF CEO PURSUANT TO SECTION 302
<TEXT>
<HTML>
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<TITLE>Exhibit 31.1 to Insignia Systems, Inc. Form 10-Q for quarterly period ended September 30, 2008</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=3>CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER</font></B></p>

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

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>I, Scott F. Drill, certify that:</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.25in; text-indent:-0.25in;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>1.</font></p> </td>

        <td  valign=top >
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>I have reviewed this quarterly report on Form 10-Q of Insignia Systems, Inc.;</font></p> </td> </tr></table>
</div>


<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.25in; text-indent:-0.25in;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:left;margin-top:0pt;margin-bottom:0pt'><font size=2>2.</font></p> </td>

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


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


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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>3.</font></p> </td>

        <td  valign=top >
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; </font></p> </td> </tr></table>
</div>


<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.25in; text-indent:-0.25in;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>4.</font></p> </td>

        <td  valign=top >
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>The registrant&#146;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>
</div>


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


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        <td width="48" valign=top >
<p style='margin:0in;margin-bottom:.0001pt'><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=2>a)</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>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; and</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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        <td width="48" valign=top >
<p style='margin:0in;margin-bottom:.0001pt'><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=2>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>Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and</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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        <td width="48" valign=top >
<p style='margin:0in;margin-bottom:.0001pt'><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=2>c)</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>Evaluated the effectiveness of the registrant&#146;s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and</font></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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        <td width="48" valign=top >
<p style='margin:0in;margin-bottom:.0001pt'><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=2>d)</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>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>
</div>


<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.25in; text-indent:-0.25in;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>5. </font></p> </td>

        <td  valign=top >
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>The registrant&#146;s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant&#146;s auditors and the audit committee of the registrant&#146;s board of directors (or persons performing the equivalent functions):</font></p> </td> </tr></table>
</div>


<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.75in; text-indent:-0.25in;text-align:left;'><font size=2>&nbsp;</font></p>


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<p style='margin:0in;margin-bottom:.0001pt'><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=2>a)</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>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&#146;s ability to record, process, summarize and report financial information; and</font></p> </td> </tr></table>
</div>


<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.75in; text-indent:-0.25in;text-align:justify;'><font size=2>&nbsp;</font></p>


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        <td width="48" valign=top >
<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="24" 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&#146;s internal controls over financial reporting.</font></p> </td> </tr></table>
</div>
<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.25in; text-indent:-0.25in;text-align:left;'><font size=2>&nbsp;</font></p>
<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.25in; text-indent:-0.25in;text-align:left;'><font size=2>&nbsp;</font></p>



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<p  style='margin-top:1.0pt;margin-right:.5in; margin-bottom:0in;margin-left:0in; text-align:justify'><font size=2>Date:&nbsp;&nbsp;November 13, 2008</font></p> </td>

        <td width="287" valign=top style='border-bottom:solid black 1.0pt; '>
<p  style='margin-right:.5in; text-align:justify'><font size=2>/s/ Scott F. Drill</font></p> </td> </tr>
    <tr >

        <td valign=top >
<p  style='margin-right:.5in; text-align:justify'><font size=1>&nbsp;</font></p> </td>

        <td width="287" valign=top >
<p  style='margin-right:.5in'><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>


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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.2
<SEQUENCE>3
<FILENAME>insignia084642_ex31-2.htm
<DESCRIPTION>CERTIFICATION OF CFO PURSUANT TO SECTION 302
<TEXT>
<HTML>
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<TITLE>Exhibit 31.2 to Insignia Systems, Inc. Form 10-Q for quarterly period ended September 30, 2008 </TITLE>
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<BR>
<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'>
<b><font size=3>Exhibit 31.2</font></b></p>

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

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><B><font SIZE=3>CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER</font></B></p>

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

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<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>

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<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>

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<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>

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<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>The registrant&#146;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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<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>a)</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>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; and</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>b)</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>Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and</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>

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<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&#146;s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and</font></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>d)</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>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>

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<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>The registrant&#146;s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant&#146;s auditors and the audit committee of the registrant&#146;s board of directors (or persons performing the equivalent functions):</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>a)</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>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&#146;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:left;margin-top:0pt;margin-bottom:0pt'><font size=2>b)</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>Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant&#146;s internal controls over financial reporting.</font></p> </td> </tr></table>
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<p  style='margin-top:1.0pt;margin-right:.5in; margin-bottom:0in;margin-left:0in; text-align:justify'><font size=2>Date:&nbsp;&nbsp;November 13, 2008</font></p> </td>

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<p  style='margin-right:.5in; text-align:justify'><font size=2>/s/ </font><font size=2>Justin W. Shireman</font></p> </td> </tr>
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<p  style='margin-right:.5in; text-align:justify'><font size=1>&nbsp;</font></p> </td>

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<p  style='margin-right:.5in'><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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<TYPE>EX-32
<SEQUENCE>4
<FILENAME>insignia084642_ex32.htm
<DESCRIPTION>CERTIFICATION OF CEO/CFO PURSUANT TO SECTION 906
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<TITLE>Exhibit 32 to Insignia Systems, Inc. Form 10-Q for quarterly period ended September 30, 2008 </TITLE>
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<b><font size=3>Exhibit 32</font></b></p>

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<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0in;text-align:center;'><B><font SIZE=3>SECTION 1350 CERTIFICATION
</font></b></p>

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

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<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 September 30, 2008, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and</font></p>

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<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.
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<p  style='margin-top:1.0pt;margin-right:.5in; margin-bottom:0in;margin-left:0in; text-align:justify'><font size=2>Date:&nbsp;&nbsp;November 13, 2008</font></p> </td>

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<p  style='margin-right:.5in; text-align:justify'><font size=2>/s/ Scott F. Drill</font></p> </td> </tr>
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<p  style='margin-right:.5in'><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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<p  style='margin-top:1.0pt;margin-right:.5in; margin-bottom:0in;margin-left:0in; text-align:justify'><font size=2>Date:&nbsp;&nbsp;November 13, 2008</font></p> </td>

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<p  style='margin-right:.5in; text-align:justify'><font size=2>/s/ </font><font size=2>Justin W. Shireman</font></p> </td> </tr>
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<p  style='margin-right:.5in'><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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